Urban transportation is arriving at an inflection point in its history. The high proliferation of lithium-ion batteries, coupled with their increasing sophistication, has ushered in an age for electric vehicles (EVs). The popularity of Tesla (NASDAQ:TSLA), albeit slow at first, helped to ultimately pave the road for other successful EV companies, on the one hand and gave potential car consumers the confidence to choose an electric vehicle over a conventional combustion engine one, on the other hand.
However, the realm of personal cars has not been the only space in which electric vehicles have grown in dominance. Governments across the globe are approving the airworthiness of electric vertical take-off and landing (eVTOL) vehicles, which will be able to fly passengers across an urban area from point A to point B. While this sector is still nascent, innovation and technical competencies will likely continue.
With that said, below are three stocks that will certainly be key to the future of transportation across the globe.
BYD (BYDDY)
Chinese EV behemoth BYD (OTCMKTS:BYDDY) continues to amaze market observers and car owners alike. Despite rising competition in China, BYD remains a dominant EV maker domestically and abroad. Total “new energy-vehicle” or NEV sales for April rose 48.9% yearly to 313,245. Overseas sales in April also hit a record high, skyrocketing 176.6% year-over-year to 41,011. The largest overseas markets for Chinese EVs are Thailand and Brazil. BYD maintains a significant 35% market share in Southeast Asia and plans to expand in Brazil and Mexico.
Last week, BYD took many analysts by surprise with the release of its new hybrid. In particular, the EV maker unveiled a hybrid capable of traveling more than 2,000 km or 1250 miles on a single charge. The new hybrid’s price tag is even better: 100,000 yuan or around $13,800.
BYD shares are down 8% for the year, underscoring investor skepticism around the EV market’s short-term headwinds and Chinese equities in general, given the economic slowdown in the country. Still, BYD will have a robust position in shaping the world of transportation, and its valuation is multiple, cheaper than Tesla’s, and it should keep it on the watchlists of many investors.
EHang (EH)
For those interested in the eVTOL vehicle market, EHang (NASDAQ:EH) is a stock worth looking into. Unlike many of its competitors in the space, the Chinese firm has actually made sales on finished products and has received airworthiness certifications from aviation regulatory bodies in China and elsewhere.
EHang’s Q1 report for fiscal year 2024 came with some more good news. Both revenue and profit estimates beat Wall Street’s expectations. Revenue increased 178% year-over-year to RMB 65.8 million ($8.5 million). The company’s net loss also improved 27.2% from the same period in 2023. Moreover, EHang’s “Sales and deliveries of EH216 series products” jumped to 26 units. This eVTOL vehicle series includes “EH216-S, the standard model for passenger transportation, EH216-F model for aerial firefighting, and EH216-L model for aerial logistics.”
The Civil Aviation Administration of China also issued EHang a production certificate, effectively paving the way for mass production of the EH216-S product.
EH shares are up 22.4% on a YTD basis, and the company’s strong position in the eVTOL vehicle space could make it a good long-term bet as this kind of transportation gains traction.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) arguably has formed the EV market into what it is today and deserves consideration from anyone betting on the future of transportation. That doesn’t mean the company hasn’t hit any roadblocks. Elevated inflation and high interest rates have disincentivized mainly potential car buyers from purchasing new vehicles.
While last year’s price cuts seemed to invigorate some of that waning demand, it has not been enough thus far. Q1 of the fiscal year of 2024 saw Tesla report its first year-over-year decline in vehicle deliveries, underscoring the market headwinds the company is currently facing. Tesla also faces rising competition in one of its key markets: China.
Nonetheless, with all this said, I still would not count Tesla out in terms of being able to rebound. Not to mention, the company’s popularity and dominance globally should not be underestimated. TSLA has fallen nearly 30% on a YTD basis, which could, in turn, create a good opportunity to buy up shares.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
