If you live in a city or large metropolitan area, finding an electric vehicle charging station is likely no problem. Most hookups are located on both coasts.
Head into the interior, though, and it becomes more dicey. Selling EVs to people with few battery charging options will make them a tough sell. And it is getting more difficult.
Tesla (NASDAQ:TSLA) reported a 5% drop in sales last month to 444,000. Its EV market share fell below 50% for the first time hitting 49.7%.
While the overall EV market is still growing, it is just growing more slowly than it was. There are a couple of reasons for that.
As the biggest EV stock, Tesla is going to skew the results. If its sales fall it will look like the entire market is down when, in fact, other EV makers are reporting increases. But the industry still has problems.
Range anxiety, or how far someone can drive before needing to recharge a battery, is a real concern. So is the price. According to Kelley Blue Book, a new EV costs on average about $56,000 while new gas-powered cars go for around $48,000. Although the gap is narrowing, a large chasm of affordability remains.
A base fossil fuel Ford (NYSE:F) F-150 has an MSRP of $37,000 while the electric F-150 Lightning starts at $63,000. For that $26,000 difference, you could throw in an extra Ford Escape.
Also, cheaper cars will have smaller batteries that have less range. Luxury vehicles with bigger batteries are just priced out of the range of the average car buyer’s wallet.
While the EV market is slowing, several EV stocks are still worth buying. These three are the best.
Toyota (TM)
Toyota (NYSE:TM) is not only the world’s largest automaker but also the biggest hybrid vehicle manufacturer. As that market has become the sweet spot for EVs, Toyota is dominating. It reported a 63% surge in U.S. EV sales in the second quarter to 247,347 vehicles. It represents 40% of all vehicles sold, almost all of which were hybrids. Over the first six months of 2024, Toyota EV sales were up 68% (its Lexus division accounts for about 13% of the total).
Although Toyota sold fewer vehicles than Tesla, the Japanese automaker clearly has its finger on the pulse of what EV car buyers are looking for. Ford and General Motors (NYSE:GM) agree. They stepped on the brakes of their battery EV dreams and are transitioning production to hybrid manufacturing.
Toyota stock is down only 5% in 2024 as it deals with inventory issues. Demand for its vehicles is so great it can’t keep up and is losing out on sales. However, it just reported a 17% increase in profits to 1.3 trillion yen ($8.7 billion). Despite that matching analyst expectations, Reuters reports it marks the lowest growth in the last seven quarters.
Shares, though, are cheap. They go for 8 times earnings and estimates and a fraction of its sales. The market offering investors such a discount makes Toyota one of the top EV stocks to buy.
Volkswagen (VWAGY)
There are arguably fewer companies doing more in EVs than Volkswagen (OTCMKTS:VWAGY). Not necessarily in building EVs themselves but rather in partnering with others to develop the best technology for its vehicles.
For example, Volkswagen has invested almost $400 million in solid-state battery maker QuantumScape (NYSE:QS) to help it advance its next-generation battery technology. VW’s battery division PowerCo also just received a license to mass-produce QuantumScape’s battery cells.
The German automaker also agreed to invest as much as $5 billion in electric SUV maker Rivian Automotive (NASDAQ:RIVN) in exchange for its advanced software-defined vehicle (SDV) platforms to be used by both companies.
Volkswagen’s plan seems to be to partner with and acquire battery technology and platforms that it can use across its own EV lineup. As a deep-pocketed investor, it can gain significant leverage with these cash-strapped startups.
It also recently announced a partnership with China’s Xpeng (NYSE:XPEV) to produce two new EVs for the country that will feature VW branding.
Yet Volkswagen’s stock is down 13% this year as it works to regain its footing, despite having a portfolio of well-known auto brands including Audi, Porsche and Bentley. This could be an excellent opportunity to buy into a business leveraging its size for future gain.
Global X Autonomous & Electric Vehicles ETF (DRIV)
Better than trying to pick a winner out of the many EV stocks on the market, why not buy a basket of them? The Global X Autonomous & Electric Vehicles ETF (NYSEARCA:DRIV) is not wholly focused on the EV market but also gives you a selection of adjacent technology stocks.
The exchange-traded fund naturally includes EV stocks like Tesla, Lucid, Xpeng and Nio (NYSE:NIO) but also holds Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), which owns the autonomous vehicle company Waymo. Additionally, the ETF owns chipmakers including Nvidia (NASDAQ:NVDA) and Qualcomm (NASDAQ:QCOM), as well as lithium miners such as Albemarle (NYSE:ALB) and hydrogen fuel cell maker Bloom Energy (NYSE:BE).
Global X has net assets of around $420 million and carries a reasonable expense ratio of 0.68%. It also pays a semi-annual dividend of 41 cents that currently yields 1.9% annually. As it allows you to spread the risk of investing in EV stocks, the ETF is a good choice for many investors.
On the date of publication, Rich Duprey did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
