Did you see electric vehicle stocks yesterday?

They caught fire, paced by better-than-expected business updates from EV makers Lordstown Motors (Nasdaq:RIDE) and Rivian (Nasdaq:RIVN). Most electric vehicle stocks popped more than 10% yesterday, with Lordstown rallying 50% and Rivian surging 21%.

To be sure, these huge rallies come on the heels of some major declines across the whole EV sector. Still, sales of electric vehicles across the globe continue to roar higher, and many of these companies are growing rapidly. This is all leading investors to ask: Is this the start of a major EV stock comeback?

We think it could be. Here’s why.

Rivian and Lordstown Reestablish Confidence in Electric Vehicle Stocks

EV stocks didn’t drop because electric vehicles stopped selling. Sales of electric vehicles in the U.S. in the first quarter of 2022 rose 60% year-over-year:

Yet EV stocks dropped big in early 2022. Amid persistent supply chain disruptions and parts shortages, investors lost confidence in major EV players’ ability to hit production targets.

But that confidence was reestablished yesterday, partly because of a positive business update from Lordstown. But it was mostly thanks to a great quarterly earnings report from Rivian.

Late Tuesday night, Lordstown said that it had closed the sales of one of its manufacturing facilities to Foxconn. The sale injects $230 million onto Lordstown’s balance sheets. That’s critical — Lordstown was on the cusp of running out of cash. But with this new capital infusion, the company now has enough liquidity to commence commercial production in quarter three.

In other words, Lordstown will hit its 2022 delivery targets — confidence reestablished.

Meanwhile, Rivian provided an excellent business update on Tuesday afternoon as well. The company said that despite huge supply chain challenges, it’s on track to hits its 25,000-vehicle production target for 2022. Pre-orders are also ramping nicely, with the latest number at 90,000 reservations.

In other words, Rivian will hit its 2022 delivery targets — confidence reestablished.

This confidence boost at two EV manufacturing startups was good enough to light a fire under the entire industry.

We don’t think that fire is going to die out anytime soon. We see electric vehicle stocks soaring from here into the end of the year.

EV Stocks Are Wiped Out and Due for a Big Rebound

Persistent supply chain concerns and fears about waning auto demand in a slowing economy have plagued the EV industry. And as such, electric vehicle stocks have been crushed so far in 2022.

Now, though, they’re completely washed out — and due for a big rebound rally.

Rivian, for example, was trading at 1X book value and 3X forward sales heading into its earnings report. That’s wild. This is a company that’s projected to grow sales by more than 3,000% this year, 250% in 2023, 110% the year after and 55% the year after that. And it was trading for just 1X book value and 3X forward sales!

Talk about a bargain.

But, as many seasoned investors will tell you, just because a stock is a bargain doesn’t mean it’s a buy. Cheap stocks can stay cheap for a long time. You need a catalyst to bring them back to life.

Well, yesterday, we got that catalyst.

EV makers — Rivian, in particular — are on track to hit 2022 targets, despite all the macroeconomic headwinds.

This confirmation catalyst converged on dirt-cheap valuations across the sector and sparked some huge rallies in EV stocks.

These rallies have some major runway ahead.

Indeed, we think Rivian stock can more than double from current levels in a hurry. But Rivian isn’t even our favorite stock to buy for this huge EV comeback.

The Final Word on Electric Vehicle Stocks

We believe that the company with the best battery technology is going to win the electric vehicle arms race.

After all, the quality of the battery determines everything about an EV. It dictates how far it can drive, how long it can last, how quickly it can recharge. The battery even affects how fast it can go.

When it comes to EVs, the battery is everything. Therefore, the company that makes the best EV battery will make the best EV — and sell the most. And ultimately, it will emerge the winner of the electric vehicle arms race.

Rivian makes a great battery. That’s why RIVN is a great EV stock to buy.

But Rivian doesn’t make the best battery.

Instead, that title is reserved for another tiny EV maker — one that could de-throne Tesla. And that company is the best EV stock to buy today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.