Undervalued electric vehicle stocks provide investors a chance to get in at reduced levels.
According to a Cox Automotive report, EVs accounted for 5.6% of the total United States auto market in the second quarter. It is also an impressive 66% rise from the same period the previous year.
Yes, 5% is a small share but it could be a tipping point. EVs could become mainstream in the coming years and transform the entire industry.
If the U.S. continues to focus on EVs and follows the adoption pattern as other countries, we will see a significant rise in new electric car sales by the end of 2025.
Several EV companies are here to make a mark and grab market share. While the competition is growing, there are concerns about rising EV costs and supply chain issues. But this is an opportunity to grab the most undervalued electric vehicle stocks before they race higher. Let’s take a look at them.
Chinese EV maker Nio (NYSE:NIO) has made big moves in the industry over the past few years. Having consistently delivered strong numbers quarter after quarter, Nio stock is a top choice when it comes to undervalued electric vehicle stocks.
Despite reporting losses, the stock has tremendous potential to grow. It suffered due to the delisting fears and supply chain issues, but Nio looks like a strong player for the long term. The company delivered 12,961 vehicles in June, up 60% from a year ago.
It plans to enter the German market with the ET7 model. Nio already has a presence across Norway and intends to expand across Netherlands, Denmark, and Sweden soon.
A lot is working in favor of the company and investing in NIO stock while it is down could prove to be a great bet. The stock is currently trading at $20.68, significantly down from the all-time high of $47.
Rivian (NASDAQ:RIVN) went public late last year in one of the biggest IPOs ever and the company managed to raise $12 billion. The company had not delivered any SUVs before it went public but managed to produce more than 1,000 vehicles in 2021.
Currently, it has about 70,000 preorders and they are not fully refundable, which shows the true demand for its vehicles in the market.
RIVN stock is trading for $34 today, a massive drop from the 52-week high of $179. Despite all odds, a lot is going on for the company.
It has the much-valued Amazon contract. It hasn’t begun deliveries to Amazon but the company is planning long-term. Amazon had placed an order for 100,000 EVs to be delivered by 2030 and if all goes well, this contract can change the future of Rivian.
RIVN stock looks like a good buy while the company is in the early stages of growth. It is also Tim Cook’s choice of EV.
Another solid player in the EV industry, XPeng (NYSE:XPEV) is slowly but steadily striding forward despite the growing competition.
XPEV stock is worth adding to your portfolio. The stock is trading at $28 today and is down 35% over the past 6 months. It reported 15,295 deliveries in June, up 133% year over year and a 51% rise from May. This is despite the supply chain issues and Covid-related lockdowns.
I believe that XPeng will be able to report stronger deliveries going forward and it will impact the bottom line. It will be launching G9 in the next quarter and with new launches, there will be higher demand and healthy growth.
That said, XPeng is also working aggressively on its expansion plans in Europe. The EV maker has consistently reported impressive deliveries and is in a healthy growth stage yet it remains one of the most undervalued electric vehicle stocks. In the next five years, XPEV stock will be able to deliver impressive results.
Li Auto (LI)
Li Auto wants to ship two million cars a year by 2025. This may seem like a humongous target, but it could be possible. It is, by far, one of the most undervalued electric vehicle stocks.
The company delivered 13,024 cars in June, up 68% year over year. Its cumulative deliveries have reached 184, 491 since its debut in 2019.
The hot China EV maker might take some time to beat Tesla but it is well on its way and taking the right steps. LI stock is trading at $152 today and is up 30% over the past six months.
The stock is a buy for the long term and will pay off patient investors.
Gaining attention and interest with solid reservation numbers, Lucid Group (NASDAQ:LCID) has become a popular name today.
Despite delivering only 360 cars in the previous quarter, Lucid has set a target of delivering close to 12K to 14K cars this year.
LCID stock is down more than 70% from the highs since the start of 2022 but the company has solid support from the Saudi Arabian government. It is building a manufacturing plant there and is opening at multiple locations in the U.S.
Lucid is offering the best speed and performance with sleek and stylish design. LCID stock is trading close to the $20 level and investors are expecting the stock to rebound in the near future. At the suppressed price, Lucid is a deal.
General Motors (GM)
General Motors (NYSE:GM) is already a well-established name in the industry and it is leaving no stone unturned to make a mark in the EV industry.
Despite the several issues related to supply chain, inflation, and lockdowns, GM managed to deliver the best ever first half retail market share through the high-margin trucks. It sold more than 7,000 vehicles in the first quarter and has EVs waiting in line.
The impact will still show in the next quarterly results but do not judge the company based on the current scenario. Its bigger picture looks promising and attractive.
The company plans to invest $35 billion in EVs through 2025 and has a long way to go in the EV industry. It recently launched the 2024 Blazer EV which will arrive next summer with a starting price of around $45,000 and $66,000. GM stock is trading at $32, nearly half of its 52-week high of $67. Grab the stock while it is trading at a discount.
BYD Company (BYDDF)
Backed by Warren Buffet’s Berkshire Hathaway (NYSE:BRK-A, BRK-B), BYD sold 641,000 EVs in the first six months of the year, 1 300% rise year over year. Notably, it hit massive delivery numbers despite the recession fears, supply chain issues, and Covid-related lockdowns in China.
For BYD, this is only the beginning and I believe it will be able to continue delivering strong numbers. BYD stock has become a hot EV play and is touted as the next big thing in the thriving industry.
I expect BYD to maintain the sales streak for another quarter. It is adding a sixth auto plant in Anhui province in China will help increase production to about 300,000 in the next month. Increasing production and easing China lockdowns will work in favor of the company. BYD stock is a steal at the current level.
On the date of publication, Vandita Jadeja 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.