The Top Electric Car (EV) Stocks 2021
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While many people think of electric cars as a modern-day invention, electric vehicles have actually been around since the Civil War, long before gas cars were invented.
In fact, Thomas Davenport developed the first electric motor in 1834. While gas cars are more popular than electric cars, over the past few years, more and more people have switched to electric vehicles in an effort to help the environment and alleviate fuel costs.
In fact, electric car sales topped 2.1 million globally in 2019. As the demand for electric cars drives up, so too do your investment opportunities. If you’ve thought about investing in electric car stocks, now may be the time to do it.
Keep reading to learn about the top electric car stocks of 2021.
Electric Car Industry Overview
While the electric car industry has been expanding for years, the market still faces a lot of challenges that could bring volatility to your stock portfolio.
If you choose to invest in electric car stocks, there are four things you need to understand:
- Electric car global growth
- Future market challenges
- Factors driving the sales of electric cars
- EV stocks and investment risks
Let’s take a more in-depth look at each of these factors:
Electric Car Global Growth
China’s electric car industry has seen some incredible growth over the last decade. China has put in place many public policy initiatives and offered financial support to promote EV usage.
The country has also seen a rise in EV stocks such as Kandi, XPing, Li Auto, and Nio. EV sales are also skyrocketing in Europe. In fact, electric car sales rose by 44% in Europe in 2019, with Germany and France leading the way. Both countries offer enticing incentive programs for those who purchase electric vehicles.
Germans can save up to $10,940 by purchasing an eclectic car, and the French can save up to $8300 with their purchase.
European carmakers are also being pushed by their governments to manufacture more electric vehicles. This is perhaps the reason why Europe has the strongest growth in electric car sales compared to the US and China.
According to the Mckinsey Analysis, Europe has since a 25% increase in its electric car market shares.
While many people think of Tesla as the driver of the electric car industry in the US, economists believe the manufacturing of electric equipment will drive the growth in the US.
Factors Driving Sales of Electric Cars
As we mentioned, many countries now have policies put in place to drive the sales of electric cars. These policies mostly aim to improve air health while expanding market share.
If an electric car meets the government’s requirements, Chinese citizens will receive an incentive or tax break for their purchase. For example, you won’t receive a tax break if you purchase a luxury car like a Tesla.
While EV sales have slowed down due to the pandemic, China expects sales to grow in the coming years.
Worldwide, consumers are looking to make more environmentally-friendly purchase decisions. This holds true not only for the automobile industry but also for other industries such as retail, food, and solar energy.
Future Market Challenges
One of the biggest market challenges that the EV sector faces is the cost of buying a vehicle. While manufacturers have found ways to make EVs more affordable, the price of a car is still too expensive for a lot of consumers.
Another challenge that the market faces is the demand for charging stations. As the demand for electric vehicles rises, so too does the demand for charging stations. Manufacturers will need to ensure that there are standardized charging stations nationwide. To do this, manufacturers will need to work with cities to build an infrastructure of public and private charging stations.
EV Stocks and Investment Risks
While EV stocks are currently hot, investors need to keep the risks in mind before buying. Investors who want a piece of the pie in this industry without taking on too much risk may want to look into EV exchange-traded funds. These funds are suited for investors who want a share in the market but don’t want to take on the risk of individual stocks.
The Top Electric Car Stocks
Now that you have some base knowledge about the electric car market let’s talk about the best electric car stocks of 2021. Here are some companies you might consider investing in:
Tesla
Tesla released its first car in 2008, and since then, the company has become synonymous with electric cars. In 2020 alone, the company’s market cap grew by more than $550 billion.
Today, Tesla is bigger than the nine largest automotive makers combined. In 2021, management is aiming for $50 annual average deliveries growth. The company’s stocks have grown by more than 600 percent in the past year as well.
Despite Tesla’s high market value, investors continue to have great faith in the company. Tesla recently unveiled a breakthrough battery design, and the company also recently revealed goals to reduce the cost of electric cars and release self-driving cars on a large scale.
Thanks to Elon Musk’s creative vision, many investors choose to keep Tesla stocks in their portfolio. Tesla shares are now trading at a reasonable level - around $400 (they’re much more than this today). But many investors, including Musk himself, say that valuation is a concern.
Nio
While China has hundreds of electric car manufacturers, Nio has found a way to stand out amongst the rest. One of the most expensive components of an electric vehicle is the battery.
But, Nio has found an innovative way to sidestep this costly issue: they offer batteries as a service. With their subscription model, Nio has been able to reduce the initial cost of buying an electric car while at the same time turning their buyers into loyal customers.
Nio charges a monthly fee of about $142 for their battery service. The electric vehicle battery industry is red hot, and Nio’s subscription model may just help them secure a long-term spot as an excellent investment opportunity.
Nio saw a solid year in 2020, with stocks growing by more than 1100%. They also saw a 146% increase in sales in the third quarter of 2020.
Like Tesla, Nio targets the luxury audience of China. Their EVs come with sleek features such as surround sound and high-end fabrics. Nio has also been prepping for international expansion, providing investors with all the more reason to purchase stock in the company.
General Motors
Most people think of General Motors because of their gas-powered vehicles. However, the company is quickly making a name for itself in the electric car industry.
Recently, the company made a major strategy shift so it could better compete with Tesla. While GM shares are down due to the pandemic and the popularity of Tesla vehicles, hope remains for investors.
GM recently unveiled their first all-electric car model under the Cadillac brand. Named the Lyriq, the vehicle promises all of the luxuries of a Cadillac and all of the practicality of an electric vehicle.
General Motors plans to launch the Lyriq in China, and from there, it will look at rolling out more electric cars under their other brands. Analysts predict that the rollout of new electric car models will raise revenue to $22 billion by 2030 and $74 billion by 2024.
Ford
While Ford recently announced mixed fourth-quarter results, Wall Street still has a lot of hope in this company. This is in large part due to the fact that Ford plans to double its investments in electric vehicles in the coming years.
Between now and 2025, the company plans to invest $22.5 billion in electric vehicles. They recently began selling their all-electric Ford Mustang, and consumers should expect to see more brand rollouts in the coming months and years.
Like General Motors, Ford is well-aware that electric vehicles are the future. While the pandemic hit Ford hard, the company still continues to push forward with recent innovations.
Overall, investors see a bright future for Ford stocks.
Li Auto
Li Auto is another Chinese company that investors have been keeping their eyes on. Li Auto has big plans to sell a range of SUV vehicles.
They currently only have one model for sale, the ONE SUV. The vehicle first launched in November of 2019, and sales for the car have been relatively impressive. In the past couple of years, Li Auto averaged around 1500 sales per month, and last August, they saw around 2700 sales.
Unlike Nio, which relies on state-owned manufacturers, Li Auto makes its own vehicles. Another difference is that while Nio offers strictly electric-powered vehicles, Li Auto takes a more hybrid approach.
Because China’s charging infrastructure still has a long way to go, the company’s hybrid approach will allow it to reach more customers who travel and live outside of the range of charging stations.
The car comes with a gasoline-powered range extender that helps recharge the battery while drivers are on the move. Li Auto also offers lower price points overall for their electric vehicles, allowing them to appeal to the more budget-conscious driver.
It’s essential to keep in mind that CEO Li Xiang holds 73% of the voting power in the company, which poses a bit of a risk to shareholders. However, considering Li Auto recently became public, they’re certainly worth looking into.
Fisker
While Fisker had a rough start in the electric vehicle industry, they’re currently in the midst of a significant comeback.
In fact, Fisker’s first EV model, named Karma, beat the Tesla S model to the market. While they came strong out of the gates with this model, the company quickly began to stumble thanks to Hurricane Sandy, funding issues, and a flurry of recalls.
However, the company is in the midst of completing a reverse merger with Spartan Energy. They plan to use the proceeds from this merger to develop Ocean, an SUV which they claim will be the “world’s most sustainable vehicle.”
The vehicle should be available in early 2022, and it’ll come with a starting price of a little over $37,000. What separates Ocean from other electric vehicles is that it’s completely vegan. The interior is made from plastic as opposed to leather, and the rest of the car’s components are made from recycled materials.
If the company continues to maintain its edge in terms of eco-friendliness, consumers with a deep interest in sustainability may find Fisker an addition in their portfolio..
While the company may be a natural rival to Tesla, its unique approach is quickly helping set it apart. The company is also looking to form a battery partnership with Volkswagen. By outsourcing production, Fisker will have more time to focus on its luxury designs.
Workhorse
Workhorse sets itself apart from other EV companies on this list by focusing on the commercial driving industry.
While the company has struggled with revenue and profits since its inception in 1998, many investors believe that Workhorse stocks are still worth looking into.
Currently, the company offers two C-Series trucks. They also have an air delivery system known as the HorseFly drone.
While the company has a long way to go in terms of proving its longevity, two major companies - Ryder and the United Parcel Service- have already placed large orders with the company.
Final Thoughts
As you can see, there are many EV companies worth investing in. To diversify your portfolio, you may want to invest in several or more of these companies.
Of course, the market is continually changing, so it’s important to keep up with market news and research before investing in new stocks.
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