EV stocks have multiplied in Tesla's (TSLA) wake and as electric cars look to go mainstream — but not all are created equal. Some car stocks are more ready than others for an EV future. Here are the top-rated electric vehicle makers and EV plays.
X
- Tesla
- Ford
- Li Auto
- Global X Lithium and Battery Tech ETF
- BYD
Are Electric Vehicle Stocks A Good Buy?
Companies with two important characteristics generally make the best candidates for stocks to buy and watch, according to CAN SLIM guidelines. First, they need strong track records of earnings growth. Second, the stock should be showing elements of market outperformance, and be shaping bullish chart patterns.
But most of the new EV stocks have neither. They include Fisker (FSR), Canoo (GOEV), Faraday Future (FFIE), Lordstown (RIDE) and Xos (XOS). In fact, many of these EV startups aren't producing or delivering electric vehicles yet.
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However, two startups have begun selling their first electric vehicles, bringing in revenue. Lucid Motors (LCID) began deliveries of the Lucid Air, a luxury electric sedan, on Oct. 30. Rivian Automotive (RIVN) has also started delivering the R1T, an electric pickup, with the R1S SUV due early this year.
Meanwhile, Chinese EV stocks like Nio (NIO), Xpeng (XPEV) and Li Auto (LI) sell tens of thousands of vehicles, but remain unprofitable for now. Then there are legacy auto giants like General Motors (GM), Ford (F) and China's BYD Co. (BYDDF) that are transforming into electric-vehicle powerhouses.
Ferrari (RACE) plans to launch its first all-electric supercar in 2025, joining the ranks of EV stocks after resisting the shift to electric vehicles for decades.
Electric Car Stocks Include Battery Stocks, Charging Stocks, EV Suppliers
The growing universe of EV stocks doesn't end with carmakers. A constellation of other companies provides car batteries, car charging stations, electric motors and other EV-associated products. Among them are EV charging networks ChargePoint (CHPT), EVgo (EVGO), Blink Charging (BLNK) and Wallbox (WBX).
Hyliion (HYLN) is developing electric powertrains for big-rig trucks as well as powertrains that can be compatible with renewable natural gas and hydrogen fuel cells.
Romeo Power (RMO) makes battery packs for commercial EV fleets. QuantumScape (QS) touts a major breakthrough in solid-state lithium metal batteries. And Global X Lithium and Battery Technology ETF (LIT) holds a basket of stocks, from lithium miners to battery producers, poised to benefit from the rise of electric vehicles.
Magna (MGA), a Chevy Bolt supplier, will make battery enclosures for GM's new Hummer electric truck. Magna already makes e-drive gearboxes for Nio and Xpeng. The company also will make the Fisker Ocean SUV, due out late next year.
Best EV Stocks To Buy Or Watch
The charts of most EV stocks are under fresh strain after severe damage in the past year. Broadly, both established automakers and startups are a speculative bet on electric vehicles, itself seen as a nascent field. They have suffered as a risk-off sentiment prevails in the current market, and as shortages of key components drag on.
These electric-car stocks had the best mix of fundamentals and technicals, as of April 1.
Tesla stock, the top auto and EV stock by market capitalization, has an IBD Composite Rating of 97 and an EPS Rating of 74. Shares are working on a 1,208.10 cup-shaped buy point. On a weekly chart, the IBD Leaderboard stock is now well above a falling 10-week moving average, while its relative strength line is rising sharply after a dive. In the longer term, the RS line shows a big uptrend.
Tesla expects to grow vehicle deliveries 50% annually. In 2021, Tesla grew deliveries 87% to 936,172 vehicles. Its first electric pickup truck, the Cybertruck, is due in late 2022. The new Model S Plaid is Telsa's fastest car yet, going from zero to 60 miles per hour in less than two seconds. Tesla opened its Berlin factory March 22, which is expected to be key to its growth in Europe and globally.
Ford stock has a Composite Rating of 61 and an EPS Rating of 22. Ford shares are trying to retake a falling 10-week average, after ripping higher in the past year. On March 2, Ford announced a new business, Ford Motor e, which will exclusively develop and scale electric vehicles, such as the new Mustang Mach-E SUV and the F-150 Lightning pickup truck. The Lightning is due in the spring. Ford also owns 12% of Rivian. By 2025, Ford plans to spend $30 billion to develop and scale electric vehicles. By 2030, Ford expects half of its global sales to be fully electric vehicles.
Li Auto Stock, Lithium ETF
Li Auto stock has a Comp Rating of 67 and an EPS Rating of 72. Like most China-based stocks, Li Auto trades in American depositary receipts. The EV stock has regained a downward trending 10-week average, which has fallen below its longer-term, 40-week counterpart, a negative.
Delisting fears and supply shortages are just two factors weighing on China EV stocks.
The China EV startup makes a single premium electric vehicle — the Li One SUV. It will unveil a second EV, the L9, on April 16. Among its unique features, the Li One includes a gasoline-driven engine, used only to charge the vehicle's battery, extending the range that the car can travel. Li Auto continues to grow EV sales at a robust pace, after nearly tripling 2021 sales. It is growing quarterly revenue at a triple-digit pace, though consistent profits are a ways off.
The Global X Lithium and Battery Technology ETF rallied sharply for most of 2020 and 2021. The ETF fell sharply from a November peak and are back above a downward trending 10-week average. It has a Relative Strength Rating of 74 out of a possible 99. That means it has outperformed 74% of all stocks in IBD's database during the past year. Its largest holdings include Albemarle (ALB), as well as China's BYD and Tesla. The LIT fund also invests in miners and refiners of lithium, as well as battery producers. Most of today's all-electric vehicles and plug-in hybrid EVs use lithium-ion batteries.
Global automakers, including GM and Ford, have set goals for an all-electric future. Regulators in the U.S., China and Europe are pushing EV adoption. Over the next five years, forecasts call for lithium demand to increase by more than 200%, Global X says.
BYD (BYDDF) has no Composite Rating and an EPS Rating of 25, but it is profitable. Shares are trying to get back above a falling 10-week average, but they ran up sharply in the latter half of 2021. China's BYD is Hong Kong-listed, trading over the counter in the U.S.
The Chinese car and battery giant is ramping up on electrification. BYD grew EV sales 764% in February, year over year, after more than tripling EV sales in 2021. Month over month, February sales fell for both BYD and Li Auto amid EV subsidy cuts and other woes. Backed by Warren Buffett's Berkshire Hathaway (BRKB), BYD has begun selling the Tang electric SUV in Norway. It will likely substantially increase exports in 2022, with Europe and Australia among the key markets. A major EV battery maker and supplier, BYD also makes its own chips, which allowed rapid expansion in 2021.
Tesla Vs. BYD: Which Booming EV Giant Is The Better Buy?
In the near term, EV stocks will continue to face chip constraints but those are starting to lessen. Battery costs and shortages could be an issue in the mid-term, as supplies of lithium and other raw materials struggle to keep up with demand. Longer term, more government support is likely headed for electric vehicles, while greater EV production should help bring down vehicle prices.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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