The electric vehicle (EV) industry is in strong growth as countries rush to reduce their carbon emissions. Once a niche industry, it has had explosive growth, and analysts expect that this trend will continue in the coming years.
A report by Allied Research estimated that the EV industry was worth more than $164 billion in 2019. It expects that it will soar to more than $804 billion in 2027, representing a compounded annual growth rate (CAGR) of 25%. In this article, we will look at the top 11 EV stocks to buy and hold in 2022.
Volvo is a large Swedish automaker that sells over 700k cars every year. The company’s major shareholder is Geely, a Chinese company. In 2021, the company returned to the public market, giving it a $20 billion valuation.
Interestingly, Volvo owns a 49% stake in Polestar, an EV company that is headquartered in Stockholm. Polestar struck a deal that will take it public in New York.
Once the listing is complete, Polestar’s market capitalization will exceed $20 billion. This means that Polestar, which sells a few cars every year, is now being valued at a bigger valuation than its minority shareholder.
Still, we believe that the Polestar stock price will be a good one to buy because of the overall success of the company. The firm currently produces two cars named Polestar 1 and Polestar 2. The company made about $1.6 billion in revenue this year and is expected to reach about $25 billion in 2025.
There are three main reasons why it makes a good investment. First, the company’s heritage is Volvo, a company that is known to produce the safest cars in the world. Second, it has some Chinese ownership, which gives it some leverage when competing in the biggest EV market in the world. Third, the company’s cars have had some good reviews. For example, Polestar 1 has a 540km range on a full charge.
Nio (NIO) is a leading Chinese EV company that makes a number of models like ET5, ET7, EC6, and EC8. The company has been compared to Tesla in China.
The Nio stock price crashed by more than 30% in 2021. This drop was not because of the mistakes or missteps that the company made. It was due to the rising geopolitical tensions between the United States and China.
These tensions have pushed investors to exit some of their Chinese investments. Besides, there are fears that China will ask its American traded companies to delist and shift their bases to either mainland or Hong Kong. The Biden administration is also considering adding more measures to delist these firms.
Nio has a market capitalization of about $47 billion. It is a company that is growing its deliveries in China and has already received a license to sell cars in Europe. Therefore, there is a possibility that the Nio stock price will keep rising in 2022. You should be cautious because of the existing geopolitical risks, though.
Xpeng (XEV) is another Chinese EV company. The company has a market capitalization of over $39 billion. It is seeing robust growth, mostly in its local market. For example, XPeng reported revenues of $5.72 billion in the third quarter. It has also increased the number of its deliveries in all months of 2021, even as the supply chain challenges remain.
XPeng currently sells two models. Its G3 model is a sports utility vehicle (SUV) that has a range of 520km in full charge. Its P7 brand is a saloon car that has a range of more than 700km. This is notable since the range easily beats Tesla’s car with the longest range, the Model S Long Range.
XPeng delivered 15,613 cars in November 2021. That was a 270% year-on-year increase. In total, the company delivered more than 100k cars in 2021, and the trend is expected to continue.
Unlike Nio, the XPeng stock price exceeded 20% in 2021 as investors cheered the company’s growth. Also, the company has made contingency plans if it is forced to delist in New York. It has dual-listed in Hong Kong, where its stock rose by about 7%.
XPeng is a good EV stock to buy because of the quality of its cars, the size of the Chinese EV market, the overall revenue, and unit growth.
Lucid Group (LCID) is an American EV company that went public in 2021 after merging with a Special Purpose Acquisition Company (SPAC). The stock rose over 300% in 2021, giving it a market cap of more than $63 billion. However, it declined by about 30% between November and December after the Securities and Exchange Commission (SEC) launched an investigation into the company. The regulator subpoenaed the firm concerning its $24 billion SPAC deal.
Lucid Motors makes a car model known as Lucid Air, which is a luxury sedan that starts at $77,000. With add-ons, the model can sell for as high as $168,000. The model won the prestigious car of the year in 2021 by MotorTrend.
The company’s business model is similar to that of Tesla, which started with a luxury car and then used the funds to finance the development of cheaper cars.
Lucid is a good EV stock for 2022 because of the quality of the first car, its strong balance sheet, and its positioning as a premium alternative to cars made by other EV companies.
The main risk is that the firm is expected to launch its pickup truck in 2030. This will put it at a disadvantage since other EVs are already building trucks, which are the best-selling cars in the US.
Americans love their pickup trucks. In fact, Ford F-150 is the best-selling vehicle in the US of all time. Therefore, as the world transitions to EVs, there is a likelihood that many Americans will embrace electric trucks. This is the gap that Rivian (RIVN) seeks to fill.
Rivian is an EV company that is backed by companies like Ford and Amazon. It went public in 2021 and saw its stock price surge to a high of $172. Since then, the stock has dropped to about $110, giving it a market capitalization of more than $96 billion. This makes it a bigger company than Ford and General Motors.
Rivian’s initial product is R1T, a model that has received good ratings and reviews in its early days. The car has a range of about 314 miles and can move from 0 to 60 miles within about 3 seconds. Rivian is also building R1S, a sports utility vehicle.
The Rivian stock is a good investment because of its first-mover advantage in the truck industry and the fact that it has more than 71,000 reservations.
Ford (F) is a leading Detroit automaker valued at $83.3 billion. The company generates more than $127 billion in revenue every year and billions in profits.
Unlike the other companies, Ford is not a pure-play EV firm. Indeed, the company makes most of its revenue selling gasoline and diesel cars.
However, like all other legacy automakers, the company is investing billions of dollars in EVs. In 2021, it said that it would invest more than $11 billion in its EV business. It also expects that EVs will be responsible for about 40% of its total revenue by 2030.
Ford has announced several plans for its EV business. For example, it is now developing its electric Ford F-150 pickup truck. The Lightning truck has been so successful that the company has stopped taking reservations, which currently stand at 200k. The company is also selling Mustang Mach E.
Therefore, analysts believe that Ford’s valuation would be much higher if it decided to separate its legacy business from its EV business. The Ford stock price surpassed 120% in 2021.
General Motors (GM) is another well-known American car company that owns brands like Chevrolet, Buick, GMC, Cadillac, and On. The company has a market cap of $83.3 billion. It had a revenue of $26.78 billion in the third quarter of 2021 and a net income of $2.4 billion.
Like Ford, GM is not known for its EV cars. Still, it is one of the biggest investors in the industry. In 2021, the company committed to investing $35 billion in EVs before 2025. That was a higher commitment than what the company made in March 2020 when it aimed to invest $20 billion. It will have 30 EV models by 2025.
GM has made some progress towards this line. For example, it is building an EV hummer, which has become popular among enthusiasts. Its most premium version has already been sold out, and reservations of the other models are rising fast. GM is also electrifying its other models. Therefore, like Ford, analysts believe that the company would be more valuable if it spun off its EV business.
Tesla (TSLA) is the biggest automaker in the world in terms of market capitalization. It is valued at more than $1 trillion, making it more valuable than most other brands combined.
Tesla has a pole position in the EV industry. It has plants in the most important markets like the US, China, and Germany. It also has the biggest network of charging spots, which is also an added advantage.
Also, the company is positioned in key subsectors. It dominates the EV saloon and SUV business, and its electric pickup truck has become popular. Cybertruck has more than 1.2 million reservations that are worth over $80 billion. Therefore, its strong profitability and brand name make Tesla a good EV stock to buy.
Li Auto (LI) is a Chinese EV company valued at more than $30 billion. The company sells Li One, a premium EV that sells for about $47,000. It has become one of the best-selling cars in China. In November, the company sold 13,485 cars. Between January and November, it sold more than 78,000 cars, which is significantly higher than those it sold in the previous year.
Li Auto’s business has been growing. For example, in the third quarter of 2021, the company’s revenue rose by 209% to $7.78 billion. Notably, it is also narrowing its losses. It lost just $21 million in the third quarter, an improvement from the $235 million that it lost in the previous quarter. This makes it a good EV stock to buy. However, like XPeng and Nio, the company is exposed to potential risks if the US and China tensions escalate.
Fisker Automotive (FSR) is a storied American car company that traces its roots decades ago. It was among the first companies to offer electric vehicles, but its sales were a bit limited. As a result, it filed for bankruptcy in 2013. Today, the company is making a comeback, and investors believe that it is worth $5 billion.
The company is building Fisker Ocean, a car that starts at $37,999. The most expensive car will go for $68,399. In June 2021, the company had 17,000 reservations, meaning that they have increased substantially in the past few months. Therefore, the company will likely see its stock rise when it starts its deliveries.
Daimler is a large German automaker that is best known for its Mercedes Benz brand. Like Ford and GM, the company currently makes most of its money selling gasoline cars.
However, the firm has committed to electrifying its brands in the coming year. To achieve that, it is investing $47 billion. It also expects that its EV and hybrid cars will account for about 50% of total sales in 2025.
The EV industry is doing well around the world. In this article, we have looked at some of the top companies that will dominate the industry. While most of these stocks will rise in 2022, there are concerns. For example, the tensions between China and the US could have an impact on the industry since China dominates the battery industry. Also, there are concerns that the industry has gotten saturated.