The electric vehicle industry is hot right now for a good reason. According to Allied Research, the industry is seeing impressive growth in key markets like China, Europe, and the United States. Indeed, the report expects the industry to have a compounded annual growth rate (CAGR) of 22.6% in the next seven years. In dollar terms, the industry will be worth more than $826 billion. In this article, we will look at some of the best EV stocks to invest in today.
Started in 2003, Tesla has grown to become the most valuable automaker in the world with a market cap of more than $400 billion. Indeed, its current valuation is bigger than that of Toyota, General Motors, Ford, Volkswagen, and Nissan. This is despite the fact that Tesla has a trailing twelve-month revenue of $28 billion while the other five firms have a revenue of more than $830 billion.
This valuation is mostly because of the company’s market share of the EV market, the strength of its technology and charging locations, and its strong revenue growth. For one, it has increased its annual revenue from just $116 million in 2010 to more than $28 billion in TTM. It has also managed to become profitable.
As the pioneer of electric vehicles, Tesla has a strong advantage as most governments start prioritizing electric vehicles. For example, the upcoming Tesla Roadster will have a range of 600 miles. According to mileage, the closest car is the Volkswagen ID 3 Long Range, which has a range of about 295 miles.
While Tesla is overvalued, it makes sense to invest in it because of how far its technology is, its global presence (US, Germany, and China), the strength of its brand, and the fact that it has become profitable.
Nio Limited (NIO)
Nio Limited is a Chinese electric car company started in 2014. Over the years, the company has experienced strong growth, which has seen it increase its valuation to more than $56 billion. This is despite the fact that the firm has a TTM revenue of more than $1.3 billion.
In 2018 and 2019, it made a combined revenue of more than $1.8 billion. At the same time, it has lost more than $1.6 billion. The company sells three models, including EC6, ES8, and ES6. The ES8, which is an SUV, has a 580km range and can move from 0-100km/h in 60 seconds. The ES6 is also an SUV with a range of 610km.
For long-term investment, Nio is a relatively risky company because of the fact that it is a Chinese company. Chinese companies tend to be riskier investments because they tend not to follow American accounting standards. Also, US regulators usually have challenges enforcing their laws to Chinese firms.
Still, Nio has some advantages, including the large size of the Chinese EV market, its fast revenue growth, and the quality of its vehicles.
Workhorse Group (WKHS)
Workhorse is an electric vehicle startup with its headquarters in Cincinnati, Ohio. Unlike Tesla and Nio, this company specializes in transportation trucks that are mostly used for mail and parcel delivery. Its main product is the C-Series vehicle, which is mostly bought by companies in the delivery industry.
As a young company, Workhorse does not have substantial revenues. Indeed, the company has made about $700,000 in the past 12 months. In this period, it has had a gross loss of more than $7.4 million and a net loss of more than $210 million. Still, because of the total addressable market, it is targeting, the company has achieved a market cap of more than $1.2 billion.
This is because Workhorse has two main things playing in its favor. First, it has the manufacturing capacity since it owns a plant that used to be owned by General Motors. Second, Workhorse has thousands of orders.
This week, the firm announced that Pritchard Auto Company had placed an order of 500 trucks. UPS, the giant delivery firm, has also placed an order of 10,000 trucks. In total, the company has orders worth more than $1.4 billion, which explains its current valuation.
In addition to electric trucks, the firm is also involved in the aerospace industry. It is developing a HorseFly delivery drone that will be used to help delivery companies like UPS and Amazon.
Therefore, while Workhorse seems like an expensive company, in reality, there is a lot going on under the hood. It has its manufacturing plant ready and firm orders from quality companies like UPS.
Aptiv is not an electric car manufacturer. It is not even a startup. Started in 1994, the company has grown to become a leading supplier to auto companies like Ford and General Motors. As the EV industry heats up, the company will continue to benefit because of its strong market share.
Aptiv operates in two main segments. In its signal and power solutions, the company designs, manufactures, and assembles cars. That includes connecters, wiring, hybrid high voltage, and cable management make up their unique electrical architecture. In its advanced safety and user experience, the company provides solutions to improve a vehicle’s safety and comfort.
Over the years, Aptiv, which is valued at more than $28 billion, has seen its revenue and profitability rise. Its revenue rose from $13.8 billion in 2010 to more than $14.3 billion in 2019. Its net income has also increased to more than $1 billion. All this, including its strong balance sheet, makes it a good investment.
Kandi Technologies (KNDI)
Kandi Technologies is a relatively small Chinese electric car and battery manufacturer. The company focuses on the affordable car industry. In the United States, it is receiving pre-orders of its K23 and K27 car brands. K23 is selling for $27,499, while K27 starts at $17,500. These prices are significantly lower than those sold by Tesla and other automakers.
Kandi has a market cap of more than $424 million and annual revenue of more than $135 million. Like all firms its size, it has been making substantial losses in the past few years.
Still, it makes sense to invest in the company because of its low cost of manufacturing and affordable cars. This means that it could take a substantial market share in an industry that most car companies are not targeting.
However, like Nio, the biggest risk for the company is that it is a relatively small firm from China, which makes it difficult to value it.
The electric vehicle industry is seeing strong growth. In the United States, the upcoming Biden administration will possibly turbocharge the industry because of his pledge to decarbonise the industry. The same trend is happening in Europe, where governments have outlined plans to move away from fossil fuels. We, therefore, believe that these firms are ideal candidates to bet on. Also, investing in traditional car companies like General Motors, BMW, and Daimler is a good way of playing the EV industry.