Electric vehicle inventories have risen in recent years as more people turn away from gas-guzzling vehicles to save money and protect the environment. However, this sector has been beaten this year as the downtrend grips the markets. As a result, investors may struggle to decipher which companies present the best electric vehicle stocks to buy in this environment.
Between China’s zero Covid policy, rising interest rates and supply chain issues, EV buyers have had little time to rejoice. The result is that top companies in this industry are now trading at deep discounts. As a result, several quality players now look attractive to the value investor looking to add some gems to their portfolio.
When it comes to the top EV stocks to buy, there are a few things to consider before investing. Above all, it is important to analyze the financial stability and recent performance of a given company. This gives a good idea of how the stock is likely to behave in the future. Next, it is important to assess the company’s electric vehicle production plans. Does the company invest in new technologies? Do they plan to increase production in the coming years? Finally, the overall EV market provides unique catalysts and headwinds. Are sales increasing or slowing down?
Undoubtedly, it is not easy to decide which stocks are the best stocks to buy, when so many factors exist. It depends on the objectives, risk tolerance and investment schedule.
When creating this list of the best electric vehicle stocks to buy, I focused on three companies with strong fundamentals that have lost at least 25% of their value this year.
| NIO | Nio | $17.73 |
| F | Ford | $11.99 |
| SHORE | Rivian | $33.79 |
Nio (NIO)
Source: Michael Vi / Shutterstock.com
For those looking for electric vehicle stocks to buy, there are few options as attractive as Nio (NYSE:NIO). The company has a very good relationship with the Chinese government and is looking for another big European opportunity.
The Chinese electric car startup will hold its European launch event in Berlin on October 7. This is the company’s attempt to explore new opportunities in Europe. Nio is studying the possibility of opening battery exchange stations in five European countries to develop their car sales. These countries include Germany, Holland, Sweden and Denmark.
To compete with gasoline-powered cars, Nio is offering an integrated EV that will be more affordable for European buyers. The company plans to remove the battery as the most expensive component and separate it from ownership, which should help reduce upfront costs. Nio is also looking to partner with a European asset management company to give its consumers on the continent easier access to finance for leasing.
Nevertheless, despite these positive developments, Nio is down sharply this year. Part of the reason is increased business losses.
Nio reported revenue growth in the second quarter, up 22% year-on-year, while its net loss quadrupled to around $409.8 million. China’s strict ‘zero-Covid’ policies lead to supply chain issues. Nio also fell victim to this policy, resulting in “cost volatilities” that affected the bottom line.
That said, Nio has the ability to weather these issues and come out stronger than ever. The company’s close relationship with the local government of Hefei, in central China’s Anhui province, ensures long-term stability for this China-based manufacturer. Nio is unique, which is why it’s one of the best electric vehicle stocks.
Ford (F)
Source: Ford
Ford (NYSE:F) fell the most since 2011 after the company recently released its preliminary results. According to the company, the iconic American automaker will post adjusted earnings of $1.4 billion to $1.7 billion. The reduced range is expected to be the result of supply chain issues that could increase the company’s costs by around $1 billion. For investors interested in learning more about the matter, the company will release its results on October 6.
Like many other companies, Ford faces challenges in today’s economy. In the short and medium term, the company’s outlook remains tense. However, Ford has turned to growing the electric vehicle segment as a way to stem this macro bear tide. Ford will invest $50 billion in electric vehicles by 2026, with 40% of its sales being electric by the end of the decade. I think it’s a smart move that will position Ford well for the future.
Just recently, Ford announced that the company opened an all-new assembly line plant, the first in 53 years. The electric vehicle manufacturing plant will cost the company $5.6 billion. However, this facility will provide Ford and Lincoln models with the batteries to use. Additionally, Kentucky will be the site of two new plants to be completed at a later date.
Over time, Ford will need to continue to expand its product lineup to remain competitive. The latest Ford factories will provide a big boost in this regard. The new factories will allow Ford to produce electric vehicles more efficiently and at lower cost. With just three EV models in its portfolio, Ford still has a long way to go to achieve its EV ambitions. That said, investors should reap the rewards of this journey.
Rivian Automotive (RIVN)
Source: Miro Vrlik Photography / Shutterstock.com
Rivian (NASDAQ:SHORE) is an American automotive and energy company founded in 2009. It is known for its electric vehicles and has developed a technology platform for battery electric vehicles. Rivian has received investments from Amazon (NASDAQ:AMZN), among other companies. The company is working in particular with Amazon to develop a new generation of electric delivery vehicles.
Rivian plans to produce several hundred thousand vehicles a year at its Normal, Illinois plant. In addition, the company has partnered with Mercedes Benz (OTCMKTS:MBGYY) to establish a plant near one of Mercedes-Benz’s existing plants in Europe.
Rivian’s lineup includes the R1T Pickup Truck, R1S SUV and R1T Adventure Vehicle. Rivian is also working on various new technologies, including autonomous driving and connected car services.
So far, 98,000 US and Canadian customers have pre-ordered Rivian R1s. By all accounts, Rivian has a great product that the masses are eager to get their hands on. The company also has a significant amount of cash on its books, with $15.5 billion in cash and cash equivalents as of June 30. This is expected to last Rivian until 2025, when the company completes its second manufacturing facility. That’s more than enough legroom to navigate murky waters, making it one of the best electric vehicle stocks to buy.
At the date of publication, Faizan Farooque did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.
