Should Investors Buy Electric Vehicle Stocks Amid Recent Weaknesses?

Investors are always on the lookout for the next big thing, and electric vehicle stocks happen to be one of them. Of course, the poster child of the EV industry is none other than Tesla (NASDAQ: TSLA). Tesla stock appears to be rebounding on recent optimistic notes from analysts. Meanwhile, pick-and-shovel plays like Blink Charging (NASDAQ: BLNK) are among the best growth stocks in the stock market. Therefore, all eyes are on this red-hot industry. 

After all, there’s a lot of good news for the sector as of late. President Joe Biden’s infrastructure plan includes heavy funding for EV charging infrastructure. Let’s not forget that myriad state and local governments also have their own plans for increasing EV adoption. These are huge tailwinds for the sector to pick up in the foreseeable future. 

Of course, when it comes to top electric vehicle stocks to buy, Tesla has been the go-to choice for most investors. But the truth is, Tesla will hardly be alone in benefiting from the electrification of vehicles. Anyone betting on the mass adoption of EVs in the coming decade should be optimistic about what these EV companies could bring to the table. But that doesn’t mean that you should just invest in any EV stocks. Like in any sector, investors should be selective about which electric vehicle stocks to buy today. If you don’t know where to start, perhaps you can look at companies with great underlying technology and have the capability to mass-produce when they receive big orders.

Top Electric Vehicle Stocks To Watch 

Xpeng Motors

First up the list, Xpeng’s stock has been trending of late. If you are keen on investing in the future of autonomous driving technology, and particularly lidar, XPEV stock is possibly one of your best bets in the stock market today. The company premiered its P5 smart EV at a press briefing in Guangzhou, China today. This marks Xpeng’s third production model. The P5 will be the first model to feature lidar sensors to enhance its advanced driver-assist system.

XPEV Stock
Source: TD Ameritrade TOS

Although Xpeng already offers some self-driving features, the new lidar feature is worth the mention. For the uninitiated, lidar systems use laser beams to form a 3D image of the surveyed surroundings. That makes a real-time map of the environment. You don’t need to be an expert to appreciate the game-changing potential with Xpeng. The company has also been delivering strong sales. 

From its first-quarter numbers, Xpeng delivered a record-breaking 13,340 Smart EVs. This represented a 487% growth year over year. That demonstrates Xpeng’s robust growth momentum despite the seasonal industry-wide slowdown in car sales. Considering XPEV stock has shed half of its value from its all-time high of $74.49, will the recent development pique your interest?

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Nio Inc.

Next up, Nio is an electric vehicle maker that has seen huge success both in China and the stock market. The company is arguably one of the most successful EV companies in terms of growth today. Similar to Xpeng, Nio has something to showcase to its potential customers and investors this week. The ‘Tesla of China’ is poised to reveal its long-anticipated tie-up with Sinopec (NYSE: SNP) to place battery swap stations at Sinopec’s gas stations. NIO stock has been in the limelight as a result.

electric vehicle stocks (NIO stock)
Source: TD Ameritrade TOS

Unless charging takes the same time as filling up gas, battery swaps will continue to have an edge overcharging in the near term. After all, no one likes sitting down for half an hour just to wait for their EV to charge. For this reason, Nio could be seen as a strong contender in the EV market. Supporting this narrative is investment bank Goldman Sachs (NYSE: GS) which highlighted Nio’s Battery-as-a-Service (BaaS) as a factor in upgrading its position on NIO stock to “hold” from “sell”.

From its quarterly update, Nio delivered 20,060 vehicles in the first quarter. That’s ahead of the roughly 19,500 it had forecasted. Should the momentum persist, coupled with the bullish sentiments from its BaaS service, it seems like investors won’t have to wait long before NIO stock picks up pace again.

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Fisker Inc.

Henrik Fisker is a name to be reckoned with in the automotive design space. But his electric vehicle start-up dreams haven’t been a smooth sailing one. The California-based company is focused on what the designer does best: creating beautiful cars. That said, the company is leaving the manufacturing and maintenance work to its partners including Magna International (NYSE: MGNA) and Apple’s (NASDAQ: AAPL) contractor Foxconn to build its vehicles.

top electric vehicle stocks (FSR stock)
Source: TD Ameritrade TOS

Fisker knew that manufacturing vehicles is no easy feat, as Tesla had some challenges in scaling its operations. Delegating some of its major work does come with risks, but take a look at it from another viewpoint. The asset-light model allows the company to focus on what it does best.

The company has yet to start any production, which makes it an even more risky bet. No one can say for sure if FSR stock will experience the sort of run other top EV stocks have had. However, with a string of partnerships and focusing on the affluent market, Fisker could prove its skeptics wrong once the Ocean debuts. Sure, it may take time for this electrification play to truly pay off. Should Fisker execute its asset-light model strategy well, it could bring in strong returns without substantial investment in plants and supply chains. With that in mind, would you consider buying FSR stock?

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ChargePoint Holdings

Last on the list, ChargePoint is a “pick-and-shovel” play of the space. It operates one of the largest networks of EV charging stations. Since its completion of the merger with Switchback Energy Acquisition, CHPT stock has been under pressure. Recall that CHPT stock hit a high of $46.30 in mid-January. But since then, it has shed nearly half of its value. The company’s stock price movement has been volatile, to say the least. 

best electric vehicle stocks (CHPT stock)
Source: TD Ameritrade TOS

Now, ChargePoint says it has more than 70% market share in the North American Level 2 charging network. Almost 90 million charging sessions have been delivered with drivers plugging into the network approximately every two seconds. It is the largest player in the EV charging space. With Biden’s plan, investors are adding CHPT stock to their portfolios as public and private investment combinations grow in the sector. 

CHPT stock may have received a shot in the arm since late March amid Biden’s infrastructure plan. Unfortunately, it has given back most of those gains this week. With the White House reiterating its plan to build more than 500,000 EV chargers over the next decade, would buying CHPT stock on dips be a great idea?

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