Competition Among Electric Vehicle Stocks Is Heating Up; New Players Joining The Race Almost Every Month
Electric vehicle stocks are once again on fire this week. But this time, it’s led by a pack of EV stocks from China. The Chinese electric vehicle stocks such as Xpeng (XPEV Stock Report) and Li Auto (LI Stock Report) were jolting higher after receiving two “Buy” ratings from Asian investment banks. While many are starting to be cautious amid the high valuation of these top EV stocks, that hasn’t dampened the optimism among analysts.
According to the China Association of Automobile Manufacturers, China auto sales rose 12.8% with 2.57 million vehicles sold in September. In China, sales of electric vehicles are leaving fossil-fuel vehicles in the dust. This came as the automotive market there continues to be recovering from the lows during the peak of the pandemic. Now that investors are cheering the positive sales data from China. The real question here is, can we expect this to continue in the long run? I don’t know about you, but many certainly want this to be true.
EV Stocks Are Charging Higher; Should You Be Getting On Board?
You might be asking yourself, what caused electric vehicle stocks to start revving their motors (silently)? And in an increasingly competitive sector in the making, how should investors evaluate the potential of the EV industry? Glad you asked. Certainly, environmentalism was one big part of the equation for the EV boom we are seeing in the stock market today. We know that EVs produce fewer emissions. They don’t contribute to climate change and smog in the same way as traditional vehicles. But the demand for EVs didn’t come overnight. It’s been over a decade since we saw the original Tesla (TSLA Stock Report) Roadster. Now that EVs have gotten mainstream, it is not surprising to see a wave of initial public offerings to capitalize on the rising demand for both EVs and EV stocks.
It could be extremely profitable if you pick the right EV stock. But with the space getting so hot, many are going public the trendy way, which is via the special purpose acquisition company (SPAC) path. Besides, I would also say it’s risky to invest in an automotive manufacturer that’s never, well, manufactured anything. Nikola (NKLA Stock Report) is a prime example. For this reason, electric vehicle stock enthusiasts should bear in mind that not all of their picks will be winners in this new world of EVs. With all that in mind, would the following three EV stocks be attractive enough for you to include in your watchlist?
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Top EV Stocks To Buy [Or Avoid] This Month: Nio Inc.
Shares of Nio (NIO Stock Report) skyrocketed 22.3% on Wednesday. This came after an upgrade and price hike from JPMorgan’s Nick Lai. He boosted his call on the from “Hold” to “Buy”, and raised his price target to $40 per share. That implies a potential 50% upside from its Wednesday’s closing price of $26.5.
According to Barron’s Al Root, “Lai thinks China’s EV penetration will be four times higher by 2025, meaning that about 20% of all new cars sold in China would be battery powered.” This presents a strong case for companies like Nio, and it also helps that China’s electric vehicle industry is expected to grow at a CAGR of 25% between now and 2025.
Obviously, Tesla has been the favourite when it comes to EV investors. But considering how much it has risen over the years, you may wonder if it is still the best EV stock for long-term gains. And some believe that younger companies like Nio have a larger upside potential. After all, Nio has a home-field advantage in China, the world’s largest EV market. Its vehicles are also much more affordable. At a market cap of less than one-tenth of Tesla’s, is NIO stock a dark horse in the making?
Top EV Stocks To Buy [Or Avoid] This Month: Fisker
The emerging electric vehicle manufacturer, Fisker, will be going through a reverse merger with Spartan Energy Acquisition (SPAQ Stock Report). The merger deal is expected to close on October 28. For investors looking to diversify from the biggest names of the EV, you might want to take a closer look at this one. When it comes to investing in a particular company, two metrics should be particularly scrutinized, that is the potential of the business and the people that are managing it.
The EV maker has enough pedigree going for it. Founder Henrik Fisker has established himself as a luxury automobile designer in his younger days. He was the man behind the Fisker Karma, one of the earliest competitors to the Tesla Model S. After his old company was sold off and renamed, he is back again.
Given his track record of producing many of the luxury automobile world’s most iconic vehicles with Aston Martin and BMW, when Henrik designs a car, the world pays attention. With the Fisker Ocean slated to launch in the fourth quarter of 2022, it appears to me that it is a legitimate rival to Tesla’s Model X and Y in terms of performance, design, and features. Yet the Ocean will be selling for just $37,500, less than half of what consumers are paying for Model X’s $80,000. If Fisker can indeed sell the Ocean at this price, you would expect it to be an instant winner. Now, the car may only launch in 2022. As such, would you be willing to stake on SPAQ stock for this potential game-changer?
Last, on the list, Blink Charging (BLNK Stock Report) is not exactly an EV stock. But it is more of a ‘pick and shovel’ play in the booming EV industry. The company operates an EV-charging network, which is managed through a proprietary cloud-based software system. This system also maintains and tracks all the associated charging data. The company’s stock price has been rebounding strongly since last month after Blink announced that it had acquired BlueLA Carsharing, the contractor for the city of Los Angeles’ electric vehicle car-sharing program.
“Through this acquisition, we believe Los Angeles can serve as a prototype for an EV carsharing and charging infrastructure program that can be replicated in other cities across the country. Our goal is to make EVs accessible by leveraging our network and expertise.”– Michael Farkasstated, CEO of Blink
Since then, Blink announced it had achieved strong sales growth over the summer. The impressive performance during this unprecedented time sent the stock price higher again. Unlike most of the other EV stocks, with Blink, you don’t have to bet on brand names or consumer taste. After all, EV users need charging stations whichever make and model they drive. With that in mind, is BLNK stock the best bet on this secular EV trend?