A surge in EV stocks may continue long-term, with new companies becoming the next big winners
The EV sector remains promising, despite clear headwinds that have formed. Higher interest rates have pressured demand for higher-priced electric vehicles (EVs).
And with more competition coming onto the market, we see better prices and more options for EV buyers to choose. And this is great for car buyers, but not so much for the EV stocks most investors care most about. We’ve seen Tesla (NASDAQ:TSLA) become the worst-performing stock in the S&P 500 for periods of time due to these headwinds.
The thing is, the EV market is a global one. There are plenty of other EV stocks outside of Tesla in which to choose. For U.S. investors, that’s a great point.
Since January 1st, the U.S. government has refunded over $580 million to auto dealers in upfront point-of-sale EV tax credit payments. Previously, buyers could only claim the EV credit when filing taxes the following year. Over 100,000 time-of-sale EV reports were received, with most requests for the full $7,500 credit.
Conflicting views on EV sales persist, with recent dips countered by forecasts of sustained growth. Optimism emerges from recent delivery numbers of select EV companies, indicating renewed consumer interest in certain brands. Despite varied performance, the U.S. EV market share has risen to 7.6%, reflecting increasing demand.
For those looking to invest in some top EV stocks for the long-term, here are three I’d put on my list right now.
Li Auto (LI)
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Li Auto (NASDAQ:LI) is among the top EV makers that’s seeing impressive growth, bucking the larger trend we’re seeing among certain EV stocks in this market. The company’s deliveries for Li Auto’s first quarter came in at 80,400 units, up 52.9% year-over-year (YOY) but down quarterly. Some of that decline can be tied to Chinese New Year production issues, so most in the market have brushed that off.
Before its official launch, the Li Auto L6 EREV crossover details and pricing surfaced in China, showing two trim levels priced between 259,800 and 289,800 yuan (approximately $35,900 – $40,100 USD). Li Auto, a 9-year-old Chinese brand with a strong market presence, aims to continue expanding its lineup with the L6 SUV, applying for sales licenses and appearing in China. While Li Auto officials dismissed leaked specifications as fake, many influencers and experts consider them credible. This is a well-priced vehicle with some decent specs. And I wouldn’t be surprised to see Li Auto take serious market share away from Tesla in China.
The Chinese EV market continues to be pivotal to most global EV brands. As an established China-based EV maker, LI has a head start on its competition. Thus, it should remain a top option for Chinese EV buyers moving forward.
Byd Co. (BYDDF)
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Another top Chinese EV maker, and the largest EV maker in the world, Byd Co. (OTCMKTS:BYDDF) deserves a spot on any list discussing top EV stocks to buy. The company has significantly boosted its global presence by exporting 99,000 new energy vehicles in Q1, a 130% surge from the previous year. This surpasses Tesla’s China plant, which exported 88,000 vehicles during the same period.
BYDDF has expanded globally as the world’s second-largest battery maker. Predominantly selling in China, the company sold 3 million cars in 2023. Despite quarterly fluctuations, the company’s EV sales rebounded in March after post-price cuts and technological advancements.
In a recent update on its WeChat account, BYDDF announced that the capacity of its MC Cube-T has been increased to 6.432 MWh, promising to redefine energy storage value. The product utilizes BYDDF’s latest high-capacity, long-blade batteries, boasting up to 11% higher individual cell energy and up to 35.8% higher system energy. Additionally, the MC Cube-T boasts a compact design, reducing the typical unit’s footprint by up to 24.7%.
Lithium Americas (LAC)
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This year is starting to become better for Lithium Americas (NYSE:LAC). The company is seeling some improvement over the past few weeks. Initially, optimism for a broader economic rebound drove expectations of rate cuts, benefitting the EV sector. Despite a decline through early February, LAC shares surged following news of a $2.26 billion federal loan. This funding will facilitate production at the Thacker Pass site, reducing reliance on Chinese lithium reserves and potentially increasing LAC’s value.
Lithium Americas’ U.S.-listed shares surged 4.5% to $5.99, peaking over 20% intraday. Construction at the Nevada site began in March 2023 after a legal victory. Pending the loan’s closure, expected this year after reviews, the company aims to commence three-year major construction. The initial phase targets 40,000 metric tons of lithium carbonate yearly, sufficient for 800,000 EVs.
Moreover, with GM’s $650 million investment, the loan will fund the initial phase. Investors recognize the potential for a lithium price rebound with the growth of the EV industry. Lithium Americas, set to start production, remains a promising option for investors looking for lithium exposure, given the company’s recently secured funding.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
