Electric vehicle stocks are all the rage in 2020. Hey, it's true! If you've paid any attention to the financial markets over the past year, you'll already know that the electric vehicle sector is probably one of the most talked about industries amongst investor circles.
It all starts with the industry leader in Tesla (NASDAQ:TSLA). They've not only transformed the automotive industry, but have revolutionized how we think about renewable energy resources.
Electric Vehicle Sector
- The shift in the global focus on clean energy and electric vehicles has never been stronger. With nearly every automaker in the world joining in, investors need to begin to think about how they can capitalize on this. People who previously invested in the automotive industry, may not recognize some of the newer brands that make up the new electric vehicle landscape.
Many of these are startups, and a savvy investor will be able to spot the potholes like Nikola stock (NASDAQ:NKLA) or the fast lane investments like Nio (NYSE:NIO) on the long road to a successful investment.
So where can we look as investors for value? That depends on your style of investing. Are you a long-term investor or a short-term trader?
Finding the companies you believe in long-term is an excellent way to grow your portfolio over time. Everyone's looking for the next Tesla.
But what if there is only ever one Tesla? Sometimes it's not always the maker of the product that's the best investment.
But other factors like the resources needed or the maintenance after the car is on the road. Let’s take a look at some of the obvious and not so obvious ways we can invest in this red-hot market.
1. Electric Vehicle Automakers
Tesla (NASDAQ:TSLA) is one of, if not the hottest stock of the year. In fact, everyone and their dog was buying up Tesla as much as they could.
There's a reason the stock is up over 330% this year and is currently down by about 20% from its 52-week highs. Tesla even split its stock 5:1 back in August. The stock price had skyrocketed too high too fast.
Tesla is the clear industry leader at this time and has the advantage of being the very aggressive first mover with literal first wheels on the roads.
Tesla is not just a car maker anymore. It's a legitimate way of life for some people and has become a brand that people identify a certain status level with.
Tesla fanboys follow Elon Musk like he's a celebrity. And sure they get mocked for it, but nobody can argue about the quality of a Tesla car.
2. $TSLA is More Than Meets The Eye
And Tesla is so much more than cars too. It's positioning itself as a disruptor in the energy sector with its solar panels and rechargeable battery technology.
A Biden administration can only come as a good thing for Tesla in the long run. The Democrats are already pledging $2.2 trillion in funding to shift America’s focus to clean and renewable energy sources.
Is the stock overvalued? If you think a price to earnings ratio of 817 is overvalued, then yes it definitely is. But Tesla is the brand that the world associates with electric vehicles.
And while much of the speculation for the future may be baked into the stock price, Tesla should only grow as a company from here. Checkout our recent tesla stock analysis.
3. Best Electric Vehicle Stocks To Buy: $NIO
NIO (NYSE:NIO) is perhaps the company that most investors believe has a shot to be the next Tesla. Or China’s answer to Tesla.
They're positioned to take a huge market share of the largest automobile market in the world. Why does Nio have an edge over Tesla in China?
Government subsidies on buying domestically produced electric vehicles have caused a shift in demand towards China-based ev makers.
So much so that Tesla has recently lowered its prices of the Model 3 and Model S in China. Why else? Because the Chinese Government itself invested in Nio.
In fact, they're one of its earliest stakeholders. The Chinese conglomerate Tencent also owns 15% of Nio. So you're starting to get the picture as to why Nio is set up for success.
Nio also has some unique technology that sets it apart from its competitors as well. Its battery swap is great for drivers on the go who don't want to sit around and wait for their car to charge.
The recurring revenue from this subscription service creates a nice razor and blade model for Nio to capitalize on. Nio is also building drive-in charging stations where drivers can just wait in their cars without having to even get out.
Finally, in January of 2021, Nio is holding its NIO day. Perhaps an homage or perhaps a jab at Tesla’s annual Battery Day event. Nio is expected to unveil a new premium sedan.
It'll be called the ET7. Which should act as a direct competitor to Tesla’s Model S. Next year also marks Nio’s plans to expand into Europe.
It's expected they'll meet resistance from automakers like Volkswagen. Still, Nio has the funding and political strength behind it to be a consistent force in the global electric vehicle market for years to come.
4. Some EV Stocks You May Not Have Heard Of:
Hyliion (NYSE:HYLN): You may know this under its SPAC IPO ticker symbol of SHLL. They merged with Tortoise Acquisition company in October to trade on the public markets.
Hyliion is in the electric truck game. An industry that should see booming growth over the next few years with big names like Tesla and Volvo getting into the market.
Things are looking up as California and New York have made strong moves towards electric vehicles. In fact, they're providing rebates for companies who buy clean energy trucks.
Is the stock a must-buy? Not exactly. But the opportunity for growth in an industry that in its infancy is mighty tempting.
Fisker Inc. (NYSE:FSR): A very new company to the public markets, Fisker is another electric vehicle maker with a twist. Fisker vehicles, like the luxury SUV called the Ocean, are actually being produced by another company.
This seriously cuts down on the costs of Fisker needing to build production factories. And some analysts are expecting Fisker to be free cash flow positive by 2024.
Workhorse Group Inc (NASDAQ:WKHS): A serious contender for the last-mile delivery sector, Workhorse Group builds delivery trucks that are used by UPS and Ryder.
Workhorse is hopeful of obtaining the contract for USPS’ new delivery fleet as well. This would seriously boost its market share.
Workhorse is also in talks with the FAA to get their Horsefly delivery drone involved in the last-mile delivery business. Workhorse also owns 10% of the newly public company Lordstown Motors.
Electric Vehicle Penny Stocks List
1. What About The Charging Station Stocks?
ChargePoint (NASDAQ:SBE): This is actually still trading under its SPAC name of Switchback Energy Acquisition. However, ChargePoint and SBE should merge soon.
ChargePoint will have up to 165,000 charging stations globally across 14 different countries by the end of 2020. They're hoping to have up to 2.5 million by 2025.
As long as you believe that the electric vehicle market will keep growing, you have to believe that charging stations will too. It's worth a small position at its low SPAC price before it begins trading as ChargePoint on the public markets.
Blink Charging Co. (NASDAQ:BLNK): Another play on charging stations, Blink already has 23,000 around the United States. It's growing every year.
Blink uses cloud software that helps to operate, maintain, and keep track of its charging stations around the country. This is another bargain stock that could explode over the next few years.
Conservative estimates of the number of electric vehicles are set to rise to 10 million vehicles globally by 2025.
2. What About The Chips That Power Electric Vehicle Stocks?
Advanced Micro Devices (NASDAQ:AMD): Earlier this week it was revealed that Tesla may be switching over to the new AMD Navi 23 chip.
This boasts more power and efficiency than the Intel (NASDAQ:INTL) and NVIDIA (NASDAQ:NVDA) chips that they previously used. If self-driving cars and autonomous driving are the future, then these on-board computers are going to get even more powerful.
Taiwan Semiconductor Manufacturing Company (NYSE:TSM): Tesla took its self-driving chip manufacturing in-house. They're working on producing its HW 4.0 self-driving chip with the help of TSMC for use in Q4 2021.
TSMC is already a global force that provides semiconductors to major companies like Apple (NASDAQ:AAPL), NVIDIA (NASDAQ:NVDA), and Qualcomm (NASDAQ:QCOM).
3. Electric Battery Stocks To Watch:
The Nickel Mining Industry: At its most recent Battery Day event, Tesla reiterated the fact that it was focusing on cleaner and more environmentally friendly ways to mine nickel. As well as moving away from using cobalt in its batteries.
Some analysts worry about the sustainability of a nickel metal supply chain as the need for stronger batteries in electric vehicles increases. Currently, North America provides about 5% of the global nickel supply.
Which is taken from various mines from all over Canada and the United States. One of the biggest areas of nickel exploration is in Indonesia. Therefore, an investment in any of the nickel miners in North America may be short-sighted.
4. What About EV Stocks That Deal in Hydrogen?
Bloom Energy (NYSE:BE): This Silicon Valley based company is one of the leaders in hydrogen fuel cell technology. And produces solid oxide fuel cell generators which they call Bloom Energy Servers. Bloom sells power from these servers and has also been providing hydrogen fuel cells to global companies such as Korea’s SK Group.
Plug Power (NASDAQ:PLUG): A hydrogen fuel cell company with a different clientele; forklifts. This company already has contracts with global heavyweights like Amazon (NASDAQ:AMZN) and WalMart (NYSE:WMT). Analysts estimate the company to be profitable by the year 2023. Another fairly cheap stock valuation makes this an enticing investments for the long-term.
One thing is for certain, electric vehicle stocks are here to stay. Currently estimates say there are about 1.5 million EV's on US roads back in January 2020.
New reports believe this number should grow to 2 million by 2021. If you're a long term investor, pick good stocks based on the fundamentals and a nice trend that's your friend.
If you're a trader, it's simple, buy at support. Sell at resistance. Rinse and repeat. If you need more training, check out the Bullish Bears online trading courses today.