The auto industry is rapidly moving towards an electrified future, and while Tesla has been at the forefront, other players are emerging and competing for a share of the electric vehicle (EV) market. In this blog, we go beyond Tesla to explore the top EV stocks worth your attention. From established automakers to nimble startups, we'll uncover the rising stars and industry giants shaping the future of transportation. Join us on this electrifying journey as we discover the next wave of electric vehicle stocks to watch out for.
Overview of the EV market
In the transition to electric vehicles, passenger vehicles have taken the lead in the auto industry. According to Cox Automotive, EV sales in the first quarter of 2023 increased by 45% compared to the previous year, with 259,000 cars and trucks sold. Tesla continues to dominate as the largest seller, but other major manufacturers like General Motors, Ford Motor, Hyundai, and Volkswagen have also introduced multiple electric models. Goldman Sachs projects that electric vehicles will make up around 50% of global new car sales by 2035. Although Tesla has been the clear leader, it is now facing increased competition from both EV startups and traditional automakers. Tesla's market share in the United States has declined from 72% in January 2022 to around 54% currently, and its global market share for EVs is approximately 21%
Tesla's Main Competitors
Nio (NIO):
Nio, a Chinese EV manufacturer, has faced challenges due to weakness in Chinese stocks listed in the U.S. and regulatory actions by Chinese and U.S. authorities. However, NIO reported a positive development with a 31% year-over-year increase in vehicle deliveries in April. Analysts recognize NIO's strong position in the premium smart EV market in China. Bank of America has expressed confidence in NIO's prospects, giving it a "buy" rating with a price target of $12. As of May 16, NIO stock closed at $8.27.
Li Auto (LI):
Li Auto, another prominent Chinese EV manufacturer, made a significant impact by introducing extended-range EVs. In April, Li Auto achieved a 516% year-over-year increase in vehicle deliveries. Analysts acknowledge Li Auto's robust lineup of models and its goal of achieving a gross profit margin exceeding 20% by 2023. Bank of America has given Li Auto a "buy" rating with a price target of $34. As of May 8, LI stock closed at $24.75.
Rivian Automotive (RIVN):
Rivian Automotive, a startup focused on EVs, successfully went public in November 2021. The company reaffirmed its production guidance for 2023, aiming to manufacture 50,000 vehicles. Analysts view Rivian as one of the most promising EV automaker startups, emphasizing its direct-to-consumer sales model. Bank of America has given Rivian a "buy" rating with a price target of $40. As of May 8, RIVN stock closed at $13.87.
General Motors (GM):
General Motors aims to surpass Tesla and become the leading EV seller in the United States by the mid-2020s. The company has announced a substantial $35 billion investment plan for EV initiatives through 2025. GM's core business is performing well, and it trades at a modest 5.2 times forward earnings. Analysts have given GM a "buy" rating with a price target of $70. As of May 8, GM stock closed at $33.66.
Toyota Motor (TM):
Toyota plans to introduce 10 new EV models and achieve an annual sales target of 1.5 million EVs by 2026. Analysts anticipate that Toyota investors may need to exercise patience for around two more years before witnessing substantial growth in battery EV sales. However, the stock is appealing due to its current valuation, with a modest 8.6 times forward earnings multiple. Bank of America has assigned Toyota a "buy" rating with a price target of $170.51.
Ford Motor (F):
Ford aims to invest $50 billion in the development of EV models until 2026 and achieve an annual production volume of 2 million EVs by that time. In 2022, Ford experienced notable success in the EV market, ranking second only to Tesla in sales. Analysts note that Ford is leveraging its established legacy businesses to fund its EV initiatives. Bank of America has given Ford a "buy" rating with a price target of $21. As of May 8, F stock closed at $12.02.
Ferrari (RACE):
Ferrari, known for its high-performance vehicles and Formula One heritage, has announced a substantial investment of $4.6 billion in developing full EV models. The company aims for 5% of its sales to come from EVs by 2026 and envisions 80% of its vehicle lineup to be purely electric or hybrid models by 2030. Analysts express optimism about Ferrari's upcoming models, including the Daytona SP3 and the Purosangue SUV. Bank of America maintains a "buy" rating for Ferrari with a price target of $300.
Tesla's Competitive Advantage:
While Tesla remains a dominant force in the overall luxury car market, its share of the EV market has experienced a decline as more manufacturers enter or strengthen their presence. According to Cox Automotive, Tesla was the best-selling luxury brand in the United States, surpassing established names such as Audi, BMW, Cadillac, Lexus, and Mercedes-Benz. However, Tesla's market share in new EV sales decreased to approximately 65% in 2022 from around 72% in 2021. Tesla achieved a record number of vehicle deliveries in 2022, with approximately 405,300 vehicles delivered in the fourth quarter.
Bottom Line
As the EV market expands, Tesla faces increased competition from both established automakers and EV startups. Nio, Li Auto, Rivian Automotive, General Motors, Toyota Motor, Ford Motor, and Ferrari are among the top EV stocks to watch out for. Each company has its unique strengths and growth potential in the evolving EV landscape. Investors should closely monitor these players as they shape the future of electric vehicles.
