The opportunity arising from the global automotive transition toward electrification has been called by analysts as being nothing short of revolutionary. Given its implications in terms of clean energy, as well as its potential to remain resilient against inflation, the opportunity presented in electric vehicles is not one that often arises. Top EV stocks are increasingly becoming an investor favorite amongst a wide array of different investment classes. Governments, climate change activists, and even industries have hardly ever been on the same page, as they are about the potential of EVs. Even the notorious fossil fuel industry is coming to terms with the inevitability of electric vehicles and has thus been adjusting its future-looking strategy accordingly. Therefore, in light of this critical transition, we bring yet another list of the five best EV stocks that hold immense opportunity going forward. These could see one’s portfolio soar in the upcoming years.
To start off our list, we begin with the Chinese smart EV manufacturer, XPENG Inc. (NYSE: XPEV). China remains one of the most dynamic and competitive markets for EV companies, and XPENG is emerging as a key player. In the month of July alone, the company delivered over 11,500 vehicles, which translates to an incredible 43% year-on-year growth. Both these figures put XPENG above its regional rivals, NIO and Li Auto. This impressive growth comes despite outbreaks of different Covid-19 variants and subsequent factory shutdowns.
Despite taking the lead in China’s highly dynamic EV space, XPENG has seen its share price plummet by almost 55% since the start of the year. This makes its valuation extremely attractive, given its strong competitive position, and annual revenue of $3.3 billion, in 2021. The company is aggressively focused on dominating the Chinese EV market, even at the cost of its profitability. The company is still in its early pre-profit phase, with its EPS figures standing at -$1.1 and -$0.86 for 2020 and 2021, respectively. Analysts hold a consensus of XPENG turning in a profit by 2024 when its sales are expected to reach close to the $15 billion mark, which will make it one of the best EV stocks.
XPENG presents a phenomenal opportunity for those seeking to make an early move on this key player. Its valuation is extremely attractive, and its growth will skyrocket once it begins delivering positive EPS.
Moving on to the second stock on our list, we present the small EV startup called Arrival (NASDAQ: ARVL). As is the case with any tech startup, Arrival inherently holds a high degree of risk, yet the sheer promise it aims to deliver is phenomenal, and cannot be stressed enough. The startup offers a unique business model which allows it to overcome the barriers to entry in the EV industry. Instead of large multibillion-dollar facilities, Arrival works with fully automated micro-factories that cost close to $50 million each. These facilities use proprietary technologies and robotics to minimize legacy costs. This feature significantly reduces heavy upfront capital investments.
Arrival is far from being all talk and no work, as it has achieved several critical milestones towards the execution of its business strategy. One of its vehicle types, the Arrival electric bus received EU certification in May 2022, giving it a critical green light to move on with its plans. Similarly, its van class vehicle was also certified by the EU, and given the go-ahead for production, which the company expects to start delivering to customers by the end of the year. The delivery company UPS has made a significant amount of pre-orders on Arrival vans, by the end of the year, which would be a crucial catalyst indicating that its unique business model is capable of being executed. The startup is also collaborating with ride-hailing giant, Uber, with its EV car class, which it has stated will begin production by the third quarter of 2023.
Arrival presents a unique, high-reward opportunity that is worth considering for those that can tolerate a certain degree of risk within their portfolio.
The third stock on our list of best EV stocks is BorgWarner Inc. (NYSE: BWA). BorgWarner essentially provides services to combustion, hybrid, as well as electric vehicles across the world. In the face of increasing demand, the company is currently shifting gears to go all in to cater to the EV market, in its attempts to keep up with the global automotive transition. In order to position itself for the surging EV demand, BWA has engaged in a number of deals and acquisitions that boost its standing in the electric space.
Amidst the uncertainties and pessimism surrounding Covid-19, BorgWarner closed a $3.3 billion deal to acquire Delphi technologies, in a strategic bid to strengthen its electronics segment, and better serve the EV market through a cutting-edge and innovative approach. As a result of Delphi’s contributions, as well as organic growth, BWA revenues in 2021 climbed by an annual 46% to $14.8 billion. Similarly, on February 2022, BWA acquired AKASOL AG, the European battery specialist in a deal worth 727 million Euros. The move is set to add crucial EV expertise to BorgWarner, enabling it to perfectly capture the immense EV opportunity that is only set to grow further.
These strings of acquisitions and deals are not by chance and are highly strategic. BorgWarner anticipates the oncoming EV boom and is positioning itself along those lines. The best time to buy the stock is before it begins realizing the gains of this ambitious strategy.
Rivian Automotive Inc.
Number four on our list of best EV stocks, is the large company, Rivian Automotive Inc. (NASDAQ: RIVN). As you may have realized, the global EV market is sprawling with a number of key players, each with unique strengths, so what exactly does Rivian offer, that puts it a cut above its market rivals? The answer is simple. The company can afford to go big in the market. In addition to a robust balance sheet, with almost $15 billion in cash holdings, Rivian holds cutting-edge technologies that enable it to take on EV giants such as Tesla.
Throughout the EV industry, companies tend to subcontract critical production functions to specialist parties. Rivian, however, is playing the long game, and hence is spending heavy amounts on developing both EV hardware and software, as well as cutting-edge manufacturing systems, instead of outsourcing. This move is likely to deliver the company structural cost advantages in the long term, giving it a substantial edge over its rivals. This strategy has already, at this early stage been delivering stellar results to the company. Most notably is the large order by the e-commerce king, Amazon, which has pre-ordered a staggering 100,000 electric delivery vans.
Given this promising strategy, which RIVN is very much capable of affording to execute, it could see itself as leading the global EV industry in the long-term future.
EV Technology Group Ltd.
The last stock on our list is the young company, EV Technology Group Ltd. (OTC: EVTGF). The company is barely a year old and has a market cap of a mere $93 million. The company’s strength lies in one area that most EV players pay little heed to brand equity. One way EVTGF has actualized this commitment is through the acquisition of Moke International, the company responsible for the legendary Mini Moke vehicle which was highly popular in the UK and Australia from the 60s to the 80s. This motorist’s darling is making a comeback in electric form, and EVTGF stands as the biggest beneficiary.
The company’s entire strategy toward financial sustainability is focused on enhancing brand equity. It would also allow the brand to charge a premium on its vehicles, and allow for differentiation against the competition. This move could potentially be a core driver of market share capture over time. Demand for EV cars is far from slowing down, and will only surge with time. With this in mind, brand equity and differentiation could be the crucial difference between success and failure. Therefore, this approach is not one to take lightly and could be heavily beneficial to the company in the long term. At present, its balance sheet reports a total cash holding of $1.2 million, which is sufficient to see it push through the upcoming quarters and make it a worth enough EV stock to invest.
The electric vehicle market is at the forefront of the global transition towards energy self-sufficiency programs and decarbonization. For this reason, the market has been quick to restructure itself along these lines, with demand for these stocks seeing a spectacular rise. As electric vehicles continue to become more efficient and less costly, their market growth potential surges. This class of stock offers unparalleled growth opportunities, which would enable investors’ portfolios to fly high in the short to long-term future.