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Electric vehicle (EV) stocks to watch and how to invest
We examine why EV stocks are becoming increasingly popular and take a closer look at six stocks to watch.
From Tesla and Nio to a host of other companies, EV stocks have generated plenty of headlines in recent months.
But why are electric cars such big news at the moment and which EV stocks are attracting investor attention? To find out, let’s take a closer look at what the future may hold for the EV industry and cast an eye over six of the best EV stocks to watch.
What's in this guide?
Why are electric vehicle stocks popular right now?
There are a few important reasons why EV stocks are gaining plenty of attention from investors around the world at the moment.
The first is thanks to Joe Biden’s victory in the recent US election. Investors are hoping that Biden’s “Build Back Better” plan, which includes plans to increase the electric vehicle charging infrastructure in the USA and a focus on clean energy, will provide a welcome boost for EV manufacturers.
And the US isn’t the only country with such plans, with the Chinese Government aiming for new energy vehicles to account for 25% of new car sales by 2025.
Next, Biden’s win comes against a backdrop of rising awareness of climate change and the impact of fossil fuels on the environment. As consumer attitudes in New Zealand and around the globe gradually shift towards environmentally friendly alternatives, people are starting to look for ways to lower emissions and reduce their carbon footprint. Switching from a petrol or diesel car to an electric vehicle is a simple way to do exactly that.
The third factor is the growth potential of the EV industry. According to the International Energy Agency’s annual Global EV Outlook report for 2020, more than 2.1 million electric cars were sold globally in 2019, a 6% increase on the record sales of 2018. But with electric cars accounting for just 2.6% of global car sales and about 1% of global car stock in 2019, investors are hoping that a continued increase in market share will spell good news for EV stocks.
Top electric vehicle stocks to watch right now
1. Tesla (TSLA)
There’s no better place to start than with the best-known name in the EV game, Tesla. Based in Palo Alto, California, this EV manufacturer was founded in 2003 by a couple of engineers. One of its earliest employees was Elon Musk, who is now the company’s CEO and also the founder of aerospace company SpaceX.
Tesla has been one of the driving forces behind the growth of electric cars, and boasts an 18% market share of the global electric car market. It’s also one of the most visible of all EV brands — there’s a good chance you’ve seen one or more Teslas on the road at some point.
Tesla’s range of electric vehicles includes four models — Model S , Model 3, Model X and Model Y — plus a Cybertruck scheduled to enter production in late 2021. However, it does look set to face increasing competition from other manufacturers in the coming years.
How is Tesla performing?
2. Nio (NIO)
A Chinese EV manufacturer based in Shanghai, Nio is often listed as one of Tesla’s main rivals. Founded in 2014 by entrepreneur William Li, it’s one of several Chinese startups with plans to steal some of Tesla’s market share in the coming years.
Nio’s range of premium electric vehicles includes the EC6 and ES6 mid-size SUVs, and the flagship ES8. The company also competes in the Formula E racing series, and its models slated for future production include a sedan, a minivan and another SUV.
This Chinese manufacturer has generated plenty of headlines in 2020, much of them to do with the fact that it secured US$1 billion of government funding in April.
How is Nio performing?
3. Hyliion (HYLN)
Hyliion Holdings Corp is a Texas-based startup that, according to its promotional material, is focused on developing electrified powertrain solutions for the commercial transportation market. In other words, it’s an electric truck company.
Founded in 2015 by entrepreneur Thomas Healy, Hyliion gets its name from “Hybrid-Lithium-Ion”. It went public earlier in 2020 after merging with a special purpose acquisition company, and has made headlines for its fluctuating share price throughout the year.
Hyliion already sells a hybrid drive train that can be fitted to existing trucks, while its Hypertruck ERX uses a generator fuelled by natural gas to charge the batteries for its electric motor.
How is Hyliion performing?
4. Workhorse Group (WKHS)
Next on our list of EV stocks to watch is Workhorse Group, another US startup focused on commercial electric vehicles. Based in Cincinnati, Ohio, and established in 2007, the company started out electrifying two-seat roadsters.
These days, its focus is on electric delivery vehicles, with its fully electric C-Series vans powered by a modular battery pack system. It also offers a proprietary fleet tracking system and a delivery drone, the HorseFly, which is designed to work in tandem with its delivery vans.
Workhorse also has a stake in Lordstown Motors Corporation, which manufactures electric pickup trucks.
How is Workhorse performing?
5. Fisker (FSR)
US company Fisker can trace its roots back to the noughties and once produced a hybrid electric vehicle known as the Karma. Fisker Automotive eventually went bankrupt, was acquired by China’s Wanxiang Group and renamed Karma Automotive, but original founder Henrik Fisker launched a new company, Fisker Inc., in 2016.
Based in California, Fisker Inc. is planning to start production on its Ocean electric SUV in 2021. The Ocean is expected to have a range of over 400km and be priced at US$37,499.
How is Fisker performing?
6. Kandi Technologies Group (KNDI)
Kandi Technologies Group is a Chinese manufacturer of batteries and electric vehicles. Headquartered in Jinhua in eastern China, the company also has a US subsidiary based in Garland, Texas.
Kandi’s first two models are the K23 and the compact K27, and both are priced at the more affordable end of the EV spectrum. At the time of writing, it had also recently been announced that both models would qualify for a US$2,500 rebate for Texas buyers of cars powered by renewable energy.
How is Kandi performing?
Other electric vehicle stocks to consider
- Niu Technologies – electric scooter company
- Arcimoto Inc – electric recreational vehicles company
- Blink Charging – EV changing station company
- General Motors – US multinational car company
Investing in electric vehicle ETFs
An alternative way to gain exposure to the EV industry is to invest in an exchange-traded fund. ETFs can be traded on stock exchanges in the same way you buy and sell shares, and they’re essentially investment funds that consist of a basket of shares.
The advantage of ETFs is that they allow you to invest in a particular sector without putting all your eggs in one basket and backing a single company to succeed. So by investing in an ETF that focuses on the EV market or associated technologies, you can gain exposure to multiple companies that could potentially benefit from rising sales of electric cars.
One example of an EV ETF is the ETFS Battery Tech & Lithium ETF (ACDC), which focuses on energy storage and production companies.
Are electric vehicle stocks a good investment?
That’s the big question — and given the rising popularity of EV stocks, it seems that plenty of investors are gambling that the answer will be yes.
As things stand, it certainly appears that the EV industry is a sector with plenty of growth potential. However, whether the uptake of electric vehicles occurs as quickly as some people are predicting remains to be seen.
The world of electric vehicles is also an increasingly competitive space, so working out which companies are best placed to take advantage of future growth will be difficult. Throw in a dash of uncertainty about exactly how the Biden White House’s economic policies will impact EV manufacturers and there are plenty of factors to consider.
And as always, just like any other investment, buying EV stocks comes with a level of risk attached. It’s up to you to research the EV industry and individual stocks before deciding whether they’re worthy of any of your investment dollars.
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