Top Five Electric Vehicle Stocks to Invest in 2024 and Beyond

The electric vehicle market continues to surge as global demand for cleaner energy and sustainable transport grows. With governments pushing for stricter environmental regulations and consumer preferences shifting toward eco-friendly options, the electric vehicle industry is poised for significant growth. This article will compare leading electric vehicle companies, analyzing their market performance, growth potential, and what makes each stock attractive.

Why Invest in Electric Vehicles Now?

Before diving into individual stocks, it’s crucial to understand the market dynamics driving the EV sector. Global EV sales have been on an upward trajectory, supported by governmental incentives, advances in battery technology, and growing charging infrastructure. Companies such as Tesla, NIO, Rivian, and Lucid Motors are at the forefront of this transformation, each offering something unique. The chart below presents EV car sales data from the IEA, illustrating a parabolic sales increase and highlighting the high demand for the EV sector. In 2023, 14 million EV cars were sold, and so far, 3 million electric cars have been sold in Q1 2024, representing a 25% increase compared to Q1 2023. EV car sales are projected to reach 17 million in 2024, marking a 20% increase from 2023. Based on current policies and trends, the rollout of electric vehicles is set to avoid the need for nearly 6 million barrels of oil daily by 2030.

According to recent forecasts, the global EV market is expected to grow at a compound annual growth rate (CAGR) of over 25% over the next decade. This growth is not limited to car manufacturers but also includes companies involved in EV infrastructure, battery production, and autonomous driving technologies. Given the growth in electric vehicle technology, EV stocks will likely become a strong investment opportunity in the coming years.

Tesla – The Market Leader

Tesla (TSLA) has been synonymous with electric vehicles since its inception. As the global leader in EV production, Tesla boasts a dominant market share and unrivalled brand loyalty. Tesla’s stock price has exhibited strong volatility over the past few years. The weekly chart for Tesla below shows the formation of a broadening wedge, which suggests that the stock remains highly volatile. However, a breakout from this pattern could signal a return to a bullish trend. On the other hand, the latest earnings release attempted to breach the pattern but failed, causing the price to decline again. This indicates that Tesla may continue to experience significant volatility in the market.

Tesla’s key strengths come from being an early player in the EV market and building strong brand recognition. Its control over battery production and software gives it an innovation and cost advantage. Tesla leads in battery tech, solar integration, and self-driving cars. However, its high stock valuation and volatility are the concerns. As competition increases, Tesla’s market dominance is being challenged by other automakers ramping up their EV production.

BYD (BYDDF) – The Chinese EV Giant with Global Ambitions

Build Your Dreams (BYD) is one of the largest electric vehicle manufacturers in the world. Based in China, BYD produces a broad range of EVs, from cars and buses to trucks, and it is also heavily involved in battery manufacturing. The company has a significant foothold in both the Chinese domestic market and global exports, making it a serious competitor in the EV space. The chart below presents the monthly chart for BYD, showing that the overall trend for the stock price remains strongly upward, though the red channel lines indicate significant price volatility. The RSI is trading above the midline, indicating continued strength, but the stock price must break above the record highs to initiate the next level of growth.

BYD’s strengths include its diverse EV lineup and production of electric cars, buses, and trucks, which gives it an edge in various sectors. Its battery expertise, supplying batteries to other automakers, adds to its revenue streams, with a strong presence in China, the largest EV market, BYD benefits from high demand and government incentives. However, it faces challenges with international expansion, lagging behind Tesla in brand recognition and sales outside China. Additionally, BYD’s profitability in the EV space is lower than that of Tesla due to higher costs and competitive pricing in its home market.

NIO (NIO) – The Chinese EV Powerhouse with Global Ambitions

Nio Inc. (NIO) is also called as the “Tesla of China,”. NIO is experiencing rapid expansion in the world’s largest electric vehicle market. What differentiates NIO is its innovative battery-swapping technology and its focus on premium electric vehicles. The company’s growing network of battery swap stations across China provides a unique solution to range anxiety, a key concern for electric vehicle consumers, positioning NIO as a preferred brand among Chinese buyers.

The weekly chart for NIO shows a continuous price decline since its peak in 2021. This three-year downtrend has pushed the stock price to a bottom level, attracting investor interest. Last week’s reversal from this support suggests the price may rise in the short term, although further consolidation is likely.

NIO’s strengths lie in its innovative battery-swapping technology, which helps address range limitations, and its strong presence in China, the largest EV market. However, the company faces challenges such as geopolitical risks related to tariffs and trade tensions and has yet to achieve consistent profitability.

Lucid Motors (LCID) – The Luxury EV Challenger

Lucid Motors (LCID) is another up-and-coming EV maker, but its focus on the luxury segment of the EV market makes it stand out. Lucid’s flagship vehicle, the Lucid Air, boasts an industry-leading battery range and high-end features, appealing to affluent consumers looking for luxury and sustainability.

From a technical perspective, Lucid Motors’ stock price fluctuates at lower levels, indicating potential further consolidation before the next upward move.

Lucid’s strengths include its superior battery technology, offering the longest range of any electric vehicle, and its strong positioning in the luxury EV market. However, it faces high competition from established players like Tesla and has limited production capacity as a newcomer, which may slow its immediate growth.

Xpeng (XPEV) – A Rising Star in the Smart EV Space

Xpeng (XPEV) is a prominent Chinese EV maker known for focusing on smart, connected vehicles. The company emphasizes innovation in autonomous driving technologies and user-friendly features, making it a key player in China’s competitive EV market. Xpeng has also started expanding internationally, with initial forays into the European market, positioning itself for global growth. The stock price of XPEV is bottoming at the long-term support, which indicates a possibility of a strong upward move. A break and close above $24 would pave the way for higher prices.

Xpeng’s strengths include its strong focus on autonomous driving technology, which sets it apart from competitors, and its rapid growth in China, which is supported by government incentives. The company’s international expansion, particularly into Europe, also offers potential for future growth. However, Xpeng faces high competition from domestic rivals like NIO and global giants like Tesla, and it continues to struggle with profitability and high production costs.

Which EV Stock Offers the Best Investment Opportunity?

With so many players in the EV market, selecting the best stock for investment depends on individual risk tolerance and investment strategy. Each company has its strengths, but certain factors like innovation, market share, and scalability determine the best pick. The chart below shows the percentage change in price for the listed five electric vehicle stocks, and it is found that Tesla’s stock price has changed by 42.87% from 2021. However, BYD is second with a 111% price change. The other company have a negative change in prices.

A similar trend is observed in the revenue chart below, which shows that Tesla and BYD have nearly the same revenues and demonstrate strong growth. However, the other companies have the lowest revenues, as they are primarily startups. The lowest revenue is from Lucid, with $200.58 million. This indicates that Tesla and BYD have strong growth potential in the coming years, driven by their robust revenue performance.

To further understand the profitability of these companies, the net income chart below shows that Tesla and BYD have the highest net income, while the other three companies are operating at a loss. Despite the significant drop in Tesla’s net income, it remains slightly above BYD’s net income. However, both companies demonstrate similar levels of profitability.

To understand the valuation of these companies, the P/E ratio chart below shows that Tesla has a P/E ratio of 59.15, while BYD has a P/E ratio of 19.11. NIO, Xpeng, and Lucid do not display a P/E ratio due to their current lack of profitability, as discussed above.

Tesla’s high P/E ratio suggests that investors are willing to pay a premium for its future growth prospects, but it also indicates that Tesla may be overvalued relative to its earnings. On the other hand, BYD, with a much lower P/E ratio, appears more reasonably priced in relation to its earnings, which could signal a better opportunity for value-conscious investors. For those seeking a value-based investment with lower risk, BYD is likely a better choice, as its lower P/E ratio reflects more moderate market expectations.

Conclusion

In conclusion, the electric vehicle market presents a wide range of investment opportunities, each with its own strengths and challenges. Tesla continues to dominate the sector with its innovation and strong market presence, though its high valuation may concern some investors. BYD offers a more value-driven option with strong growth potential in both China and global markets, making it an attractive choice for those seeking lower risk. NIO, Xpeng, and Lucid present higher-risk, higher-reward opportunities as they continue to innovate and expand, but their profitability remains a concern.