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The 3 EV Stocks Most Likely to Outrun Tesla

Tesla (NASDAQ:TSLA) is well known as the reigning king among EV stocks. The company has blazed a path forward in an industry that really didn’t exist in the same way a decade ago. Accordingly, for most investors, Tesla is the EV sector, and it’s the only stock that matters.

The market appears to be disagreeing lately, with Tesla seeing a major slide on a year-to-date basis alone. At the time of writing, TSLA stock is down 25% in 2024 alone, much of this driven by the company’s recent earnings results (which underwhelmed, to put it nicely).

Many in the EV space are now looking for alternatives. As a global game, and given Tesla’s current dominance in the North American market, I think we need to look around the world for some picks. Here are three companies I think have what it takes to eat into Tesla’s global market share over time.

BYD Co. (BYDDF)

Source: J. Lekavicius / Shutterstock.com

In December, China-based BYD Co’s (OTCMKTS:BYDDF) global deliveries numbers skyrocketed to 36,095 units, representing a 209% increase from the previous year. This impressive rise is expected to continue. In January, BYD started auto shipments through its very first PTCT vessel, with a new Thailand-based factory awaiting to begin operations. In late 2023, a price war escalated, prompting BYD and other Chinese EV makers to slash prices and offer discounts. As a result, by the first half of 2023, BYD became the largest automaker in China and the 10th in the world.

Tesla exceeded expectations by delivering 484,507 EVs in Q4 and consequently achieved 1.81 million in annual deliveries for 2023. BYD said, “not bad,” delivering more than 3 million vehicles and overtaking Tesla as the global BEV sales leader in Q4 with deliveries of 526,409 units. It is an outstanding feat made possible through the contributions and several brand segments.

Tirelessly innovating, BYD is looking to dominate the EV sector in Israel and just set its eyes on Europe and Latin America. Atto 3, Dolphin and Seal are parts of a strong export strategy, but I expect newer models to roll out in 2024.

Rivian (RIVN)

Source: Tada Images / Shutterstock.com

Rivian Automotive (NASDAQ:RIVN), a stand-out among EV startups, has managed to swerve away from a head-on collission with Tesla. Instead of competing in the same product categories, Rivian has chosen to focus on pickup trucks and SUVs, areas of the EV market where Tesla is not currently dominant. (In the views of many the Cybertruck really isn’t a pickup in the same way the Model Y isn’t really the three-row-type SUV that was promised.)

Rivian’s initial surge upon going public was tied to the company’s links to Amazon (NASDAQ:AMZN). Amazon has backed Rivian from the beginning, also providing the company with a hefty order for its delivery vans (yet another niche segment Rivian is after).

With e-commerce sales steadily rising, it’s no surprise to see delivery vans take center stage as a key growth area of focus for Rivian and others. Amazon already has around 10,000 Rivian delivery vans on the road, and is aggressively pursuing electrification. This is a narrative I don’t hear much about, but it’s pretty central to the Rivian thesis over the long term.

I do think Rivian is likely among the higher-risk, higher-upside picks in the U.S. EV space. However, this is a company backed by a major company looking to reduce its cash burn and ramp up production. If investors can see a path to profitability, this is a stock that could soar.

Li Auto (LI)

Source: Robert Way / Shutterstock.com

Li Auto (NASDAQ:LI) has risen above the chaos of the volatile EV market, and become a front-runner in the Chinese EV space.  Despite depressed stock as a result of market sentiment, optimistic analysts estimate a forward price-to-earnings ratio of 20x for the company. Li’s delivery growth was impressive in 2023, with more than 376,000 vehicles delivered, showcasing growth of more than 180%. Continued growth is expected, with the lacuna of the Li MEGA model in March.

On Jan. 11, Li Auto revealed updates of its L-series (L7, L8, L9) in 2024. These models are planned to be released in March, and have been offered at a discount through a lunar New Year promotion. The L-series has a large user base, proven by over 420,000 combined sales and over 50,000 monthly sales. Thus, we’ll have to see how this sales push turns out for the company.

Overall, Li is among the top high-growth EV stocks in a still-growing market in China. Those betting on the global rise of EVs, and who think the Chinese market will be the place to be for the coming decades, may want to consider LI stock at these relatively attractive levels.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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