While electric vehicles may dominate the roadways of the future, their general underperformance since the beginning of 2022 has clouded the narrative of EV stocks with high potential. To be sure, the dramatic rise of competition in the arena most likely won’t be sustainable. Unlike what your kindergarten teacher told you, everybody can’t be a winner.
Still, it’s a massive market so targeting the top EV stocks to buy should be well worth the time for patient investors. According to Grand View Research, the global EV sector may reach a valuation of $1.21 trillion by 2027. And we’re not just talking about the vehicles themselves but several secondary and tertiary segments, such as charging stations and rental car outlets. Plus, with the red ink in the sector at the moment, contrarian market participants could pick up serious discounts. So, investing in EV stocks may be lucrative if you’re willing to plug your nose for a bit.
I want to be clear when mentioning Tesla (NASDAQ:TSLA) as one of the EV stocks with high potential: I’m speaking purely from a long-term perspective. Fundamentally, I have major concerns about TSLA in the short to intermediate term. Yes, shares gained about 72% in the year so far. However, in the trailing year, it’s still in negative territory, down more than 11%.
Overall, I’m not liking the lack of momentum in the charts. However, if we’re talking about betting on which of the top EV stocks to buy will still be traded a decade from now, TSLA offers a reasonably safe wager. Back in 2021, InsideEVs mentioned that Tesla gained massive brand value. Today, it’s possible that the company achieved irreversible brand awareness.
Unlike failed automotive companies that have cult appeal – read DeLorean Motor Company – Tesla has become ingrained in the mainstream. It’s almost to the point where Tesla has become synonymous with personal electric transportation. Unless you know something that others don’t, Tesla is one of the long-term EV stocks that can go the distance.
General Motors (GM)
When it comes to EV stocks with high potential, I’d be remiss not to mention General Motors (NYSE:GM). If I’m being perfectly honest, I’d wager that GM has the ability to go an even longer distance than Tesla. Sure, the latter enjoys an incredible social cachet, as mentioned earlier. However, GM represents an American icon. It’s for the working people while also providing exciting vehicles for wealthier enthusiasts (read the eighth-generation Corvette).
Fundamentally, for average American drivers to make the transition to electrification, they’re likelier to trust established brands like GM. And that’s exactly what Green Car Reports noted one year ago. Shoppers are more likely to trust the legacy automakers than even Tesla, let alone a new EV manufacturer like Mullen Automotive (NASDAQ:MULN).
However, the problem back then – and probably nothing changed in just a year’s time – centered on a lack of product excitement. It’s still a new field so the lack of enticing products is understandable. Fortunately for GM, it can leverage some of its most popular models and convert them for electrification. Therefore, GM is well worth consideration for anyone interested in investing in EV stocks.
To be fair, Toyota (NYSE:TM) has been an oddball in the field of EV stocks with high potential. Known for its hybrid approach to green-friendly transportation (read Prius), the Japanese automaker hasn’t fully embraced electrification with gusto until more recently. For instance, in late 2022, The Wall Street Journal ran a story about then-CEO Akio Toyoda and his doubts about the auto industry pursuing an EV-only approach.
However, Toyota’s new chief executive is Koji Sato and he calls for the automaker to pursue an EV-first mindset. “We need to drastically change how we do business,” remarked Sato. Given Toyota’s remarkable success in consistently becoming one of the top auto manufacturers in the world, investors shouldn’t doubt TM’s upside narrative. Thus, it’s one of the top EV stocks to buy.
To be fair, Toyota’s acceleration into electrification lags many of its competitors. Nevertheless, the trust associated with legacy firms should apply exponentially to Toyota. As practically everybody knows, the company garnered a strong reputation for quality and reliability. So, it’s a comfortable pick among long-term EV stocks.
Representing one of the more remarkable turnarounds in business history, Hertz (NASDAQ:HTZ) at the start of the Covid-19 pandemic became a tragic symbol of the global crisis. Through no fault of its own, the SARS-CoV-2 virus temporarily shut down non-essential travel. Incurring a catastrophic loss of demand, the WSJ reported that the company filed for bankruptcy in May 2020.
Today, you can make the argument that Hertz represents one of the long-term EV stocks to buy. No, it’s obviously not a direct player in the burgeoning electrification market. However, it does provide a critical ancillary service. By renting out vehicles to travelers, it can help accelerate the transition to zero-emission mobility through its EV portfolio.
In March of last year, Electrek noted that Hertz added the Tesla Model Y to its fleet following a massive deal for 100,000 Model 3s. Because consumers nowadays prefer SUVs over sedans – heck, even I had to make the transition to SUVs following my longstanding love affair with two-seaters – the deal should be immensely beneficial for both Hertz and Tesla. Thus, it’s one of the EV stocks with high potential.
A multinational automotive manufacturing corporation, Stellantis (NYSE:STLA) materialized as a 50–50 cross-border merger between the Italian-American conglomerate Fiat Chrysler Automobiles and the French PSA Group, per its public profile. Under the Stellantis umbrella stand several compelling brands, including Alfa Romeo, Dodge, Fiat, Jeep, and Peugeot to name but a few. As electrification becomes a reality for all, Stellantis enjoys lucrative conversion opportunities.
Enticingly, STLA makes for one of the EV stocks with high potential thanks to Stellantis’ upcoming 2024 Dodge Charger EV. You read that right. Dodge is going to take its iconic Charger muscle car and make it whirr (instead of rumble) down the dragstrip. To be sure, the Charger EV will carry an amplifying chamber “exhaust” tuned to 126 decibels.
Honestly, muscle car aficionados represent a hard-to-please crowd so the Charger EV might not resonate with them. Guess what? That’s not the main consumer. Instead, I’m almost certain that Stellantis aims to attract younger folks who yearn for unapologetically masculine cars while still being environmentally responsible. Watch this space.
We can’t talk about EV stock with high potential without mentioning companies specializing in infrastructure. Thankfully for the burgeoning industry, the segment has increased in scope and competition. That said, ChargePoint (NYSE:CHPT) may be able to rise above the fray thanks to its vast coverage network and awareness. In addition, the company makes inroads regarding commercial and fleet partnerships.
From a technical performance perspective, CHPT appears relatively stable, with the keyword being “relatively.” Since the Jan. opener, CHPT slipped nearly 7%. In the trailing one-year period, shares tumbled more than 18%. Of course, these aren’t sterling figures. However, some EV charging stocks have suffered losses of more than 55% during the past 365 days.
Financially, ChargePoint could definitely use some work, let’s keep this discussion real. As with other EV charging companies, profitability challenges cloud the segment. However, ChargePoint also features a three-year revenue growth rate of 38.5%, which is quite impressive. Overall, it’s one of the long-term EV stocks for speculators.
Lucid Group (LCID)
Easily one of the riskiest ideas for those interested in investing in EV stocks, Lucid Group (NASDAQ:LCID) embarked on a mission to take on Tesla. Initially, the backdrop appeared favorable. Commanding world-class engineers along with a sense of style, Lucid immediately distinguished itself from Tesla, which generally features the same design language throughout its various models. Thus, Lucid appeared to have an edge regarding the consumer excitement angle.
Unfortunately, circumstances have not panned out well for Lucid. For its first quarter of 2023 earnings call, Lucid revealed ongoing disappointments regarding serious production shortfalls. As well, its deliveries encountered headwinds in 2022. Therefore, LCID stock gave up almost 56% of its equity value in the trailing one-year period.
Still, it’s not all bad news. As Electrek pointed out, management stated that it still had 28,000 unfulfilled EV reservations. If Lucid can fill all of them, we’re talking about roughly $2.7 billion in revenue. Also, the company reported total liquidity of $4.9 billion, indicating that the EV maker has enough capital to maintain operations through at least Q1 2024. Granted, it’s a high-risk, high-reward wager. However, it could be one of the EV stocks with high potential once it works out the cobwebs.
On the date of publication, Josh Enomoto 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.