Electric vehicles are the future of transportation. Not only are fossil fuels headed out the door, but the push for smarter, hi-tech and connected cars is driving new markets unlike any we have seen before.
The global electric vehicle market is already projected to be worth $802.81 billion by 2027, according to Allied Market Research. It was $162 billion in 2019. So that's going to be 395% growth for the industry.
EVs and connected cars will also push up markets like semiconductors, copper, artificial intelligence, and 5G tech. The car of the future is really a fusion of almost every technology we are aware of today.
That's why owning the best electric vehicle stocks is so important right now. Many investors have already been taking advantage of this monumental opportunity.
They drove the Tesla stock price up over 700% in 2020. Other EV stocks that got positive attention were Workhorse Group and NIO. We recommended Workhorse in January 2020, and it proceeded to pop 969% over the next year.
You might be thinking how you can get gains like Tesla if you missed it. You might also wonder how to best avoid the Nikolas of the world.
People were piling into special purpose acquisition companies ahead of their mergers with EV companies. One of those was Lordstown Motors Corp. (NASDAQ: RIDE), which got a 210% pop within two months of going public.
But another SPAC merger has not panned out so well. Nikola Corp. (NASDAQ: NKLA) was accused in a short-seller report of fraudulent operations. It also has not conjured a product, despite its theoretical product being hugely intriguing.
You want to get as big a piece of this 395% growth industry as you can. But how do you tell a Tesla from a Nikola this far in advance?
We've got you covered.
We'll show you the catalysts fueling growth in this hot new sector, plus, we'll show you the best EV stocks to buy...
Going "Clean" Is Pushing EV Stocks Higher
This is not just a popular grassroots movement. National governments and international corporations are pushing for electric vehicle adoption around the world as we speak. China, the United States, and even Big Oil is in on it.
For example, Royal Dutch Shell Plc. (NYSE: RDS.A) announced in January 2021 that it was moving into the electric vehicle charging market. The company bought 2,700 charging points in the United Kingdom, which is 13% of the potential market.
BP Plc. (NYSE: BP) also announced recently that it would switch billions of its oil and gas holdings to clean energy. The company's chair predicts fossil fuel demand to be reduced by 75% in 30 years.
This is because renewable energy is quickly getting cheaper and more efficient than fossil fuels. The International Energy Agency (IEA) said solar is finally cheaper per-watt than fossil fuels.
Money Morning's Michael Robinson says EVs in China are on the rise. He says China is "the world's largest car market," at $1 trillion, accounting for 10% of all manufacturing.
China is targeting 7 million annual EV sales by 2025, according to Reuters. The nation is subsidizing production from Tesla Inc., which has a factory in Shanghai, as well as Nio Inc. (NYSE: NIO).
In California, Governor Gavin Newsome has been vocal about making California 100% emission-free by 2045. Part of that plan is to ban production of gas-powered vehicles. Extreme as it may sound, there are 15 other countries working on similar plans, including France and Germany.
A fresh, environmentally interested presidential administration and the potential of a "Green New Deal" are enough factors at play that could push other states in a similar direction.
The Best EV Stocks to Buy Today
Tesla stock soared more than 500% in 2020. Though it had trouble getting deliveries off the ground back in the 2010s, it broke records. It was just shy of hitting 500,000 deliveries for the year.
For 2021, Tesla expects to deliver 766,000, which is up from a prior target of 687,000.
If you want, you could look for more Tesla shares on a dip, but you might not get the same gains as Tesla investors in 2020.
If you missed those Tesla gains, however, not to fear. The reason Tesla growth could slow down again is because several other EV stocks could potentially take off within the next decade.
We have only seen the beginning of growth from Workhorse Group Inc. (NASDAQ: WKHS). Companies that are fueling all-electric public transport such as Lion Electric Co. (NYSE: LEV) have plenty of room to grow - Lion even has a deal to supply fully electric delivery trucks to Amazon.com Inc. (NASDAQ: AMZN).
But even these gems don't give a complete picture of your profit potential in the EV industry.
You see, when we think about EV stocks, the impulse is to search for the "next Tesla." But it's so easy to get caught up in something "new" that you could end up missing the gold mine right in front of you.
There are plenty of traditional, familiar carmakers that have yet to prove themselves in the EV market. What matters is that they have the capital and brand-recognition to do it.
In addition, some legacy auto makers have had a head start with successful hybrid lineups.
So, you're about to get the full rundown on our best EV stocks to buy. These include a slew of young, exciting companies, some time-tested auto veterans, and some useful pick-and-shovel plays.
Here we go...
EV Stocks at the Cutting Edge
Tesla Inc.
You know it well. And while it might not get the same big, fast pop it got in 2020, grabbing some Tesla Inc. (NASDAQ: TSLA) on a dip could still be worth your while in the long term.
Under the firebrand leadership of Elon Musk, many were not sure which way Tesla would go in its early years. But after several years of flirting with production shortages and bankruptcy, Tesla has finally found its stride.
The company saw some success after opening a new factory in Shanghai, China, in 2020. The stock popped around 400% quickly after that happened, and it even led to a Tesla stock split.
There is still concern about Tesla's volatility. But it's cementing itself as an established player in the car world.
WARNING: It's one of the most traded stocks on the market every day - make sure it's nowhere near your portfolio. WATCH NOW.
Tesla has seen profits every quarter in the last year. Revenue is up 300% in the last five years, from $7 billion to $28 billion.
Innovation can only take you so far. What Tesla investors want now is reliability and a promise of future growth. So far, it appears to be offering that through new car models and improvements on old ones.
Following the success of its Model 3, the company is in the process of releasing a Tesla truck and the Tesla Roadster. It has also been trying every year to increase the distance Model 3 can travel on one charge.
One of Tesla's missions is to lower the cost of its vehicles. If it can succeed in the luxury department and in making the economy cars more efficient, it stands a chance.
Nio Inc.
People like Nio Inc. (NYSE: NIO) because it's based in China. China has been accelerating toward green energy in recent years - the country passed 1 million EV sales in 2019, which was about four times U.S. sales.
Nio is also one of Tesla's most viable competitors on the world stage. Tesla has been able to lower the cost of its vehicles by making batteries in-house. Now, Nio will do the same.
The company is working on a battery-as-a-service (BaaS) to lower vehicle prices by 25%. Battery-as-a-service means Nio will sell cars without batteries and lease interchangeable batteries through a separate company.
In addition, Nio also wants to make its own self-driving chips. With large companies like Alphabet Inc. (NASDAQ: GOOGL) and Ford Motor Co. (NYSE: F) putting tens of billions into self-driving cars over the next decade, EV companies want to lower costs any way they can.
The stock popped 800% after it announced $1 billion in new funding in 2020. It still has a strong chance of doubling over the next few years as well.
If you're looking for a vertically integrated EV manufacturer that can co-lead the EV market with Tesla and any other legacy carmakers out there, Nio is a strong bet.
Workhorse Group
The need for innovation in delivery became apparent with COVID-19, as Amazon.com Inc. (NASDAQ: AMZN) had to hire 175,000 new workers to keep up with demand.
Workhorse Group Inc. (NASDAQ: WKHS) has an entire drone delivery system to help delivery companies scale. United Parcel Service Inc. (NYSE: UPS) predicted it could cut $50 million in costs by using that service.
In the EV realm, Workhorse Group Inc. (NASDAQ: WKHS) is moving toward a $6 billion deal to supply the U.S. Post Office with electric mail trucks.
We recommended this company in January 2020 at around $3. It only took a few months to soar to $30, about a 900% pop.
Looking ahead, while Amazon has its own drones and could put delivery companies like FedEx (NYSE: FDX) and DHL out of business, there is still a chance it could find value in Workhorse's drone fleet that integrates with EVs.
One way or another, Workhorse has a promising ecosystem of technology and has a good shot at sticking around for years to come.
Lion Electric
Lion Electric Co. (NYSE: LEV) has a big deal coming with Amazon. So far, it's going to supply Amazon with 2,500 all-electric trucks. And there is probably more to come.
If Amazon manages to eat the competition like we discussed above, Lion will continue to thrive. E-commerce demand is expected to continue growing. And the field is expanding further into grocery and other items since the lockdown.
As Amazon grows its services in response to demand, it will need more electric trucks. That's good news for Lion Electric.
But Lion doesn't sell only electric trucks. It makes electric busses, too.
This Canadian company is supplying entire fleets of electric school busses in California and Minnesota.
It produces about 2,500 vehicles per year in Canada and is starting to manufacture its busses in the United States as well.
Meanwhile, it also provides electric trucks to the entire Canadian National Railway.
With its connections and quick rise to prominence, Lion Electric will be a major EV stock to contend with in the truck and bus world.
Now, this next group of EV stocks is not as young and exciting. But they all pay dividends, which can't be said for many newer companies...
Some Top EV Stocks Are Legacy Car Makers
General Motors Co.
General Motors Co. (NYSE: GM) is one company that's made its intentions clear when it comes to clean energy. It's committed to releasing 30 new electric vehicle models by 2025 in hopes of "building a zero-emissions future."
It kicked off this plan in 2019, with a $4.5 billion investment in EV production. Several months later, GM invested another $2 billion into its EV manufacturing efforts.
In total, GM plans to invest $27 billion in electric and autonomous cars by 2025.
Such passionate effort from a seasoned industry veteran could pull this company to victory as EV competition ramps up.
GM's CEO, Mary Barra, sees this as an important "pivot" for the company. This is the company known for the Hummer, Cadillac, Corvette, and legendary Chevy trucks.
Its all-electric lineup will be led by an EV Hummer and the Cadillac LYRIQ, a family-size vehicle set to compete with the Tesla Model Y.
Shares of GM stock may take a while to climb as it churns out cars. The company is going at its own pace to perfect its hallmark cars.
What investors in GM will lean on is a proven track record. The company has a vast portfolio filled with decades of successful automobiles.
Ford Motor Co.
Ford Motor Co. (NYSE: F) started it all with the Model T. And it wants to do it again.
The company has an undisclosed state in the private electric truck company Rivian. But it's also making its own EVs.
In early 2021, the company announced a $29 billion investment in electric and autonomous vehicles by 2025.
Twenty-two billion dollars of that will go toward electric vehicles, and $7 billion will go toward autonomous vehicle solutions.
Ford had already entered the hybrid game. Even though the company is not necessarily going to "disrupt" transportation in the same way as Tesla, it's a whale in the auto industry with the capital to remain competitive.
The company has a fully electric Mustang Mach-E in the works. Ford says the vehicle "takes less than half a second to reach peak acceleration."
It recently released an all-electric transit van and outlined plans for an electric version of the famous F-150 pickup.
Ford has big plans for connected cars as well. CEO Jim Farley has said that he will be working to integrate "millions of vehicles" with Google by 2023.
Toyota Motor Corp.
There's a concept in both foot and bike racing called "drafting." It's when one racer uses another other as a "human shield" by staying behind them. The person in front has to use more energy to fight headwinds. Eventually, the person behind breaks ahead.
Toyota Motor Corp. (NYSE: TM) is a good example of this in the EV industry. It was an innovator with the Prius, and since then, it has all the tools to dominate EVs. But when it comes to fully electric vehicles, it's let Tesla and other young companies take the big risks.
In the years when Tesla weathered all the ups and downs that come with innovation in a new market, Toyota stuck to its wildly successful Prius and Rav4 hybrid models.
Now that Tesla has proven the demand of a future electric vehicle industry, all Toyota has to do is build on what it already has. Toyota can also learn from any of Tesla's mistakes over time.
One example is its solid-state battery pack, which charges faster and travels further than Tesla's lithium-ion batteries.
While Tesla has wanted to make its cars progressively cheaper, it might have a hard time going lower than Toyota.
This company has 60 new hybrid and EV models waiting to be made. It expects to sell 5.5 million electrified cars by 2025.
Pick-and-Shovel Plays in EV Stocks
Copper
Copper demand is going to soar with growing electric vehicle demand. It's one of the major components in EVs, in fact.
The commodity is used in the motor, inverter, and electrical wiring - really in almost every major EV component. Around a mile of copper wiring is used in electric vehicles.
It's hands-down the best metal for conducting electricity, so it's used in both batteries and charging stations.
Global copper consumption is expected to increase by 250% by 2030, according to Wood Mackenzie. This is going to be in large part due to the 20 million new EV charging stations springing up.
Also, the bigger the vehicle, the more copper it needs. So trucks and busses will need significantly more than sedans.
Tesla wanted to mine lithium in Nevada for its batteries. We could see carmakers do something similar with copper in the future.
The copper ETF to buy, then, would be the U.S. Copper Index Fund (NYSE: Arca: CPER). It tracks the SummerHaven Copper Index Total Return and manages $28.3 million in assets.
Semiconductors
Another item electric vehicles will absolutely need is semiconductors, or microchips. Michael Robinson likes STMicroelectronics NV (NYSE: STM) as a backdoor play here.
STMicro is Europe's largest chip maker. It has over 100,000 customers worldwide, and it makes a host of tools and apps for managing EV hardware and software.
Right now, STMicro is putting most of its focus on EV battery management systems as well as onboard chargers. The company also sells a wide range of hybrid and fully electric car products like converters.
EV production in both Europe and China will create huge demand for these chips over the next few years. According to EV Sales Blog, Europe saw 1.36 million EV sales in 2020, a new record.
As that number climbs, so will the demand for STMicro semiconductors.
This is an awesome growth opportunity for investors who want to buy a company that benefits from EV demand but also supplies various other projects.
The company also makes sensors, which will be huge for the self-driving auto market on the horizon.
Charging Stations
A more obvious backdoor investment in electric vehicles will be the electric charging stations themselves.
One of the top charging station stocks to buy will be Blink Charging Co. (NASDAQ: BLNK).
This company operates a network of charging stations across the United States. Many of them are strategically located around airports and hotels.
Though the company has been around since 1998, the rise in EV popularity has enabled it to make inroads with local governments and corporations to expand its network.
In early 2021, the company made a deal with the city of San Antonio to be its official provider of EV charging infrastructure.
Blink stands to benefit from the EV focus of the new presidential administration. The stock shot up 15% in January 2020, after President Joe Biden called for a gradual transition to fully electric government vehicles.
This stock soared 2,799% from April 2020 to the end of the year, from $1.69 to $49. But if the EV industry is what we think, Blink stock has plenty further to go over the long term.
Election Results Mean Nothing for 2021 Markets
When it comes to the 2021 stock market, politics won't matter, and neither will the COVID-19 pandemic.
Major economic shifts are about to hit the country. They've been brewing for 10 years, and there's no stopping them now.
Some stocks are destined to soar... while others are doomed to crumble.
Market veteran Shah Gilani is revealing what he feels will be the winners and losers in this 2021 Investors Address.
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