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Electric car stocks have been getting a lot of attention on Wall Street lately. Despite various uncertainties posed by the novel coronavirus pandemic, the share prices of many electric vehicle firms have hit 52-week or even all-time highs. But some electric car stocks are better investments than others.
In 2017, EV sales surpassed one million. In 2019, sales of electric cars topped 2.1 million globally. The 2019 sales accounted for 2.6% of global car sales and showed a 40% year-over-year increase. Between 2019-2027, the market is expected to grow from around $162 billion $802 billion, showing a CAGR of 22.6%.
According to George Crabtree of University of Illinois at Chicago, “Electric vehicles are poised to transform nearly every aspect of transportation, including fuel, carbon emissions, costs, repairs, and driving habits. The primary impetus now is decarbonization to address the climate change emergency, but it soon may shift to economics because electric vehicles are anticipated to be cheaper and higher-performing than gasoline cars.”
Technological developments, backing of many governments worldwide (including policies around financial incentives for buying electric cars, emission targets or city-access restrictions for fuel vehicles), and positive developments in driver perceptions are helping the electric car industry to charge ahead. We’re seeing a staggering number of entrants into the sector, not only from the U.S., but also from other countries, including China and Canada. Several of these companies are high-beta, news- and performance-based penny or microcap stocks. There are also many exchange-traded funds (ETFs) in this burgeoning sector.
Electric cars run on an electric motors that require supply of energy from various type of batteries. Thus the sector is also becoming quite diverse in terms of battery type, vehicle class (e.g., luxury or mid-priced) or vehicle type (such as passenger cars, light duty vehicles, two wheelers or commercial cars). With all that background information, here are seven electric stocks to buy as the sector accelerates:
- Arcimoto (NASDAQ:FUV)
- Ayro (NASDAQ:AYRO)
- Blink Charging (NASDAQ:BLNK)
- Electrameccanica Vehicles (NASDAQ:SOLO)
- Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV)
- Global X Lithium & Battery Tech ETF (NYSEARCA:LIT)
- Tesla (NASDAQ:TSLA)
Let’s take a look at what makes each of these stand out electric car stocks to buy.
Electric Car Stocks: Arcimoto (FUV)
FUV) logo amplified by a magnifying glass on the company's home web page." width="300" height="169">Source: Pavel Kapysh / Shutterstock.com
52-week range: $0.97-$8.89
Since going public in September 2017, Oregon-based Arcimoto has built its production facility, completed regulatory compliance for Fun Utility Vehicle (FUV), its flagship EV, initiated production in September 2019 and now delivers vehicles to early customers. FUV is a tandem two-seat, three-wheeled electric vehicle.
Arcimoto has also initiated pilot programs for its next EVs. The first one is Deliverator, last-mile delivery solution that is customizable to carry a range of food products. The second one is Rapid Responder, which is designed for specialized emergency, security and law enforcement services. Production of those vehicles is set to begin in late 2020.
In June, the company released earnings when it reported quarterly sales of $616.8 million. A year ago in Q1, total revenue had been $2,645 for the same period in 2019. The increased revenue in the current year period was due to continued sale of FUV products that began in late 2019 following the start of commercial production.
A recent press release also notified the Street that Arcimoto is beginning to rent pure electric Deliverator in Los Angeles using HyreCar (NASDAQ:HYRE). If you believe in the future of EVs, FUV may be an appropriate cheap stock. The company may also find itself a takeover candidate.
Ayro (AYRO)
Source: Shutterstock
52-week range: $1.80-$8.75
Texas-based EV manufacturer began trading on the Nasdaq Composite on May 29 following a merger with DropCar, which was already listed on the exchange. Although it opened at $4.10, by June 4. Ayro stock was down to $2.15.
Yet investors’ risk appetite in EV shares helped push the shares to a high of $8.18 on July 6. Now they are hovering around $4.5.
Ayro started in 2017 as Austin Electric Vehicles, which later became AEV Technologies until the merger with DropCar in May. The company designs and manufactures purpose-built, automotive-grade electric vehicles.
It creates sustainable electric solutions for campuses, last-mile delivery, urban commuting, fleet management and closed campus transport such as golf courses or airports. These light-duty vehicles are typically classified as low-speed electric vehicles (LSEVs) and serve a niche, yet growing, market.
The company has two EV models, Ayro 311 and Club Car 411. Ayro 311 is a three-wheeled vehicle and Club Car 411 is a compact all-electric vehicle suitable for low-speed logistics and cargo services. They both are zero-emission vehicles and can have multiple configurations to meet customer requirements.
Depending on the features chosen and the level of customization, the Ayro 311 sells for between $10,000 and $14,000. The Club Car 411 starts around $21,000. This new decade is likely to see an exponential growth in LSEV vehicles, which could mean high sales numbers for Ayro.
Blink Charging (BLNK)
Source: David Tonelson/Shutterstock.com
52 Week Range: $1.25-$14.58
Miami, Florida-based Blink Charging owns and operates an EV charging network across the U.S. and several other countries, including Dominican Republic, Greece and Israel. It generates income by charging customers money per kWh of energy they use. The Blink Network uses cloud-based software that operates, maintains and tracks the EV charging stations connected to the network, along with the associated charging data.
In mid-May, the company released Q1 earnings. The company saw a YoY revenue increase of 125% to a quarterly record of $1.3 million compared to $577,390 a year ago. However, the company is not yet profitable. During the quarter, gross margin also improved to 23.8% from 9.3% in the same prior-year period.
CEO Michael Farkas commented, “During the first quarter, we enjoyed solid growth and, most notably, strong product sales of EV charging equipment and services. This has led to record quarterly revenue … Blink’s international expansion continues.”
Blink is expected to release its Q2 report in the coming days. If you believe in the growth potential of services and supplies associated with electric cars, then BLNK stock may be one of the more promising electric car stocks to consider today.
Electrameccanica Vehicles (SOLO)
Source: Shutterstock
Canada-based Electrameccanica Vehicles sells a vehicle that is somewhat different than the ones offered by most other EV manufacturers. If you have seen its flagship car, the Solo EV, you’d have noticed that the front looks like a regular car. But at the back, you’d see only one wheel. In effect, it is a reverse trike.
The Solo is a single-passenger three-wheeled, battery-powered electric vehicle. The company markets it as a short-range vehicle for commuting. It has a range of 100 miles and a charge time of two and a half hours. And the retail price tag stands at $18,500.
The group plans to build a manufacturing site in the U.S. In early June, management announced it “has narrowed its list to the following five states (in no particular order): Arizona, Colorado, Florida, North Carolina and Tennessee.”
The company’s proposed expansion plans into the U.S. are likely to bring increased investor attention to SOLO stock. Electrameccanica may also become an acquisition target in the coming years. However, potential investors should remember that currently the company has minimal revenue.
Global X Autonomous & Electric Vehicles ETF (DRIV)
Source: Shutterstock
52 Week Range: $9.32-$16.25
Dividend Yield: 0.62%
Expense Ratio: 0.68% per year, or $68 annually per $10,000 invested
The Global X Autonomous & Electric Vehicles ETF is an exchange-traded fund that seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles, as well as electric vehicle components and materials. Such companies are typically involved in the development of autonomous vehicle software and hardware, or the production of EVs and their batteries.
DRIV, which has 75 holdings, follows the Solactive Autonomous & Electric Vehicles Index. Net assets under management are close to $30 million.
Since the EV sector is still in its early days, many of the exchange traded funds resemble broader tech ETFs. The top three holdings are Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT). Tesla is No. 7 on the list. Put another way, DRIV is a portfolio of companies that are building out a presence in the EV space. The top ten companies account for about 30% of the fund.
Year-to-date (YTD), the fund is up about 9%. In late July, it hit an all-time high of $16.25.
Global X Lithium & Battery Tech ETF (LIT)
Source: Shutterstock
52 Week Range: $17.83-$38.71
Dividend Yield: 1.18%
Expense Ratio: 0.75%
The Global X Lithium & Battery Tech ETF, which has 43 holdings, follows the Solactive Global Lithium Index. The funds’s focus is on the full lithium cycle, from mining and refining the metal, through battery production.
An electric car’s price tag is closely dependent on the cost of its battery. And lithium-ion batteries are heavily used in car batteries. Therefore, those investors who believe in the growth of the EV sector may want to further research the fund and companies engaged in producing the lithium necessary for top-capacity batteries.
Net assets are close to $690 million. The top three names, Albemarle (NYSE:ALB), Tesla, and LG Chem (OTCMKTS:LGCLF), comprise close to 22% of the fund. YTD, the fund is up over 37%. In mid-July, it hit a 52-week high at $38.71. With rising attention going to battery technology, the bull trend may continue in the coming months.
Tesla (TSLA)
Source: Pe3k / Shutterstock.com
52 Week Range: $211-$1,586.99
Last but not least on my list is Tesla. The Palo Alto, California-headquartered company is typically the first name when investors think about electric car stocks. The business is targeting half a million deliveries in 2020, achieving over a 35% YoY growth.
In late July, to the delight of shareholders, the Tesla reported its fourth consecutive quarterly profit. Therefore, it is now one of the eligible candidates to be included in the S&P 500 Index. However, before a short-listed company can join the index, an S&P 500 company would need to be taken off the index.
Put another way, if a current member of the index no longer meets eligibility criteria, then Tesla would be among the companies to be considered. When that day comes, fund managers will have to buy about 25 million shares of TSLA stock. Currently, the stock is hovering around $1,500. That transaction would currently be worth around $30 billion.
Year to date, the stock is up an eye-popping 260%. Analysts are debating whether the potential inclusion in the index has already been priced into the share price. However, long-term investors may consider any upcoming dip in the share price as opportunity to go long the shares.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education, including a Ph.D. degree, in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
