Electric vehicles (EVs) are the future of the automotive industry. Despite the coronavirus pandemic, the EV market is becoming more electrified than ever before. There is an awful lot of optimism in space. Retail investors earn the same by buying EV shares aggressively. The advancement of technologies, tighter emissions and fuel consumption targets, as well as the increasing commercial viability of EVs in terms of affordability and charging infrastructure, increase the environmentally friendly EV market. Investors are interested in carmakers looking for solutions to lower global carbon emissions to offer a cleaner future.
This year, the IPO filing by green vehicle manufacturers – including Nikola, Li Auto, Hyliion and Fisker – has increased to capitalize on the EV frenzy. With large car manufacturers, pure EV plays and small as well as medium-sized start-ups actively focusing on the development of environmentally friendly vehicles, the race to EV supremacy will only get worse in the coming years.
Sales of cars worldwide are expected to grow by 50% or more in 2021, compared to the expected growth of ICE by a meager 2-5%, as predicted by Morgan Stanley analysts, as quoted in an article from MarketWatch. Global EV penetration is expected to increase from 3% to 31% by 2030. According to a Deloitte report, the EV market is expected to reach 31.1 million units by 2030 from 2.5 million units in 2020, with a CAGR of 29% during the forecast period. .
If you want to bet on the greener mode of transportation, the obvious choice is EV players and the old-fashioned car manufacturers who invest a lot of money to switch from gears to electric mode. However, one can also take advantage of the booming EV market with battery manufacturers, lithium players, car suppliers, semiconductor supplies and charging companies. In this heading, we will highlight five stocks in which you can invest to earn money from the EV euphoria.
Our choices
Tesla TSLA: Well, we take about EVs and despite Tesla’s high valuations, this EV king is at the top of the list. Although electric cars account for a small share of the global car market, Tesla has gained a significant market share within this niche segment. With Model 3 sedan as its flagship vehicle, Tesla has established itself as a leader in the EV segment.
For the full year 2020, Tesla has maintained the target of exceeding 500,000 vehicle deliveries, indicating a 36% increase year-on-year despite production disruptions amid coronavirus problems. It has a first-class advantage in the EV space with high-range vehicles, excellent technology and software. Robust Model 3 demand, build-up of Model Y production, significant progress in Shanghai, an amazing lineup of emerging products and aggressive expansion efforts, offer great interests for this Zacks Rank # 1 (Strong Buy) firm. The Zacks consensus estimate for its earnings in 2021 indicates an increase of 58.8% year-on-year. You can see the full list of today’s Zacks # 1 Rank shares here.
General Motors GM: This old-fashioned carmaker is stopping everything to demonstrate its EV efficiency. It has adopted an ‘all-in’ electrification strategy, giving it a competitive edge in terms of batteries, software, vehicle integration, manufacturing and customer experience to make EVs the most important catalyst to increase the company’s profitability.
The third-generation global EV platform powered by Ultium batteries will be the heartbeat of the American car giant’s electrified future. The Ultium modular battery platform will power the carmaker’s new electric cars, starting with the Cadillac Lyric model. This Zacks Rank # 1 carmaker is also speeding up plans to expand electric cars and trucks over the next five years, and plans to spend $ 27 billion on the initiative by 2025. It is planned to unveil 30 EVs by 2025, two-thirds of which will be available in North America. Strategic collaboration with Honda and EVgo is likely to improve General Motors’ motorsport. The Zacks consensus estimate for its earnings in 2021 indicates a year-on-year increase of 58.2%.
BorgWarner Inc. BWA: Investors can capitalize on the rosy EV market prospects by investing in businesses that offer automakers power solutions. The businesses are focused on innovation and technology development, and they expect hybrid and electrical technologies to strengthen their leading future. In this regard, BorgWarner is making a promising bet.
In the long run, hybrid and electrical technologies are expected to be the biggest revenue. Electrification programs are likely to spur the backlog of Zacks Rank # 2 (Buy). From 2021 to 2023, the net new backlog is expected to be at least $ 2.1 billion. With a diverse product range, hybrid and electric vehicle products are expected to lead to more operating profit by 2023. BorgWarner’s balance sheet strength and investor – friendly movements increase investor confidence. The Zacks consensus estimate for its earnings in 2021 indicates a year-on-year increase of 58.2%.
NVIDIA Corporation NVDA: Technology is changing the dynamics of the automotive industry and semiconductors are the core of technology. The more technologically advanced the EV, the more semiconductors it needs. Basically, chips are important when it comes to EVs, and investors can also play the EV revolution with semiconductor stocks. One of these stocks worth betting on is NVIDIA, which currently has a Zacks Rank # 2.
The company’s launch of Drive AGX Orin deserves special mention. It is a highly advanced software-defined platform for autonomous vehicles and robots powered by a new system-on-a-disk called Orin which consists of 17 billion transistors. It was recently chosen by Li Auto to accelerate the development of its next generation cars. The higher sales of artificial intelligence cabin solutions and traction shown by motor platforms for infotainment systems enable the company to profit from the EV boom. The Zacks consensus estimate for its fiscal earnings in 2022 indicates an increase of 18.7% year-on-year.
Panasonic Corp. PCRFY: Since batteries are the most important component of a green vehicle, the overall cost, performance and driving distance of an electric car mostly depends on it. As the revolution of electric motors is about to start in a big way, the battery industry is likely to see exponential growth in the coming years. Panasonic, which currently has a Zacks Rank # 2, looks like an attractive bet.
The company is one of the key players in the development of the next generation of lithium-ion batteries for green vehicles. Ongoing research and cutting-edge technology have kept Panasonic at the forefront of battery development. Its advanced lithium-ion battery technology offers improved energy density, lower cost and better driving distance. Strategic partnerships with automotive companies such as Tesla and Toyota are likely to improve the company’s prospects. In particular, the company is targeting zero cobalt in battery cells and plans to commercialize cobalt-free batteries within a few years. The Zacks consensus estimate for its fiscal 2022 earnings indicates a year-on-year increase of 82.1%.
Zacks Top 10 Shares for 2021
In addition to the stocks discussed above, would you like to know about our top ten tickets for the entire 2021?
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