Why EV Stocks are Hot Investments

Why EV Stocks are Hot Investments

by Gill D on November 26, 2021

While electric vehicles are no longer a novelty, they are only now beginning to gain traction. Last year, Tesla manufactured approximately half a million cars, and sales in 2021 are expected to be significantly higher. Its competitors are also increasing production.

Electrification is becoming a priority for many countries as they look at tackling climate change and increasing renewable energy. This is not something that will happen in the future when it comes to renewable energy. It's happening right now.

Currently, around one out of every 40 new cars sold is an electric vehicle. But that figure is rising every year, and by 2030, electric vehicles will likely account for 20% or more of all new automobile sales.

In the EV industry, Tesla is what Coca-Cola is to the soft beverages market. Tesla receives the greatest attention since it is one of the most valuable corporations in the world, and it is the clear leader in electric vehicles, with 386,000 units delivered in the first half of the year. However, there are reasons to be optimistic about electric vehicles in the coming decade.

 

New EV Players

Tesla isn't the only firm investing heavily in electric automobiles. Between 2020 and 2025, GM plans to invest $35 billion in electric vehicles and autonomous vehicle research and production. According to the firm, 30 all-electric vehicles will be available by 2025, which isn't far away by auto industry standards.

Ford just confirmed a $11.4 billion investment in battery and F-150 production, as well as the all-electric F-150 Lightning. By 2025, the corporation plans to invest $30 billion in electric vehicles.

Aside from the major automakers, upstarts such as Lucid, Rivian, Fisker, Nikola, and a slew of others are either starting or nearing production. Electric vehicles have reached a tipping point in terms of market penetration, and there appears to be no turning back.

The tremendous amount of money going into the electric car business is one of the main reasons why electric vehicle stocks are attracting so much attention.

Companies can use their shares to raise funds to create new factories, buy competitors, or purchase complementary assets. Being highly valued provides electric vehicle firms a lot of leeway in expanding their operations, which is excellent news in the long run. But emerging EV manufacturers will have to prove they're able to build and sell vehicles profitably; and that's going to be the hardest task they've faced.

If EV stocks continue to establish innovative business models and steal market share from traditional competitors, only time will tell. EVs, on the other hand, will undoubtedly be a hot topic for many years to come.

 

EV Charging Stocks Heat Up

And…it is not just electric vehicle stocks. EV charging stocks are also getting attention. Investors looking for electric vehicle (EV) charging stocks didn't have many choices not long ago. That changed with the public listings of ChargePoint Holdings, EVgo, Volta and Blink Charging.

Blink Charging Stations

EV charging stocks have outperformed the market over the last three months. EVgo's stock price has increased by roughly 74%, while Blink Charging's stock price has increased by 40%.

Investors are paying close attention to EV charging businesses right now because of the enormous growth potential for charging infrastructure.

In the United States, there are already over 100,000 publicly accessible EV chargers. However, when it comes to available EV chargers, the United States lags well behind China and many European countries. To put things in perspective, China has nearly eight times the number of public EV chargers as the United States. As a result, there is strong policy backing at a time when charging infrastructure is desperately needed. EV charging providers should benefit from this.

 

EV Charging Challenges

With so many things working in their favor, it would appear that EV charging companies are doing well. However, all of these EV charging companies are currently losing money.

This is due in part to the significant upfront cost of constructing this infrastructure. However, it is illustrative of some of the difficulties that EV charging firms encounter.

Tesla developed its own charging network, taking away a sizable chunk of potential traffic from these networks. Most other legacy and new EV makers say they don't plan to develop their own charging networks. They are rather looking to partner with EV charging companies like General Motors that partnered with EVgo to build out 3,250 charging stalls through 2025.

 

The EV Charging Landscape is Changing

It's crucial to remember that investing in EV charging firms' stocks carries a lot of risk due to the sheer amount of uncertainty in this evolving market, as well as the fact that they're still years away from profitability.

EV charging providers, on the other hand, should be in a better position to achieve profitability as the number of electric vehicles grows. Despite the fact that the road ahead appears to be rocky, the long-term forecast for these companies appears to be bright.

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