Should Investors Buy Electric Vehicle Stocks Amid The Recent Pullback?
Electric vehicle stocks are taking a beating in the stock market as of late. This came after a strong year for the sector. Now, as stocks continue to stutter, smart investors need to have a thorough understanding of what factors are in play. Behind the recent declines in the stock market was of course the consumer price index increasing 4.2% year-over-year in April. This is far higher than what the Fed has expected. And stocks were tanking because of that.
For instance, Tesla (NASDAQ: TSLA) saw its stock price drop 4.4% on Wednesday, closing below $600 per share for the first time since March this year. What’s more, Musk mentioned that Tesla has suspended purchases of its electric vehicles with Bitcoin. Before you start rushing to liquidate some of your cryptocurrencies, the technoking mentioned that Tesla will not be selling any Bitcoin, as he still sees the promise of the cryptocurrency.
The Future Is Electric, Should Investors Buy The Dip?
The potential of the EV market has also encouraged traditional carmakers to jump on the bandwagon. Volkswagen (OTCMKTS: VWAGY) sold 231,600 all-electric vehicles in the past year. Now, the automaker expects this number to more than double this year. It’s also worth mentioning that Volkswagen aims to increase its all-electric vehicle sales to 20% of its total sales volume by 2025. That would translate to around 2 million electric vehicles. But it is not all smooth-sailing for electric vehicles. And if you have been keeping up with the news, you would be aware of the global chip shortage.
Much like with many other industries, the global chip shortage has caused several EV stocks to lose momentum. Coupled with investors’ frantic redirection towards buying pandemic recovery stocks, this presents a rare opportunity. After all, this could be a chance for investors to buy EV stocks on the dip. With that in mind, could these be 3 of the best EV stocks to watch right now?
Top EV Stocks To Buy [Or Sell] Right Now
- Xpeng Inc (NYSE: XPEV)
- ChargePoint Holdings (NYSE: CHPT)
- Fisker Inc (NYSE: FSR)
Xpeng
First, on the list, Xpeng is one hot stock to watch right now. The leading Chinese smart electric vehicle company announced its first-quarter results on Thursday morning. Total revenues came in 616.1% higher to $450.4 million for the first quarter of 2021. The company delivered 13,340 in the first quarter, representing an increase of 487.4% from 2,271 in the corresponding period in 2020.
“The first quarter kicked off a great start to 2021 with record-breaking vehicle delivery notwithstanding seasonally slower demand for automobiles and the semiconductor shortage,” said Mr. He Xiaopeng, Chairman and CEO of XPeng. “Our strong momentum in the quarter was propelled by our industry-leading full-stack autonomous driving technology, solid differentiated product strategy, and our vision to lead Smart EV development and transformation.“
Looking ahead, the company remains on track to fuel Smart EV transformations. The revenue realized from their proprietary software suggests that they are at the forefront of the industry in autonomous driving software subscriptions. You don’t need to be an expert to appreciate the game-changing potential with Xpeng. If you are keen on investing in the future of autonomous driving technology, and particularly lidar, would XPEV stock be possibly one of your best bets in the stock market today?
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ChargePoint Holdings
Next up, we have EV charging stock, ChargePoint Holdings. ChargePoint is the largest EV charging station company in America with over 135,000 charging ports. The company is the first EV charging stock to have gone public via the SPAC route. This came after the completion of its merger with Switchback Energy Acquisition. If you’re looking for pick-and-shovel play in the red-hot EV industry, CHPT deserves a closer look.
ChargePoint is likely to play a major role in the world of electric vehicles. That is certainly the plan as the Biden administration serves as the catalyst. However, investors appear to be impatient, judging by how Chargepoint’s share price has performed in recent months. But let’s take a step back and look at the bigger picture. After all, the company’s revenue would grow significantly over time as more EVs appear on the road. Similar to other top EV charging stocks in the market, CHPT stock today trades at a more attractive valuation than where it was a few months back.
The company already has a large lead in North America with a 70% share of Level 2 charging networks, which use 240-volt power. Its comprehensive network of offerings also includes more than 2,000 publicly available fast-charging stations. It’s also worth noting that betting on the EV sector is not a short-term strategy. However, if the exponential growth projection by BloombergNEF with an estimate of 54 million electric vehicles by 2040 materializes, should you load up CHPT stock now?
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Fisker
Fisker is a California-based EV company focused on designing and developing electric vehicles. The company is expected to deliver its first product, the Fisker Ocean SUV, in early 2022. Just like many other EV stocks, the stock has been severely under pressure as of late. In fact, Fisker stock has fallen around 70% from its 52-week high over the rising competition in the EV space. The sharp drop in Fisker stock provides an attractive buying opportunity for long-term investors.
Founder Henrik Fisker is known for creating some of the most beautiful cars on earth. The company’s management is well-experienced in the EV and automobile industry and shares the goal to turn vision into reality. With that in mind, the company is leaving the manufacturing and maintenance work to its partners including Magna International (NYSE: MGA) and Apple’s (NASDAQ: AAPL) contractor Foxconn to build its vehicles.
No one can say for sure if Fisker will snap up a sizable EV market share. But as for now, the company is still on track to commence the sale of its Fisker Ocean by 2022. Given that the company has a string of partnerships and its focus on the affluent market, Fisker could prove its skeptics wrong once the Ocean debuts. Sure, it may take time for this electrification play to truly pay off. Should Fisker execute its asset-light model strategy well, it could bring in strong returns without substantial investment in plants and supply chains. With that in mind, would you consider buying FSR stock now?
