3 electric vehicle stocks to electrify your portfolio
The global electric vehicle ecosystem received a punch in the arm last week as EU countries launched a plan to impose an outright ban on fossil fuel vehicles from 2035. This The move coincided with the Biden administration rolling out a US$5 billion plan. build 500,000 electric vehicle charging stations and increase the percentage of electric and plug-in hybrid vehicles to 50% of all new vehicles sold in the United States by 2030.
The current rate of proliferation and future growth potential of electric vehicles puts the following automakers on a long-term growth track. Investors looking to take advantage of the electric vehicle tide may want to keep these names on their screen.
The most powerful of electric vehicles, Tesla (TSLA) is making a line of electric cars with larger vehicles – a light truck, a tractor-trailer and a sports car – in the works. It is also an energy company selling storage batteries.
Tesla is the world’s largest electric vehicle manufacturer. “In less than a decade, the company has grown from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles,” a Morningstar stock report said.
Tesla is well positioned to maintain its market leadership position as the proliferation of electric vehicles intensifies due to massive consumer adoption. The e-mobility pioneer sold more than 936,000 cars in 2021. automotive will increase by more than 60% year-on-year”.
Tesla could see near-term cost headwinds as new factories in Austin, Texas and Berlin “will likely weigh on profitability as production increases over time,” warns Goldstein, who assesses the company’s fair value. stock at $750.
However, over the next few years, Tesla’s profit margins are expected to increase as the company reduces the unit cost per vehicle.
Goldstein predicts that Tesla will increase its total annual vehicle delivery volume to around 5.4 million by 2031, nearly 6 times the 936,222 vehicles delivered in 2021.
The largest US automaker, General Motors (GM), has eight brands and operates in four segments: GM North America, GM International, Cruise and GM Financial.
Although GM lost its crown as market share leader in the United States in 2021 due to a severe shortage of chips, “we expect GM to regain the top spot in 2022,” according to a report on shares of Morningstar, adding that “GM’s earnings potential is excellent as the business has a healthy North American unit and a near-mature finance arm with GM Financial.
The incumbent automaker is making a strong inroad into the booming electric vehicle market with a staggering US$35 billion investment in battery electric and self-driving vehicles for 2020-25. GM is also launching 30 BEVs through 2025, two-thirds of which will be available in North America. “Management is also targeting more than 2 million annual BEV sales by mid-decade and announced in early 2021 an ambition to sell only zero-emission vehicles globally by 2035.” Morningstar sector strategist David Whiston.
It recently lowered the stock’s fair value to $70 per share from $72, to reflect the nearly $5 billion outflow in 2022 to buy SoftBank’s stake in self-driving transportation company Cruise.
On the bright side, a leaner, more nimble GM is making products that consumers are willing to pay more for than in the past. “GM now operates in a demand pull model where it can only produce to meet demand and is structured to do no worse than break even at the bottom of an economic cycle when factories can be opened,” Whiston said.
The German automotive giant, Volkswagen (VWAPY) is one of the largest automobile manufacturers in the world. Its product portfolio includes many popular and premium brands, including Volkswagen, Audi, Bentley, Lamborghini, Porsche, SEAT and Skoda passenger cars. The company also offers financial services through a separate division.
Volkswagen is transitioning to zero-emission electric vehicles from internal combustion engines. “Volkswagen is successfully executing a global automotive strategy and has one of the most aggressive plans to transition to BEVs from internal combustion powertrains,” a Morningstar stock report said.
Volkswagen’s MEB platform underpins its current BEV offensive. Dedicated to electric vehicles, the MEB platform is expected to produce up to 27 BEV models by the end of 2022. lowering the cost of entry-level segment battery cells as well as 30% savings in the segment volume,” notes Morningstar equity analyst Richard Hilgert, who pegs the fair value of the company’s American Depository Share (ADS) at US$37 and forecasts 8% consolidated revenue on 5% volume growth. for 2022.
Spurred by the Biden administration’s support for electric vehicles and their growth potential in the US market, VW plans to build new electric vehicle and battery facilities in the United States.
Additionally, the company has established a $22 million battery engineering and testing facility in the United States.