Electric vehicle (EV) stocks have been a really interesting asset group over the past 24 to 36 months. First, there weren’t as many sole EV stocks out there as there are now. However, they exploded in value shortly after the novel coronavirus pandemic rattled stocks in March 2020.
Overall, I’m not sure why the investment dollars came piling into electric vehicle stocks. In fact, it’s something I have struggled with as an investor.
I have covered automotive stocks closely for a number of years. That’s the Big Three in Detroit, but it’s also interviews with CEOs at Mercedes-Benz and Bentley, among others. And multiple meetings with Nvidia’s (NASDAQ:NVDA) automotive leaders, again, among others. In other words, I feel like I have a good grasp of the space.
The automakers were always weighed down by an insultingly low valuation. When Tesla (NASDAQ:TSLA) came along, though, the valuation game changed. Well, at least it changed for Tesla, as it wasn’t bound by the same low valuation that weighed on traditional automakers.
After March 2020, many other EV stocks garnered a high valuation too — regardless of whether they deserved it. The question is, will these stocks ever regain that valuation?
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With that in mind, let’s look at a few electric vehicle stocks that are still getting some analyst love.
- Ford (NYSE:F)
- General Motors (NYSE:GM)
- Nio (NYSE:NIO)
- Lucid Motors (NASDAQ:LCID)
- Rivian (NASDAQ:RIVN)
- Xpeng (NYSE:XPEV)
Now, let’s dive in and take a closer look at each one.
Electric Vehicle Stocks Analysts Love: Tesla (TSLA)
Source: Hadrian / Shutterstock.com
Average Analyst Price Target: $962.94
Shares of Tesla have been under pressure lately, and I can hardly say I’m surprised. Despite the recent dip, though, shares are down just 35% from the highs.
If that sounds crazy, consider that the Nasdaq is down about 16% from its high, while many growth stocks are down in excess of 60% or more. It’s been a rough and brutal environment out there, with many growth investors collectively being forced to fold their hands as their portfolios get buried.
So to see Tesla stock only down about 35% and still commanding a market capitalization of $885 billion, I have to say I’m impressed.
There are questions surrounding its Cybertruck and other global production plants. But by and large, Tesla continues on with its strong growth and solid deliveries. It used the mammoth run in the stock market to fortify its balance sheet and improve its financials.
As we turn to 2022, analysts expect more than 50% revenue and earnings growth. That’s pretty impressive, given the run we’ve already seen here. As always, though, look for Tesla to be the leader in the EV space.
Source: Philip Lange / Shutterstock.com
Average Analyst Price Target: $21.54
Exploding onto the EV stocks scene is Ford. In the beginning, traditional auto thought Tesla would fail. When it didn’t fail, they thought they could kill Tesla off on their own. Now with Tesla having a larger market cap than just about every other automaker combined, it’s clear who’s chasing who.
Regardless, Ford is making a great transition.
The company already has the Mustang Mach-E on the road, and Consumer Reports is loving it. In fact, it’s the top EV according to the publication.
It’s also electrifying the Ford Transit van and — this one’s the biggie — the F-Series pickup truck. Not only is the latter the best-selling truck in the U.S., but it’s also the best-selling vehicle in the country.
Anyone that was worried about an electric F-Series pickup not having any demand can put those worries to rest. After topping 200,000 reservations for the F-150 Lightning, Ford stopped taking reservations. Then the automaker announced it would double production of the new vehicle to 80,000 units a year.
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So, as Ford targets its strongest model and electrifies its fleet, investors are excited about the long term for obvious reasons.
Electric Vehicle Stocks Analysts Love: General Motors (GM)
Source: Jonathan Weiss / Shutterstock.com
Average Analyst Price Target: $75.44
Some might argue that General Motors is not getting the recognition that Ford is when it comes to electrification. But when you look at the price targets, analysts are clearly optimistic about GM’s longer-term potential.
Ford has a clear multi-prong approach to its EV strategy, which should begin unfolding this year. After building on some of its leading vehicles, it will look to expand in the future.
GM is taking a somewhat different approach, building a vertically-integrated EV solution. Everything from forming partnerships on battery production to EV charging networks, the company wants to go all-in and is taking its approach seriously.
Additionally, like Ford, GM is looking to leverage the electrification of its Silverado pickup — likely available in 2023 — while also bringing electrification to certain Cadillac vehicles. Overall, Barron’s provides even more insight:
“There is a lot going on at GM. All its deal making, engineering work, and planning will eventually yield 30 new EV models by 2025. Most of those will arrive after 2022.”
Source: Sundry Photography / Shutterstock.com
Average Analyst Price Target: $52.42
I like Nio the automaker, but I was critical of NIO stock because its valuation was enormous.
The company has a solid portfolio of EVs, and it’s one of the few sole electric vehicle stocks with strong production. Furthermore, the company made the necessary moves to bolster its financials at a time where many investors were worried about whether the company was a going concern.
I think it’s important for investors to remember that in the third quarter of 2019 — so pre-Covid — this stock was changing hands at about $1.50 a share. 15 months later and it was trading north of $65.
With that multi-fold increase, the valuation exploded too and Nio was trading more like a software company than an automaker. And even if EV stocks were undergoing a favorable re-rating, this type of increase seemed ludicrous.
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Now, though, the stock has finally come back down to Earth even though the business is still doing well. Expectations call for revenue to more than double this year, increasing by more than 120%. In 2022, revenue estimates call for an increase of 76%. So, Nio will find its footing. The question is, where?
Electric Vehicle Stocks Analysts Love: Lucid Motors (LCID)
Source: Around the World Photos / Shutterstock.com
Average Analyst Price Target: $44.33
Lucid Motors has certainly had its highs and its lows this year. When shares plunged from $65 in January 2021 to sub-$20 in May, it set up the perfect dip-buying opportunity. It ultimately led to a massively breakout, where shares rallied back to the upper-$50s.
I don’t want to seem like the negative bear who’s always whining and complaining. But after such a massive run, I too had an issue with Lucid Motors on a valuation basis — as well as the next stock on this list, Rivian.
I hope readers can discern the difference between a perma-bear vs. someone who was taking valuation and risk into consideration. I was bullish on the big dip, but after shares exploded to the upside again, I felt that Lucid was skating on thin ice.
For all intents and purposes, the company hadn’t even begun production and yet, at its highs it had generated a market cap in excess of $100 billion. In other words, Lucid Motors was worth more than Ford and GM but didn’t yet produce anything.
Why did that happen? The hype surrounding its new model and being “the next Tesla” made is so that no one wanted to miss out on nailing the next $1 trillion company.
I’m all for anointing stocks and rewarding them with aggressive valuations. But doing so when the company is effectively pre-revenue — it’s forecast to generate about $60 million in sales for 2021 — how in the world can it justify a $110 billion market cap?
That’s more than 50 times 2022 revenue estimates of $2 billion.
I like Lucid Motors and think its products look great. The driving range and capabilities are incredible. Is it the next Tesla? Maybe, but not yet.
Source: James Yarbrough / Shutterstock.com
Average Analyst Price Target: $132.93
I won’t go on a valuation rant again. Instead, I’ll simply point out that Rivian commanded a market cap of roughly $100 billion at the highs, again valuing it higher than both Ford and GM.
The premise is that Rivian’s electric pickup would take the market by storm. The reality is that Ford has the best-selling vehicle in the country and pent up demand for its electric pickup. GM will hit the market with its EV pickup, while Tesla’s Cybertruck should eventually hit the road too.
That said, Rivian has some nice catalysts of its own.
For starters, Amazon (NASDAQ:AMZN) is already an investor in the company, as well as a customer. Furthermore, George Soros’ firm recently took a notable stake in the automaker as well.
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I didn’t think Rivian deserved a $100 billion market cap (again, essentially pre-revenue). But if it can ramp up production, this could become one of the premium EV stocks when the bear market ends.
Electric Vehicle Stocks Analysts Love: XPeng (XPEV)
Source: Andy Feng / Shutterstock.com
Average Analyst Price Target: $59.49
I feel that Xpeng flies under the radar a bit. Is that because it’s a lesser-known Chinese EV maker trading on a U.S. exchange? The company trades at about 10 times 2021 revenue estimates, which is pretty rich for an automaker — EV or not.
That said, the stock is down about 50% from its highs, indicating that the stock traded at about 20 times 2021 revenue, which is incredibly rich. To some extent, though, the company can justify its valuation because of its growth.
Estimates call for 257% revenue growth this year from around $900 million in 2020 to $3.25 billion in FY 2021. Expectations for 2022 are lofty too, with estimates calling for 101.5% revenue growth to $6.54 billion.
That doesn’t mean the stock won’t go down more,e though. After all, we’re in a bear market with many EV stocks and while that storm will eventually pass, we simply don’t know when.
On the date of publication, Bret Kenwell held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
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