In the dynamic realm of electric vehicles (EVs), investor enthusiasm meets a reality check as major concerns over sales linger. Despite the apprehensions, the EV industry harbors a promising future, with projections suggesting a marked increase to 350 million EVs on the road by 2030, a staggering twentyfold leap from 2021. However, not all EV stocks will ride this wave of growth. As competition heats up, it becomes imperative for investors to carefully cherry-pick stocks with the potential for powerful growth and substantial value creation.
Three EV stocks stand out in 2024, each uniquely positioned for healthy expansion. These companies, distinguished by their resilient financials, are well-equipped to navigate the intensifying battleground. Their strength lies not just in surviving the ferocious competition but in leveraging it to fuel innovation and growth.
The key for investors is discernment. In a sector brimming with potential but also fraught with challenges, selecting EV stocks requires a focus on companies with sound financial health. As we cruise into a new era of electric mobility, savvy investment choices will be critical in driving long-term growth and value.
Albemarle Corporation (ALB)
Albemarle Corporation (NYSE:ALB), the world’s premier lithium producer, remains a standout pick for battery stock investors despite the market slowdown. Lithium, critical in EV battery manufacturing, has seen its prices plummet this year. Yet, Albemarle’s track record of weathering commodity market volatility and experts predicting a looming lithium shortage by 2025 indicates ALB’s fortunes are set to swing upwards, potentially as early as 2024. For those with patience and confidence in the burgeoning EV sphere, Albemarle presents a promising investment prospect poised for a rebound.
Despite recent challenges, Albemarle projects a robust 30% to 35% increase in sales for 2023, underlining a resilient outlook. With expectations of substantial revenue growth and a forecast of $700 million in operating cash flow, even amidst margin pressures, Albemarle is ready for a comeback. Once lithium prices bounce back, the company is well-placed to deliver impressive growth and cash flow.
Li Auto (LI)
Li Auto (NASDAQ:LI), is a standout among Chinese EV stocks, which has experienced a remarkable year and shows no signs of slowing down in 2024. In the third quarter of 2023, Li Auto reported a staggering 271.6% year-on-year (YOY) revenue increase to $4.61 billion. The successful launch of new EV models and an aggressive expansion of its retail network in China attribute to this incredible growth. Moreover, it achieved a healthy vehicle margin of 21.2% in the same quarter, translating into robust free cash flows and an expanding cash reserve.
Looking ahead to 2024, two key drivers are likely to sustain Li Auto’s growth momentum. Firstly, the company is set to begin mass deliveries of the Li MEGA in the first quarter of 2024, with support from its ongoing retail network expansion. Additionally, with more than $12.1 billion in cash and equivalents as of the third quarter, Li Auto is well-positioned for international expansion. Given these developments, Li Auto appears well-equipped to continue its upward trajectory, making it a compelling option for investors focused on the EV sphere.
Rivian (RIVN)
Rivian (NASDAQ:RIVN) stands at a pivotal juncture, bolstered by the prospect of increased U.S. tariffs on Chinese EVs, giving it a competitive edge. Its domestic production shields it from these tariffs, setting the stage for an advantageous market position. The imminent 2024 launch of Rivian’s next-gen R2 EV further brightens the outlook. This more affordably priced model could significantly expand Rivian’s customer base, addressing a wider market segment.
The company’s expansion plans are equally strategic, with a new manufacturing facility in Georgia set to produce the R2 model, reinforcing Rivian’s commitment to accessibility and innovation in the EV space. For investors, Rivian’s trajectory for 2024 appears mighty promising. The combination of favorable trade circumstances, strategic expansion, and product innovation positions the firm as a compelling investment choice, with the potential for substantial long-term growth and market impact.
Tesla (TSLA)
No EV stocks to buy list is complete without Tesla (NASDAQ:TSLA). Its commitment to innovation, as evidenced by its $2.9 billion investment in research and development in the first nine months of 2023, positions it as a juggernaut in the EV space. This substantial investment in R&D is a critical factor that positions Tesla at the forefront of the EV market. Supported by strong financial flexibility, Tesla’s ambitious global expansion plans remain on track, with multiple new factory setups anticipated in the coming years.
A significant boost to Tesla’s delivery growth is expected in 2024 with the commencement of Cybertruck mass production. Additionally, the launch of the Tesla Roadster, boasting an impressive 620-mile range, is on the horizon. These new models underscore Tesla’s continued innovation and appeal in the EV space. Looking further ahead, Tesla is poised to announce one or more Gigafactory locations next year, with India and Indonesia emerging as potential sites for long-term expansion in Asia and Southeast Asia. These developments align with Tesla’s ambitious goal to sell 20 million EVs annually by 2030. With these developments in the pipeline, optimism surrounding TSLA stock for the upcoming year is well-founded, underscoring a bullish outlook for the firm’s future.
Panasonic Holdings (PCRFY)
Panasonic Holdings (OTCMKTS:PCRFY), a renowned player in the EV battery sector, is ambitiously aiming for a major expansion in its battery capacity, targeting a fourfold increase to 200 GWh by 2031. Moreover, despite a recent hiccup with the cancellation of a planned battery plant in Oklahoma, it continues to maintain its 2031 objective, signaling potential new plant announcements in 2024.
Additionally, Panasonic Holdings’ strategy for growth is multifaceted and ambitious. Central to its plan is the expansion of its EV battery production capabilities, potentially quadrupling its current capacity. This increase is expected to drive substantial growth in both revenue and cash flow, reflecting the company’s strong commitment to the EV market. These strategic moves underscore Panasonic’s dedication to advancing technology and expanding its footprint in the evolving landscape of EVs.
BMW (BMWYY)
In a year where the EV market faced its fair share of challenges, BMW (OTCMKTS:BMWYY) stands out with its robust progress. Amid an economy that’s been less than favorable for luxury vehicle manufacturers, BMW’s brand equity has shone through, enabling it to maintain sales of its high-end cars. This resilience positions BMW as a potentially top EV stock for the year.
According to InsideEVs, A significant surge in BEV registrations, with a 308% increase reported for January through October, underscores the company’s growing dominance in the sector. A key move contributing to this success is BMW’s adoption of Tesla’s North American Charging Standard (NACS) for its EVs. This strategic decision enhances the convenience for drivers in North America, boosting the appeal of BMW EVs next year. As BMW continues to navigate the EV space with strategic initiatives and a strong brand presence, its potential for growth and success in the industry appears incredibly promising.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG), a key player in the hydrogen fuel cell space, finds itself at a pivotal juncture. Its technology, offering an alternative to traditional battery power, primarily in commercial and heavy-duty vehicles, places it in a unique position within the EV sector. However, it remains a high-risk, high-reward bet. Moreover, the company ambitiously aims for a $20 billion revenue target by 2030, with a gross margin of 35%, though near-term financial concerns loom large.
Furthermore, PLUG’s journey has been marred by recent setbacks, notably its disappointing third-quarter earnings, falling short of both top and bottom-line expectations. This underperformance has sparked analyst concerns about its sustainability, given its rapid cash burn rate. The path ahead for PLUG is fraught with uncertainties. Moreover, the management’s expectations of more lenient regulatory terms have been met with reality, creating an air of apprehension about the company’s future.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
