The global automotive industry is undergoing a transformation driven by the rise of electric vehicles (EVs). Investing in EV stocks offers a gateway to a thriving auto market, with established automakers transitioning to EVs and new entrants fueling fierce competition and substantial growth opportunities. EVs encompass not only vehicles but an entire ecosystem, from battery manufacturers to charging infrastructure providers and autonomous driving software developers. Here are three top EV stock picks for investors seeking substantial growth over the next decade.
- BYD Co. (BYDDF) BYD Company (OTCMKTS: BYDDF) has experienced a 12% stock price increase in the past year, largely driven by its promising growth prospects. Despite this growth, BYDDF stock remains attractive with a forward price-to-earnings ratio of 27.6x. The company recently made a strategic move to acquire Jabil Inc.’s (NYSE: JBL) mobility business in China, potentially strengthening its presence in electric components. Jabil is a producer of printed circuit boards used across various sectors, including EVs and smartphones. In August, BYD achieved record-breaking sales, delivering 274,386 vehicles—a 5% increase from July and a remarkable 57% surge from the previous year. The company aims to sell a minimum of 3 million vehicles this year, necessitating an average monthly delivery of nearly 302,000 vehicles for the remainder of the year. While Tesla (NASDAQ: TSLA) leads in global EV sales, BYD dominates the Chinese market, ranking as the country’s largest automaker and 10th globally in the first half of 2023.
- Li Auto (LI) Li Auto (NASDAQ: LI) is experiencing rapid growth driven by new vehicle models and an expansive retail presence in China. In Q2 2023, the company reported a remarkable 229.7% year-over-year revenue surge, reaching $3.86 billion. Li Auto boasts a 21% vehicle margin and $1.33 billion in free cash flow. With $10.17 billion in cash reserves, the company has ample financial flexibility for expansion and innovation. LI stock has been on an upward trajectory since October 2022, reaching a high of $47 by August 2023. Li Auto is a prominent Chinese EV manufacturer known for its smart SUVs featuring extended-range technology, particularly the Li L7 SUV. It competes directly with Tesla’s Model Y and is witnessing rapid growth in China amid surging EV demand. Consistently rising monthly sales underscore strong demand, while its extended-range technology sets it apart.
- XPeng (XPEV) XPeng (NYSE: XPEV) is a Chinese smart EV manufacturer committed to accelerating the transition to smart electric vehicles through technology and innovation. The company is experiencing rapid growth in its core segment, and other key factors make it an intriguing stock to consider. Notably, XPeng introduced its X2 flying car in Dubai last October and subsequently obtained a special flight permit from the Chinese government. This achievement makes XPeng the first Chinese flying car company with flight safety certification. The X2, unveiled in July 2021, underwent over 3,000 experiments and tests and is uniquely designed to fit in a home garage. Additionally, XPeng acquired the smart EV unit of the Chinese ride-hailing company DiDi. This acquisition enables XPeng to not only develop cost-effective EVs but also collaborate on autonomous ride-hailing services (robotaxis). XPeng’s advanced autonomous technology, already in testing for robotaxis, combined with DiDi’s extensive customer base, holds the promise of substantial future profits. Furthermore, the planned $20,000 EV in partnership with DiDi is expected to feature autonomous driving capabilities, likely attracting significant attention in China and globally.
