Electric vehicles (VE) are the future of the auto industry. Despite the coronavirus pandemic, the EV market is becoming more electrified than ever. There is great optimism in space. Retail investors are profiting from the aggressive purchase of EV shares. Advances in technologies, stricter emissions and fuel savings targets, as well as increasing the commercial viability of EVs – both in terms of accessibility and charging infrastructure – are driving the environmentally friendly EV market. Investors are intrigued by automakers looking for solutions to reduce global carbon emissions, providing a cleaner energy future.
This year, IPO registrations for green vehicle manufacturers – including Nikola, Li Auto, Hyliion and Fisker – have increased to capitalize on the EV frenzy. With big auto makers, pure EV games and small and medium-sized startups actively focusing on the development of environmentally friendly vehicles, the race for EV supremacy will only become more intense in the coming years.
EV sales worldwide are projected to grow 50% or more in 2021 compared to ICE’s expected sales growth of a measly 2-5%, as predicted by Morgan Stanley analysts, cited in a MarketWatch article. Global EV penetration is projected to jump from 3% to 31% by 2030. According to a Deloitte report, the EV market is estimated at 31.1 million units in 2030 from 2.5 million units in 2020 , witnessing a CAGR of 29% during the forecast period.
If you want to bet on the most environmentally friendly mode of transport, the obvious choice will be pure EV players and old car makers who are investing large sums of money to switch to electric mode. However, it is also possible to explore the growing EV market with battery manufacturers, lithium readers, car suppliers, semiconductor stocks and charging companies. In this article, we will highlight five actions in which you can invest to profit from the eu euphoria.
Our choices
Tesla TSLA: Well, we’re talking about EVs and despite Tesla’s high ratings, this EV king is at the top of the list. Although electric cars occupy a small portion of the global automotive market, Tesla has gained substantial market share in this niche segment. With the model 3 sedan being its flagship, Tesla has established itself as a leader in the EV segment.
For the entire year 2020, Tesla maintained its goal of exceeding 500,000 vehicle deliveries, indicating an increase of 36% year after year, despite production interruptions amid problems with the coronavirus. It has a pioneering advantage in the EV space with long-range vehicles, superior technology and the latest technology. The robust demand for the Model 3, the increased production of the Model Y, the significant progress of Shanghai Gigafactory, an incredible line of future products and aggressive expansion efforts are a good omen for this company Zacks Rank # 1 (strong buy). Zacks’ consensus estimate for its earnings in 2021 indicates a 58.8% year-over-year increase. You can see the complete list of today’s Zacks # 1 Rank stocks here.
General Motors GM: This legacy carmaker is using every effort to demonstrate its EV efficiency. It has adopted an all-in electrification strategy, through which it will gain a competitive advantage in batteries, software, vehicle integration, manufacturing and customer experience to make EVs the primary catalyst for increasing the company’s profitability.
The third generation global EV platform powered by Ultium batteries will be the heart of the electrified future of the United States auto giant. The Ultium modular battery platform will power the automaker’s new electric cars, starting with the Cadillac Lyric model. This Zacks Rank # 1 automaker is also accelerating plans to launch electric cars and trucks over the next five years, and plans to spend $ 27 billion by 2025 on the initiative. It is scheduled to reveal 30 EVs by 2025, two-thirds of which will be available in North America. Strategic collaborations with Honda and EVgo are expected to accelerate General Motors’ EV game. Zacks’ consensus estimate for its earnings in 2021 indicates a 58.2% year-on-year increase.
BorgWarner Inc. BWA: Investors can capitalize on the optimistic outlook for the EV market by investing in companies that provide energy solutions to car manufacturers. The companies are focused on innovation and technology development and hope that hybrid and electric technologies will increase their revenue in the future. In that sense, BorgWarner makes a promising bet.
In the long run, she expects hybrid and electrical technologies to be the main revenue drivers. The electrification programs are likely to take the order book from this company Zacks Rank # 2 (Buy). From 2021 to 2023, the new net backlog is expected to be at least $ 2.1 billion. With a diverse range of products, products that serve hybrid and electric vehicles are projected to lead to more business gains by 2023. The strength of BorgWarner’s balance sheet and investor-friendly initiatives increase investor confidence. Zacks’ consensus estimate for its earnings in 2021 indicates a 58.2% year-on-year increase.
NVIDIA Corporation NVDA: Technology is changing the dynamics of the automotive industry and semiconductors are at the heart of the technology. The more technologically advanced the EV, the more semiconductors it requires. So basically, chips matter when it comes to EVs and investors can play the EV revolution with semiconductor stocks as well. One such action worth betting on is NVIDIA, which currently carries a Zacks Rank # 2.
The launch of Drive AGX Orin by the company deserves a special mention. It is a highly advanced software-defined platform for autonomous vehicles and robots powered by a new system on a chip called Orin, which consists of 17 billion transistors. It was recently selected by Li Auto in an attempt to accelerate the development of its next generation of EVs. Higher sales of artificial intelligence and traction cockpit solutions witnessed by automotive platforms for infotainment systems position the company well to capitalize on the EV boom. Zacks’ consensus estimate for its 2022 tax gains indicates an 18.7% year-on-year increase.
Panasonic Corp PCRFY: With batteries being the most important component of a green vehicle, the overall cost, performance and range of an electric car depends mainly on it. With the electric car revolution about to take off on a large scale, the battery industry is expected to witness exponential growth in the coming years. Panasonic, which currently carries a Zacks Rank # 2, looks like an attractive bet.
The company is a major player in the development of state-of-the-art lithium-ion batteries for green vehicles. Continuous research and cutting-edge technology have kept Panasonic at the forefront of battery development. Its advanced lithium-ion battery technology offers improved energy density, lower costs and improved autonomy. Strategic partnerships with major automotive companies like Tesla and Toyota are likely to increase the company’s prospects. Notably, the company aims at zero cobalt in battery cells and plans to commercialize cobalt-free batteries in a few years. Zacks’ consensus estimate for its 2022 tax gains indicates an 82.1% year-on-year increase.
Zacks Top 10 Stocks for 2021
In addition to the actions discussed above, would you like to know about our top 10 tickers for the entire year 2021?
These 10 are carefully handpicked from over 4,000 companies covered by Zacks Rank. They are our primary choices for buying and maintaining. Start your access to the new Zacks Top 10 Stocks >>
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BorgWarner Inc. (BWA): Free Stock Analysis Report
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