You’ve probably heard that electric vehicles are the way of the future. If that’s the case, how come some of the most hyped electric vehicle stocks are underperforming?
On the surface, electric vehicle stocks should be crushing it. Unlike combustion cars, the federal government is doing everything it can to assist you in making the transition to this new power system. It pays to be an EV driver, from tax breaks to the opportunity to use the carpool lane as a lone driver in some regions.
However, investing in electric vehicle stocks does not pay out — at least not for a number of predicted manufacturers. One can reasonably wonder whether this industry is worth considering.
While anything might happen, it’s probable that the market underperformance of many EV stocks is indicative of the sector’s current state.
According to Discourse contributor Emily Washburn, the industry has been “swathed in fantasy and hype for years.” “A variety of major economic, logistical, and environmental constraints suggest that electric vehicles will not be taking over the roads very soon, if ever,” she says.
That is a significant departure from the cliche that EVs are the future. Nonetheless, as author Robert Bryce pointed out in his excellent article for RealClear Energy, electric propulsion has been branded the “next great thing” for more than a century.
In this background, it’s not unexpected that many electric vehicle stocks have struggled since their initial public offering. EVs are not cutting-edge technology.
This does not, however, imply that you should abandon the industry totally. Moving forward, the most practical approach may be a market in which EVs and combustion automobiles coexist, with the latter maintaining a dominant market share.
Although it may not be what environmentalists want to hear, these electric vehicle stocks are for realists.
- General Motors (NYSE: GM)
- Ford (NYSE: F)
- Toyota (NYSE: TM)
- Honda (NYSE: HMC)
- Lucid Group (NASDAQ: LCID)
- Volkswagen (OTCMKTS: VWAGY)
- Panasonic (OTCMKTS: PCRFY)
Although some EV stocks appear to be well-positioned for long-term success, the entire industry has been fragile due to external variables like as geopolitical concerns and speculation about how the Federal Reserve would respond to rising consumer inflation. As a result, take these ideas with a grain of salt and, above all, conduct your own research.
GM (General Motors) (GM)
When it comes to vehicles, I’m generally an import guy — perhaps because I’m an import myself. Furthermore, I’ve never been a fan of American automakers. General Motors, on the other hand, is influencing people’s perceptions, including mine.
While General Motors has long been recognized for vehicles such as the Camaro and the Firebird, the business is also creating a name for itself as one of the best electric vehicle stocks to invest in. General Motors can have its cake and eat it too with the creation of the GMC Hummer EV Pickup and SUV.
Driving aficionados (and affluent soccer mothers) may enjoy the legendary Hummer brand while leaving a smaller carbon footprint.
If GM’s performance projections are true, the pickup will go from zero to sixty in three seconds, while the SUV would take 3.5 seconds.
The beautiful part is that GM hasn’t forgotten its racing heritage. Its eighth-generation Corvette is crushing it on the showroom floor. This is one of the EV stocks you can trust, with a mix of combustion and electric.
Ford Motor Company (F)
Before I go any further, you should be informed that I own stock in Ford.
Because I have a vested interest in the company, please keep in mind that I may have a hidden prejudice that influences my appraisal of it.
With that caveat aside, I honestly feel that Ford is one of the electric vehicle stocks in which you can have faith in the long run.
Back in July 2020, I emphasized the importance of the company’s Mustang Mach-E. True, auto aficionados were dissatisfied with the Mustang brand being associated with an SUV.
To sound morbid, but the main demographic for traditional Mustangs — those with those strong V8 engines — has been dwindling. Consumers today want functionality with performance embedded in.
The Mach-E, on the other hand, does just that, and recent sales figures back it up. Ford sold 27,140 electric SUVs last year, making it the category’s second-best seller. Only the Tesla (NASDAQ: TSLA) Model Y came out on top, which is a remarkable achievement.
On paper, the influx of electric vehicle inventories has put some pressure on good ol’ Toyota, which has long been known for its tradition of fairly priced and reliable combustion automobiles.
Add to it the devastating impact of the coronavirus pandemic on global supply lines, and the corporation appeared extremely vulnerable.
However, the company’s shift toward electric propulsion merits consideration as a long-term EV stock to purchase. Furthermore, I appreciate Toyota’s foresight in developing novel technology, such as the announcement of a simulated manual transmission for electric vehicles.
At first glance, the premise appears absurd. Using a mimicked manual transmission in an EV, complete with a clutch pedal that simulates the experience of driving a gasoline automobile, will almost certainly cause the vehicle to run slower.
However, it could also be a brilliant decision because it allows for a more natural transition for dedicated gearheads.
Even if this patented technology is never put into production, Toyota’s research and development with solid-state batteries has the potential to transform the EV market. It is now striving for integration with hybrid automobiles. As a result, if you have a long time horizon, TM could be one of the EV stocks to consider.
Honda, one of the world’s most popular automakers, built its reputation on legendary dependability — and, for any JDM enthusiasts reading this, VTEC!
But, seriously, I can’t emphasise enough how well-made these vehicles are. While it’s anecdotal, I’ve heard numerous examples of individuals abusing their Hondas and forgetting to perform regularly scheduled maintenance items, and still they remain going strong.
And if you don’t trust the anecdotes, that’s great. Simply reading any automobile magazine will validate Honda’s position as one of the most trustworthy vehicles.
However, we don’t hear much about the company’s position as one of the leading electric vehicle stocks. To be truthful, Honda’s entry into the EV industry is a touch concerning in terms of styling.
Nonetheless, management has pledged to electrify two-thirds of worldwide auto unit sales by 2030.
If it does not achieve that milestone for any reason, don’t worry. Honda will continue to seek its major source of revenue: low-cost, fuel-efficient, and dependable cars for the average household, not simply the wealthy who can afford EVs.
The Lucid Group (LCID)
When we’re talking about wealthy people, we have to bring up Lucid Group. One of the most popular concerns about electric vehicle stocks, particularly those that have challenged Tesla’s dominance, is that their underlying products are far too expensive for the average household, which makes around $70,000.
Granted, certain markets will make far more than others, but with the average EV costing $56,437, it’s not something that many families can easily afford, which is why I feel Lucid Group is one of the EV stocks to trust.
The corporation makes no apologies for catering to the wealthy. And guess what? Affluent buyers like Lucid, with the company’s Dream Edition — which costs $169,000 — being sold out.
Moving forward, EV stocks will most likely gravitate toward the middle-class demographic. However, until the market gets large enough to justify economies of scale, Lucid can continue to pamper the wealthy.
VW (Volkswagen) (VWAGY)
Volkswagen, one of the world’s most recognisable automakers, has set a new goal: to become one of the top electric vehicle companies.
The leadership team is preparing to develop a new EV factory, so it’s not simply wishful thinking. Despite missing production objectives due to the prolonged semiconductor shortage, the company is eager to lay the groundwork for its electric ambitions.
If you’re confused about which of the much-hyped EV darlings will actually make it, consider Volkswagen.
VWAGY is simply more reputable than a newly minted enterprise, even if it won’t help you reap the crazy profits from a long-shot wager going right.
Furthermore, the company can appeal to a wide range of income levels. For example, the 2023 Volkswagen ID.4 is an all-electric compact crossover expected to cost roughly $35,000.
Although not particularly interesting in terms of performance, the ID.4 may appeal to those who simply want to get from point A to point B.
Volkswagen also owns Porsche, which is entering the EV market with the Taycan. This German juggernaut may be in for some exciting days ahead.
Though hardly a household brand in the world of electric vehicles, consumer electronics giant Panasonic has long supported the industry with its EV battery packs.
As you may know, the company has had a lengthy connection with Tesla, which has helped it become the leading brand in the EV industry.
Furthermore, Euronews stated in late January of this year that “Panasonic would begin producing a new lithium-ion battery for Tesla as soon as 2023, with plans to invest some 80 billion yen (€622 million) in Japanese production facilities.”
In October of last year, the electronics company debuted the 4680 format battery, which might be a game-changer.
Panasonic is currently the sole supplier of Tesla’s sophisticated battery packs, giving PCRFY a significant advantage over alternative battery providers. According to all indications, this domination will continue in the future.
Josh Enomoto maintained a LONG position in F as of the date of publishing. The author’s views are stated in this article, which is subject to the InvestorPlace.com Publishing Guidelines.
Josh Enomoto, a former senior business analyst for Sony Electronics, has assisted in the negotiation of large contracts with Fortune Global 500 businesses. He has provided unique, vital insights for the investing markets, as well as other industries such as legal, construction management, and healthcare, during the past many years.
This article is for educational and knowledgeable purposes only. This article does not provide advice/recommendations for investment in the stock market and is relevant. Before investing, make sure that you have a piece of good knowledge of that field.