Carnage in EV Stocks Means Opportunities for Long-Term Investors

Why EV Stocks Should Be Part of Investment Portfolios

The carnage in electric vehicle (EV) stocks has been devastating this year. KraneShares Electric Vehicles and Future Mobility Index ETF (NYSE:KARS) is down 42% from its 52-week high as investors dump EV stocks.

However, the price deterioration is providing opportunities to find some wonderful stocks at far more compelling entry points.

While it will take years to develop, there’s no backtracking on the worldwide move to electrify all types of vehicles, from passenger cars to commercial trucks and buses.

Allied Market Research predicts that the global EV market could expand to $802.8 billion by 2027, compared to $162.3 billion in 2019. And this may be conservative, given the extent of the adoption of EVs. (Source: “Electric Vehicle Market,” Allied Market Research, last accessed December 6, 2022.)

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Not only are we seeing a rise in pure-play EV stocks, but we’re also seeing the legacy automakers jumping in headfirst.

The research suggests the Asia-Pacific EV market could rise to $357.8 billion by 2027, while EV sales in North America could grow to $194.2 billion.

In anticipation of the shift to EVs, countries around the world are rapidly increasing the scale of their EV infrastructure. We’re witnessing strong EV infrastructure growth in the U.S., while early adopters China and Europe are already heavily invested in it.

My Top EV Stocks for the Next Decade

EV stocks have been in a nasty bear market since staging impressive upside moves in 2020 and 2021.

At this point, the majority of domestic and foreign EV stocks are hemorrhaging at levels well below their highs. Now, while the initial surge in the price of EV stocks was excessive, the selling has been, too.

EV leader Tesla Inc (NASDAQ:TSLA) has seen much better days after sinking 48% in 2022. While there are issues with the company’s operations in China and Europe, Tesla stock remains the premium EV play. Moreover, it currently has its sights on the massive Indian market. A move into India would be a game changer.

Chart courtesy of StockCharts.com

Another domestic, pure-play EV company that’s beginning to deliver strong revenue growth as it ramps up production is Rivian Automotive Inc (NASDAQ:RIVN). After its initial surge, Rivian stock has plummeted 71% in 2022 to the point where it’s a compelling opportunity to consider.

Chart courtesy of StockCharts.com

Shifting to the legacy automakers, I see vast opportunities, given that the companies also generate significant revenues from gas-powered vehicles, so these players have more diverse revenue streams.

My top legacy automaker picks are General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), Volkswagen AG (OTCMKTS:VWAGY, OTCMKTS:VWAPY), Stellantis NV (NYSE:STLA), and BYD Company (OTCMKTS:BYDDY).

Chart courtesy of StockCharts.com

For the extreme risk taker, there are the Chinese EV stocks NIO Inc (NYSE:NIO) and Xpeng Inc (NYSE:XPEV).

Chart courtesy of StockCharts.com

Analyst Take

My take on the current price weakness of EV stocks is for investors to consider accumulating small positions and monitoring them over the next decade as EVs become more of a mainstay in everyday life.