Through the Democratic budget bill that was recently signed into law, the U.S. government has adopted an aggressive, pro-growth policy that’s designed to fight climate change. Support for the electric vehicle (EV) sector is central to the legislation, which is known as the Inflation Reduction Act (IRA).

The bill includes $369 billion of  provisions related to climate and energy, including a great deal of support for the EV sector. Given the implications of the IRA, it’s a very good time to identify superb EV stocks to buy.

As shown by the table above, the most prominent EV stocks have unappealing valuations for now, according to Stock Rover. Their value will become more attractive when investors pour additional funds into the sector.

EV makers that are eligible for tax credits within the IRA will benefit the most from the legislation. Only companies that assemble EVs  in North America are now eligible for the $7,500 tax credit.

But investors should not ignore the manufacturers that are not eligible for the tax credit, since some of these names are still good EV stocks to buy and will enable investors to take advantage of the transition to EVs that will take a decade to unfold.

Ford Motor (F)

Ford Motor (NYSE:F) is accelerating its pivot from making gasoline-powered vehicles to manufacturing EVs. On Aug. 22 Ford cut 3,000 jobs, mostly in the U.S., Canada, and India.

Ford is reducing its costs to ensure that it has enough funds to transition to electric vehicles.

Importantly, Ford CEO Jim Farley said on the automaker’s quarterly conference call that the  demand for its EVs has been overwhelming.

Among Ford’s very popular EVs are the Mustang Mach-E, the Lightning, and the E-Transit. Ford has received a high number of orders for those models for the next few years.

Fortunately, the automaker expects to increase its monthly production steadily. Since it is selling its EVs immediately after they are completed, investors should expect Ford’s EV revenue to grow rapidly. Indeed, Farley anticipates that Ford’s EV sales will climb twice as quickly as the global EV average through 2026.

Fisker (FSR)

Fisker (NYSE:FSR) revised its production plans after the IRA was passed. Specifically, the firm will now explore U.S. manufacturing sites and will consider increasing its production of the Fisker Ocean in late 2023.

Fisker is confident that it will sell all of the EVs that it produces, as it has received more than 58,000  reservations from consumers, each of whom paid a $5,000 deposit.

Investors might worry about  inflation raising the cost of Fisker’s commodities. On the automaker’s recent earnings conference call, CEO Henrik Fisker said that, since the company is not yet producing EVs, the higher costs are not yet affecting it at this time. That frees the company to focus on several different prototypes.

Henrik Fisker said the company has already built 55 prototypes, tested all of them, and reviewed their design. This suggests that Fisker is well-positioned to meet its vehicle-production schedule.

By 2025, the firm will have four vehicles on the market, but it will need capital to fund those programs. Bears are betting that Fisker will have to sell more shares, diluting shareholders and putting pressure on the stock.  Almost 34% of the stock’s float is being sold short. If the short sellers are proven wrong, a short squeeze would send FSR stock much higher.

Lucid Group (LCID)

Only two analysts are covering LCID stock. Their average price target is $23.00,   42% above its current level.

The luxury EV supplier is nowhere near profitability. In Q2, Lucid lowered its 2022 production guidance. It reported revenue of $97.3 million after delivering 679 vehicles in the period.

Lucid can reward investors over the long-term, as it reported that it had received  over 37,000 reservations for its EVs. If  all of those EVs are sold, they would generate revenue of nearly $3.5 billion for the automaker.

Patient investors should consider waiting for the markets to punish LCID stock for Lucid’s weak guidance, as the firm cut its 2022 production guidance. It now expects to produce 6,000 to 7,000 vehicles, down from 12,000 to 14,000 previously. Lucid blamed bottlenecks, logistics challenges, and the supply chain for the reduction.

The company ended the quarter with $4.6 billion of cash. It has more than enough funds to last through 2023.

The demand for its EVs may stall if they do not qualify for America’s $7,500 tax credit. But Lucid is taking steps to help its customers qualify for the credit.

Mullen Automotive (MULN)

Mullen Automotive (NASDAQ:MULN) had around $99 million of cash and cash equivalents as of the end of Q2.

In the quarter, Mullen nearly tripled its research and development spending. In addition, it advanced its solid-state battery technology.

The company signed a binding agreement with DelPack Logistics, LLC. The customer is an Amazon Delivery Services Partner that will buy up to 600 of Mullen Class 1 EVs plus 2 EV cargo vans in the next 18 months.

Given its low market capitalization of $346.5 million, MULN stock is risky. Its operations will require more cash, and weak stock market conditions will hurt the firm’s ability to raise funds.

Still, investors who believe Mullen can launch successful, new solid-state batteries may consider buying its shares.

Polestar Automotive (PSNY)

Polestar Automotive (NASDAQ:PSNY)  more than doubled its deliveries in the first half of 2022 to 21,200 cars.

Polestar reported a 350% YOY increase of its global orders to 50,000. It also expects to deliver 50,000 units. CEO Thomas Ingenlath is confident that Polestar’s sales will accelerate, as its brand awareness and new model releases will drive demand for the EVs in the coming years. The company’s global expansion will increase its addressable market.

In the first six months of 2022, it operated in 25 markets, up from 19 previously. Its retail locations increased from 103 to 125. By the end of 2022, Polestar will add another 30 retail locations.

To attract enthusiasts, Poletar announced a roadster concept vehicle. The Polestar O2 is eye-catching. It showcases the vehicle maker’s bonded aluminum platform. Once the media writes glowing reviews of this vehicle, they could drive demand for the EV when Polestar releases it next year.

Rivian Automotive (RIVN)

Rivian Automotive (NASDAQ:RIVN) posted second-quarter revenue of $364 million. It lost $1.89 per share.

The company reaffirmed its 2022 production guidance of 25,000 EVs. However, it revised its full-year EBITDA guidance to -$5.45 billion. Rivian said it would continue to adopt its production to the unfavorable economic outlook. For example, it will reduce its operating expenses and its capital expenditures.

Rivian ended Q2 with $15 billion of cash. The company is in a good position financially to launch the R2 vehicle platform with the cash that it has on hand.

But investors need to watch for inflationary pressures on commodities. As of the end of Q2, raw material inputs and lithium prices had risen by over 115% since the start of the year.

If high prices persist,  Rivian’s long-term gross profit margins will be pressured. By 2024, Rivian will have sold 150,000 EVs. It will realize economies of scale as it leverages its fixed overhead and costs.

Tesla (TSLA)

Tesla (NASDAQ:TSLA) made its stock more affordable for retail investors with a stock split on Aug. 25. TSLA is due to post its production and demand figures in late September.

Earlier in the year, China’s anti-Covid policies disrupted the output of Tesla’s Shanghai factory. With the lockdown over, investors should expect strong productivity from this facility.

Tesla cut the delivery waiting time for its Model Y in China to between four weeks and eight weeks. Once the company figures out how to increase the output of its Texas and Berlin plants, its share of the EV market will accelerate.

Tesla CEO Elon Musk said the company would hike the prices of its Full Self-Driving System (or FSD) to $15,000, up from $12,000. That will have a positive impact on Tesla’s profit margins and increase Tesla’s cash flow, enabling it to invest further in FSD. As a result, Tesla will widen its lead against competitors who cannot offer the same level of autonomy.

On the date of publication, Chris Lau 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.