The stock market is currently under pressure, as the U.S. economic report last week indicated a significant slowdown in growth and persistent inflation issues. Amidst this downturn, savvy investors are looking for EV stocks to buy.
The U.S. GDP grew by only 1.6% in the first quarter, below the anticipated 2.4% growth rate, as reported by the Bureau of Economic Analysis. Moreover, the personal consumption expenditures price index rose to 3.4%, up from 1.8% in the previous quarter, signaling ongoing inflationary pressures.
However, as financial markets face turbulence, certain sectors stand out for their potential resilience and growth prospects. The electric vehicle sector, known for its rapid innovation and alignment with global sustainability goals, is one such area.
According to S&P Global, by 2030, electric cars are expected to make up more than a quarter of new passenger vehicle sales. That presents a strategic opportunity for investors to consider adding undervalued EV stocks to their portfolios during market downturns. Here, we explore three top EV stocks becoming increasingly attractive as their prices pull back, offering promising prospects for savvy investors ready to capitalize on the next wave of automotive evolution.
Li Auto (LI)
With a clear focus on extended-range electric vehicles (EREVs), Li Auto (NASDAQ:LI) is uniquely positioned to benefit from the growing demand for environmentally friendly transportation solutions. The company operates in a highly competitive market, with a number of players vying for a share of China’s booming EV sector. Despite this, Li Auto has distinguished itself with its EREVs, setting it apart from competitors that primarily focus on fully electric models.
In 2023, Li Auto expanded its product lineup, introducing several new models that have been well-received by the market. The introduction of the Li L9, a luxury SUV, and the expansion into more compact SUVs with the Li L7, highlights Li Auto’s commitment to diversifying its portfolio and tapping into different consumer segments.
The company’s stock has done well over the past year. However, analysts are still bullish and have an average price target of $51.41 on the stock. That presents a potential 105% upside in the near term.
NIO (NIO)
NIO (NYSE:NIO), often hailed as China’s answer to Tesla (NASDAQ:TSLA), has carved out a significant niche in the electric vehicle market. Despite current macro pressures, NIO’s strategic initiatives and robust delivery metrics speak volumes about its resilience and potential for growth.
In the latter half of 2023, NIO demonstrated a commendable operational rebound, with vehicle deliveries reaching near-record levels. The consistent uptick in quarterly deliveries, culminating in 50,045 vehicles for Q4 2023, highlights NIO’s robust production capabilities and growing consumer demand.
NIO has not just focused on ramping up production, it has also strategically expanded its product line. The introduction of sub-brands and entry into lower-priced vehicle segments indicates NIO’s intent to capture a broader market base. The launch of the Alps brand, targeting a starting price of around $28,000, positions NIO attractively in the competitive mass-market segment, potentially increasing its market share and brand penetration.
BYD (BYDDY)
BYD (OTCMKTS:BYDDY) has established itself as a leader in the electric vehicle industry. In 2023, BYD became the world’s largest EV manufacturer based on sales, surpassing even Tesla. The company sold over 1.86 million EVs, marking a significant increase from the previous year. The vehicle sales include a combination of pure electric vehicles and plug-in hybrids, showcasing BYD’s versatile approach to catering to various consumer needs and preferences.
At the core of BYD’s technological edge is its Blade Battery, renowned for its safety and efficiency. The proprietary technology not only enhances the safety profile of electric vehicles by reducing the risk of battery fires but also offers higher energy density, which extends the driving range. In practical terms, BYD’s Blade Battery allows vehicles to achieve a range increase of up to 50% compared to earlier models, offering distances that rival those with gasoline engines.
BYD’s strategic expansion beyond China has been key to its global footprint. With operations extending to Europe, South America and Southeast Asia, BYD has not only diversified its market presence but also its revenue streams.
On the date of publication, Mohammed Saqib did not hold (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.