In this piece, we will take a look at the 12 best EV stocks to buy for 2024. If you want to skip our introduction to the electric vehicle industry and how recent trends have shaken investor faith, then you can take a look at 5 Best EV Stocks To Buy For 2024.
The electric vehicle industry is one of the few sectors right now that most believe will yield massive dividends in the future. This is because the sector is relatively nascent when compared to several other industries. For instance, the personal computing market is more than three decades old, and the true growth here has come over the past decade as advances in the Internet and processing power have created demand and reduced costs for the products. Similarly, the EV sector's largest rival, the internal combustion automotive industry, is a century old after its first roots were put in place by Rolls-Royce and the Ford Motor Company (NYSE:F) in the early 20th century.
Like personal computing, electric vehicles have had to overcome manufacturing bottlenecks to ensure that they can be produced in sufficient volumes to reduce per unit fixed costs and generate substantial revenue to fund future growth. At the heart of today's electric vehicle race is Tesla, Inc. (NASDAQ:TSLA), whose manufacturing troubles at the tail end of the 2010s helped set up the foundation for mass production. Now, dozens of other companies also make and sell either pure electric vehicles or hybrids. These also include big ticket traditional car manufacturers such as Ford and the General Motors Company (NYSE:GM).
The difference between GM and Ford's market capitalization compared to Tesla's is the biggest indicator of how investors view EVs and traditional cars differently. For instance, consider the market cap of the former two. Combined, the pair is currently valued at $88.1 billion - a substantial figure that makes them among the most valuable companies in the world. Their price to earnings ratio ranges between 4 to 7, indicating that they are viewed as stable companies with few potentially explosive growth catalysts down the road.
On the other hand, Tesla's latest market value sits at a whopping $738 billion, nearly nine times the value of the two traditional car companies combined. This is a feat that many would have thought impossible when Tesla first attempted to make a car in the early 2000s. At the heart of Tesla's progress is its vehicle production and well built factories that are among the leading edge of their kind in the world. Making more cars allows Tesla to reduce their prices and capture more market, with one of the fundamental assumptions about its business model being that, unlike other companies who have to create demand for their products, the demand for electric vehicles already exists in substantial volumes.
Yet, despite the rosy outlook for the electric vehicle industry, 2023 has been quite tough on the industry. The year has been marked by high inflation and high interest rates, both of which aren't too great for high growth industries. High interest rates make it difficult to run everyday business operations and raise sufficient capital for any expansion plans while high inflation not only makes electric vehicles more expensive but also saps demand in a double whammy reinforcement cycle since manufacturers are also forced to raise prices at the same time to protect their margins.
These difficulties have manifested themselves during the tail end of 2023. One such development came in the form of GM and Honda withdrawing their $5 billion plan to develop electric vehicles together in October 2023. Their partnership, announced a couple of months earlier in April, was quite important for the electric vehicle industry since they were aiming to develop low cost EVs. These are necessary to break the world's dependence on internal combustion vehicles as price is one of the biggest limiting factors behind why firms like Tesla are unable to sell more cars.
Just as the car makers are suffering from a tough economy, demand for electric vehicles is also slowing. Data from Cox Automotive shows that between January and the start of October, the average days of inventory for electric vehicles jumped from 52 to peak at 111 days in July to slightly drop to 97 days in October. This means that dealerships are taking longer to sell electric vehicles, a crucial development that underscores the need to make cheaper EVs since the days of inventory for IC cars have remained stable this year.
So, with these details in mind, let's take a look at some top EV stocks to buy in 2024. The top three stocks are General Motors Company (NYSE:GM), Tesla, Inc. (NASDAQ:TSLA), and Ford Motor Company (NYSE:F).
12 Best EV Stocks To Buy For 2024
Our Methodology
To make our list of the best EV stocks to buy for 2024, we made a list of 42 companies that are directly engaged in making EVs or designing them. Then, those with the highest number of hedge fund investors during Q3 2023 were selected.
XPeng Inc. (NYSE:XPEV) is a Chinese EV company that makes and sells SUVs, sports sedans, and family sedans. While EV firms in the U.S. are struggling, XPeng Inc. (NYSE:XPEV)'s November deliveries jumped by 245% annually as it continued to unlock demand.
For their September quarter of 2023 shareholdings, 13 out of the 910 hedge funds surveyed by Insider Monkey had held a stake in the company. Out of these, XPeng Inc. (NYSE:XPEV)'s largest shareholder is D. E. Shaw's D E Shaw as it owns $83.7 million worth of shares.
XPeng Inc. (NYSE:XPEV) joins Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F) in our list of the best EV stocks to buy for 2024.
Fisker Inc. (NYSE:FSR) is an American electric vehicle company headquartered in Manhattan Beach, California. Like other EV companies, the firm is also struggling in a tough economy that made it cut production for December to ensure it remains cash flow healthy.
As of Q3 2023 end, 14 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Fisker Inc. (NYSE:FSR).
REV Group, Inc. (NYSE:REVG) is an American first responder vehicles provider that is also making moves in the EV space. Its E-One truck is the first fully electrified electric truck in North America, providing REV Group, Inc. (NYSE:REVG) with a key advantage in the heavy duty EV space.
Insider Monkey's third quarter of 2023 survey covering 910 hedge funds outlined that 15 were the firm's shareholders. REV Group, Inc. (NYSE:REVG)'s biggest investor in our database is Richard S. Pzena's Pzena Investment Management due to its $55.5 million investment.
Toyota Motor Corporation (NYSE:TM) is one of the world's largest car companies. Its EV plans faced a setback in 2023 when the firm ended its partnership with GM to make low cost vehicles.
After scouring through 910 hedge funds for their September quarter of 2023 shareholdings, Insider Monkey found that 15 had bought and owned Toyota Motor Corporation (NYSE:TM)'s shares. Ken Fisher's Fisher Asset Management was the largest shareholder as it owned $1 billion worth of shares.
Lucid Group, Inc. (NASDAQ:LCID) is a premium electric vehicle company that makes and sell high end, luxury cars. Its shares were under stress in late November after Needham downgraded them to Hold from Buy on the back of slow demand for its products.
As of September 2023, 18 out of the 910 hedge funds profiled by Insider Monkey had invested in Lucid Group, Inc. (NASDAQ:LCID).
NIO Inc. (NYSE:NIO) is one of the largest electric vehicle companies in China. Its third quarter financial results saw the firm grow its vehicle deliveries by 75% annually, lending credence to its stable position in China's EV industry.
After sifting through 910 hedge funds for their third quarter of 2023 shareholdings, Insider Monkey discovered 18 NIO Inc. (NYSE:NIO) shareholders. Among these, the biggest hedge fund investor in our database is Jim Simons' Renaissance Technologies courtesy of its $37.9 million stake.
Blue Bird Corporation (NASDAQ:BLBD) is an American company that is focusing on developing electric buses. It's a top rated stock, as the shares are rated Strong Buy on average and analysts have set an average share price target of $27.58.
21 out of the 910 hedge funds profiled by Insider Monkey were the firm's shareholders in Q3 2023. Blue Bird Corporation (NASDAQ:BLBD)'s largest investor among these is Michael Braner, Daniel Friedberg, and Anil Shrivastava's 325 Capital as it owns $25.2 million worth of shares.
General Motors Company (NYSE:GM), Blue Bird Corporation (NASDAQ:BLBD), Tesla, Inc. (NASDAQ:TSLA), and Ford Motor Company (NYSE:F) are some top hedge fund EV stock picks.
