In this piece, we will take a look at the 13 most undervalued EV stocks to buy according to analysts. If you want to skip our overview of the global electric vehicle industry and the latest trends, then you can take a look at the 5 Most Undervalued EV Stocks To Buy According To Analysts.
While some high growth sectors such as high performance computing, cloud networks, and data centers have seen robust performance in 2024 particularly when artificial intelligence is thrown into the mix, others like clean energy have struggled in the changed global monetary environment.
The aftermath of the pandemic era government spending and the Russian invasion of Ukraine's effects on monetary policy has made it difficult for firms to find capital to fund their expensive manufacturing plants and for consumers to squeeze in pricey electric vehicle purchases in their budgets.
Coupled with instability in the raw material markets, particularly the one for lithium that has nearly stripped all incentives from mining companies to produce the battery metal, electric vehicle stocks are having a bumpy road on the market. As an example, consider three pure play EV stocks, Tesla, Inc. (NASDAQ:TSLA), Lucid Group, Inc. (NASDAQ:LCID), and NIO Inc. (NYSE:NIO). Their share price performance year to date is affected by factors related to the U.S. electric vehicle market, the firms' business environment, and those present in China. The lackluster Chinese economic conditions are also responsible for the slowdown in lithium prices as a slowdown in EV demand in the country has meant that producers whose output is designed to match heavy demand sit with excess lithium on their hands, in a situation that's also called a glut.
For instance, the worst performing EV stock among these three is the Chinese firm NIO, whose shares are down by 30% year to date. This drop has been fueled by weakening analyst sentiment, with notable downgrades from JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corporation (NYSE:BAC). Both have downgraded NIO's shares, and BofA led the bank in January when it slashed NIO Inc. (NYSE:NIO)'s shares to Neutral from Buy. Like JPMorgan's later downgrade to Underperform from Neutral, Bank of America analysts shared that a lack of new models will hinder the firm's ability to effectively compete in the cut throat Chinese electric vehicle industry. They also added that since NIO has yet to introduce new models, it might have to increase its marketing spending in the coming months and years. While spending on marketing is good, the BofA analysts believe that if NIO is also forced to cut its prices, then the lower revenue could constrain its margins.
Shifting focus on Tesla, its shares fell in 2022 and then recovered some of the losses last year. In 2024, the firm's shares tanked by 12% after its revenue of $25.17 billion and EPS of 71 cents ended up missing analyst estimates. This led short sellers to make billions of dollars according to some estimates, and the outlook was gloomy as the world's biggest pure play electric vehicle company warned that sales growth in 2024 could be slower.
Tesla was not the only electric vehicle stock that left investors thirsting for more in the wake of its fourth quarter earnings. Another such stock was Rivian Automotive, Inc. (NASDAQ:RIVN). The stock is down a whopping 47% year to date, after management shared during earnings that "challenging macro-economic conditions" would lead it to make 51,000 vehicles this year - a hefty drop from what analysts were expecting. However, Rivian investors were nevertheless comforted by the fact that the demand for its vehicles is solid, as evidenced by a revenue beat.
Looking at how these trends have affected EV stocks as a whole, the performance of the S&P Kensho Electric Vehicles Index provides us with a benchmark. Unsurprisingly, the index is down by 13% over the past twelve months. Over the past three years, the index is down by 23%, highlighting that while stocks such as Tesla have nevertheless posted some returns during the period, the broader EV sector has struggled in the era of high rates and high inflation. Narrowing down our EV stock index performance band to six, three, and one month, quarter to date, the index is down 6.9%, while over the month it is flat. The six month performance is -6%.
Tesla’s stock declined slightly in the period because the core automotive segment remained under pressure. A complex macroeconomic environment, higher interest rates, a two-week factory shutdown, and Tesla’s car price reductions throughout the year pressured its near-term growth and margin profile. Nonetheless, Tesla continues to generate sufficient gross profit to support robust product development. Tesla also started to deliver its highly anticipated Cybertruck, its first pickup truck. There has been tremendous consumer interest in the truck and new technologies within the vehicle and its manufacturing lines. Tesla’s refreshed Model 3 also seems to be generating strong demand while improving unit-level economics. We anticipate a new lower priced vehicle being introduced next year to address a much larger market segment. Finally, investors expect Tesla to benefit from its investment in AI through development of autonomous driving technology Dojo (an AI training computer), Autobidder (an automated energy trading platform), and Humanoid (a human-like robot)
Finally, before we look at the most undervalued EV stocks according to analysts, 2024 appears to be the end of Apple Inc. (NASDAQ:AAPL)'s foray into the electric vehicle industry. Multiple reports in the press suggest that its 'Apple Car' project has been shelved, which is unsurprising considering the significant manufacturing investments needed to successfully mass produce a car.
So, which EV stocks are the most undervalued according to analysts? We took a look and a couple of notable names are Fisker Inc. (NYSE:FSR), Canoo Inc. (NASDAQ:GOEV), and Electrameccanica Vehicles Corp. (NASDAQ:SOLO).
13 Most Undervalued EV Stocks To Buy According To Analysts
A lithium battery recharging a fleet of electric vehicles in a parking lot.
Our Methodology
For our list of the most undervalued EV stocks according to analysts, we ranked all that either make electric vehicles or serve manufacturers' needs by their average analyst share price percentage upside. The EV stocks with the highest upside were selected, and the price data was collected from Yahoo Finance.
For these most undervalued EV stocks according to analysts, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
13 Most Undervalued EV Stocks To Buy According To Analysts
VinFast Auto Ltd. (NASDAQ:VFS) is a Vietnamese electric vehicle company that makes and sells scooters. This means that even though electric car companies might face inflationary headwinds to their demand, VinFast Auto Ltd. (NASDAQ:VFS) might be better off due to the lower prices of its vehicles. The average analyst rating from four analysts is Strong Buy for VinFast Auto Ltd. (NASDAQ:VFS)'s shares.
As of Q4 2023 end, seven out of the 933 hedge funds profiled by Insider Monkey had bought VinFast Auto Ltd. (NASDAQ:VFS) 's shares. Along with Fisker Inc. (NYSE:FSR), Canoo Inc. (NASDAQ:GOEV), and Electrameccanica Vehicles Corp. (NASDAQ:SOLO), it is a highly undervalued EV stock.
12. Polestar Automotive Holding UK PLC (NASDAQ:PSNY)
Number of Q4 2023 Hedge Fund Shareholders: 11
Average Share Price Upside: 79%
Average Share Price Target: $3.53
Polestar Automotive Holding UK PLC (NASDAQ:PSNY) is a Swedish electric vehicle company that sells a mid sized electric car and plans to introduce larger vehicles to the market soon. While its shares tanked in early February after a disappointing announcement from Volve, they have recovered most of the losses particularly after Polestar Automotive Holding UK PLC (NASDAQ:PSNY) confirmed $1 billion in funding.
During last year's fourth quarter, 11 out of the 933 hedge funds part of Insider Monkey's database had bought Polestar Automotive Holding UK PLC (NASDAQ:PSNY)'s shares.
XPeng Inc. (NYSE:XPEV) marks the entry of the flashy Chinese electric vehicle industry into our list of the most undervalued EV stocks. Amidst a fierce price war in the Chinese EV sector, XPeng Inc. (NYSE:XPEV) stepped up to rivals after announcing in February 2024 that discounts on some vehicles will be extended.
By the end of December 2023, 15 out of the 933 hedge funds profiled by Insider Monkey were XPeng Inc. (NYSE:XPEV)'s shareholders. D. E. Shaw's D E Shaw was the biggest investor due to its $75.7 million stake.
Xos, Inc. (NASDAQ:XOS) is a unique electric vehicle company that makes commercial vehicles like large vans. The firm scored an order for step vans from a hospitality industry supplier.
Insider Monkey scoured through 933 hedge fund holdings for their December quarter of 2023 shareholdings and found that four had bought Xos, Inc. (NASDAQ:XOS)'s shares.
Workhorse Group Inc. (NASDAQ:WKHS) is another commercial electric vehicle company that works with trucks and vans. Be wary of the high percentage upside though, since it is accompanied by an average analyst rating of Hold.
Insider Monkey dug through 933 hedge fund portfolios for last year's fourth quarter to find that five had invested in the firm. Workhorse Group Inc. (NASDAQ:WKHS)'s largest shareholder in our database is D. E. Shaw's D E Shaw as it owns $290,011 worth of shares.
Gogoro Inc. (NASDAQ:GGR) is a rare Taiwanese electric vehicle company that develops electric scooters and battery swapping platforms for multi vehicle use. The firm has had a busy couple of months on the news front, after having teamed up with Uber and having expanded its presence in Asia and the Americas.
Insider Monkey's December quarter of 2023 survey covering 933 hedge funds revealed five Gogoro Inc. (NASDAQ:GGR) shareholders.
The Lion Electric Company (NYSE:LEV) is a Canadian electric bus company headquartered in Quebec. Its fourth quarter and full year 2023 results were not well received, as despite annual revenue growth, The Lion Electric Company (NYSE:LEV) also reported a net loss for the quarter.
As of December 2023 end, 13 out of the 933 hedge funds profiled by Insider Monkey had held a stake in the firm. Steve Cohen's Point72 Asset Management was the biggest The Lion Electric Company (NYSE:LEV) investor through its $877,212 stake.
Nikola Corporation (NASDAQ:NKLA) is an American electric vehicle company working on hydrogen powered trucks. After having spent a controversial time on the stock market that led to the ouster of its founder, Nikola Corporation (NASDAQ:NKLA) finally gave investors some respite last year when it announced in January had made 42 vehicles in 2023.
During Q4 2023, 12 out of the 933 hedge funds surveyed by Insider Monkey had bought Nikola Corporation (NASDAQ:NKLA)'s shares. Anand Parekh's Alyeska Investment Group was the largest shareholder as it owns $28.3 million worth of shares.
Fisker Inc. (NYSE:FSR), Canoo Inc. (NASDAQ:GOEV), Nikola Corporation (NASDAQ:NKLA), and Electrameccanica Vehicles Corp. (NASDAQ:SOLO) are some of the most undervalued EV stocks according to analysts.
