The automotive industry is going electric at a frantic pace, with new companies seemingly coming on the scene daily. It can be difficult for even the most dedicated auto investor to keep up with the action.
We Fools appreciate as well as anyone how tough it can be to sort through the ever-growing list of public companies involved in electric vehicle production and support. With that in mind, we created a list of who’s who to help guide you (and us) through the sector.
Here’s a list of the many options available to investors interested in EVs, and three stocks that Foolish contributors are keeping their eyes on as potential long-term winners.
EV makers (or start-ups planning to make electric vehicles)
- 0.1 EV makers (or start-ups planning to make electric vehicles)
- 0.2 Pure-play suppliers of EV components
- 0.3 Charging networks
- 1 The stock to own if you want a piece of the world’s largest EV market
- 2 Forget Blink Charging. This EV charging company is better.
- 3 This stock is high risk, but the rewards could be huge
Pure-play suppliers of EV components
- Hyliion (NYSE:HYLN) – heavy-truck drivetrains
- Romeo Power (NYSE:RMO) – batteries for big trucks, buses, construction equipment
- QuantumScape (NYSE:QS) – developing a next-generation solid-state battery
- Ree Automotive (SPAC is 10X Capital Venture Acquisition (NASDAQ:VCVC)) – powertrain components and platforms for EVs
- XL Fleet (NYSE:XL) – EV conversions for commercial vehicles
- Blink Charging (NASDAQ:BLNK)
- ChargePoint (SPAC is Switchback Energy Acquisition (NYSE:SBE))
- EVBox (SPAC is TPG Pace Beneficial Finance (NYSE:TPGY))
- Nuvve (SPAC is Newborn Acquisition (NASDAQ:VCVC))
- Volta (SPAC is Tortoise Acquisition II (NYSE:SNPR))
The stock to own if you want a piece of the world’s largest EV market
Lou Whiteman (Li Auto): Li Auto is attempting to dominate one of the most profitable segments in the world’s largest auto market. For that reason alone, the company belongs on your watch list.
Li makes premium electric SUVs, one of the fastest-growing segments of the Chinese auto market. It has differentiated itself by including features like an onboard gasoline generator that supplements the battery and acts as a range extender. That’s a big deal in China, where EV sales are getting ahead of charging infrastructure, and it helps the company make sales outside of urban areas where charging equipment can be hard to find.
The company currently has only one model available for sale, but analysts expect it to launch one new model per year from 2022 to 2024. That would give it a full range of SUVs, from full-sized to compact premium, and help it better compete with other automakers trying to take market share.
Li shares are up nearly 80% since their debut last summer, and currently trade at a lofty 90 times sales. But the company is set up well to grow into that valuation quickly. Li delivered 32,624 vehicles in 2020, but has the infrastructure in place to ramp up to 500,000 deliveries annually by 2025.
Li also has a management team that has familiarity with U.S. public markets, and founder and CEO Li Xiang is well aligned with shareholders as the owner of about 20% of shares outstanding.
The stock is not without risk, given the valuation and Li’s relatively small number of vehicles sold. But the potential is substantial. This is a company that could remain in the fast lane for a long time to come.
Rich Smith (Volta): Electric cars are great and all, but they won’t go far without juice. If you believe as I do — and as titan General Motors (NYSE:GM) does — that electric cars are the future, then it makes sense that car-charging networks will be a building block in that future. And it also makes sense to try to find the right car-charging network stock to invest in.
Volta — the charging company being brought public in an IPO via special purpose acquisition company Tortoise Acquisition II — just might be that charging stock.
If you haven’t heard of Volta, that’s no great surprise. As a private company, it hasn’t been investable before, and it still won’t actually be investable until Tortoise Acquisition II finalizes its acquisition of the company in late Q2 2021. Once that happens, though, the companies anticipate you will see a newly public Volta (trading under the new ticker symbol “VLTA”) valued at more than $2 billion, and possessing $600 million in cash to invest in building out a nationwide network of charging stations.
Volta is specifically targeting shopping centers and other retail establishments for its charger locations, and has built out a network of stations spanning more than 200 municipalities across 23 states. Each charging station includes a large video screen on which retail advertisements can be displayed, contributing additional revenue streams to the company on top of revenue from selling electricity.
In 2021, Volta anticipates the total revenue from more than 3,100 installed charging stations will approximate $47 million, and the company is predicting sales growth of 100% annually from now through 2025. When you compare that to better-known, already publicly traded Blink Charging’s mere $4.5 million in trailing-12-month sales, it’s clear that Volta stands head and shoulders above the competition.
This stock is high risk, but the rewards could be huge
John Rosevear (QuantumScape): This is one of those cases where the stock seems expensive (and it might be), the risks seem high (and they are), but the potential seems huge (and it is).
QuantumScape has been working for years on a “holy grail” technology that the industry has been trying to commercialize for decades: solid-state batteries. And it may have solved a difficult puzzle.
Simply put, solid-state batteries have the promise to be more energy-dense, lighter in weight, less expensive, quicker to recharge, and less prone to fires than current lithium-ion batteries. A solid-state battery that is reliable and could be mass produced at a reasonable price would be a big advance for electric vehicles.
That has all been known for many years, but the challenge has been to develop a solid-state battery that works — and holds up long term — outside of a lab. The details are a bit complicated (you can learn more here), but the gist is that solid-state batteries require a “separator” with certain characteristics, and nobody has been able to come up with one that works — until (maybe) now.
QuantumScape revealed in December that it has developed a new flexible ceramic material that appears to work well as a separator for a solid-state battery. The company thinks that it can have its batteries in production by 2024, and it already has one big customer: German auto giant Volkswagen (OTC:VWAGY), which has invested about $300 million (and counting) in QuantumScape.
If QuantumScape’s technology pans out, it could become a major supplier to the world’s automakers just as the world’s transition to electric vehicles kicks into high gear. That’s the huge potential, but there are risks too: QuantumScape’s technology might not pan out, it could take longer than expected to get to market, or it could be beaten to market by any of several well-funded rival efforts.
But that said, QuantumScape has the team, the advisors, the investors — and apparently, the technology — to make it a winner. It’s a risky bet, but if you believe in the potential of electric vehicles, the payoff could be huge.