EV stocks have multiplied in the wake of Tesla and as electric cars start to go mainstream — but not all are created equal. Some car stocks are more ready than others for an electric future. Here are the top-rated EV makers and EV-related plays.
- Tesla
- Li Auto
- XPeng
- ON Semiconductor
- Aehr Test Systems
Best EV Stocks To Buy Or Watch
Broadly, both established automakers and startups are a speculative bet on the growth of electric vehicles, itself seen as a nascent field. Growth stocks have been hurt by inflation, risk of recession, and a China slowdown.
It's hard to find an EV stock with a good mix of fundamentals and technicals right now. These are our picks based on EV or EV-tied sales and strategy.
We also consider a stock's Composite Rating, EPS Rating and RS Rating, each on a scale of 1 to 99, with 99 being the best-possible score.
Tesla Stock
Shares of Tesla earn an IBD Composite Rating of 98 and an EPS Rating of 93. TSLA stock carries an RS Rating of 95, meaning that it has outperformed 95% of all stocks in IBD's database over the past year.
Tesla stock offers a 278.98 buy point and a 268.94 early entry, according to MarketSmith analysis. It's still below the entries, but back above the 50-day moving average.
The company delivered 435,059 electric vehicles during the third quarter. That was down slightly from record Q2 sales but reflected planned factory downtimes.
Tesla makes four EV models, mainly the Model 3 sedan and the Model Y crossover SUV. Its new and upcoming electric vehicles include the Semi truck, Cybertruck and Roadster.
The global EV leader expects to grow deliveries 50% annually. It has a target to sell 1.8 million electric vehicles for the year. In 2022, Tesla sales jumped 40% to 1.3 million.
Tesla and other EV stocks can be found on the IBD 50 list of top growth stocks and Leaderboard.
Li Auto Stock
China EV startup Li Auto carries a Composite Rating of 99, EPS Rating of 81 and RS Rating of 94. Li Auto stock has tumbled from August highs and undercut the 50-day line. It has been hurt by worries about increased competition, despite record Q3 deliveries.
So far in 2023, Li Auto continues to outsell rival startups Nio and XPeng.
LI caters to the market for premium electric SUVs. The company specializes in "extended range" EVs, which use a small gasoline engine to increase driving range.
Its new L7, L8 and L9 SUVs are all off to a strong start. Li's first all-electric vehicle, the Mega, is due by end of year.
Unlike many EV startups, Li Auto is profitable, though inconsistently so.
XPeng Stock
Another China EV startup, XPeng caters to the mass market for electric cars. It bears a Composite Rating of 63, EPS Rating of 21 and RS Rating of 96. XPeng stock is on the mend amid EV sales momentum.
The new G6 crossover, a Tesla Model Y rival, made up more than half of September sales. Xpeng's EV deliveries for the third quarter jumped 72% vs. Q2, while it continues to expand outside of China.
Xpeng has also struck strategic alliances with heavyweight partners.
It plans to build electric cars with Volkswagen and to launch a new car brand, called Mona, with Didi Global, China's Uber.
ON Semiconductor Stock
ON Semiconductor holds a Composite Rating of 84, EPS Rating of 77 and RS Rating of 91. ON Semiconductor stock surged to a high July 31 on strong earnings and outlook, fueled by demand for auto chips. Chip stocks sold off Oct. 17 following new curbs on U.S. chip exports to China.
Also known as Onsemi, ON Semiconductor sees big opportunity in electric vehicles.
Its silicon carbide, or SiC, chips can operate at much higher voltages, temperatures and frequencies than traditional silicon-based semiconductors. That makes them a better choice for EVs.
The megatrends of electric vehicles and advanced driver-assistance systems are helping to drive revenue growth, Onsemi has said.
Key automotive partners include Volkswagen. It also provides technology for fast charging electric vehicles.
Aehr Stock
Aehr Test Systems carries a Composite Rating of 93, EPS Rating of 56 and RS Rating of 94. Aehr stock is attempting to rebound after an earnings tumble in October.
Aehr, a semiconductor equipment maker, offers products for testing logic, optical and memory integrated circuits. The need for semiconductor quality and reliability is on the rise. As a result, the Fremont, Calif.-based company is growing revenue by double digits.
Aehr touts strong demand for gear to test silicon carbide power chips used in electric vehicles, solar energy, and other applications.
Revenue jumped 93% in Aehr's latest quarter driven by EV-related demand, but guidance disappointed.
Tesla Vs. BYD: Which EV Giant Is The Better Buy?
Are EV Stocks A Good Buy?
Companies with two characteristics generally make the best candidates for stocks to buy and watch, according to CAN SLIM guidelines. First, they need a strong track record of earnings growth. Second, they should be technically strong and be shaping bullish chart patterns.
Most of the new EV startups have neither. Those EV stocks include Canoo, Faraday Future, Lordstown and Xos. In fact, many of the startups aren't producing electric vehicles yet.
Get Alerts To Stocks Near Buy Points With IBD Leaderboard
But Lucid Motors, Fisker and Rivian have started selling EVs.
Meanwhile, Chinese EV startups like Nio, XPeng and Li Auto sell tens of thousands of vehicles, but mostly lose money.
Then there are legacy auto giants like General Motors, Ford, Volkswagen, all transforming into EV makers.
China's BYD Co. has already turned into an EV powerhouse.
EV Battery Stocks, EV Charging Stocks
The growing universe of EV stocks doesn't end with carmakers. A constellation of other companies provide car batteries, car charging stations, electric motors and other EV-related products.
Among them are ChargePoint, EVgo, Blink Charging and Wallbox.
Hyliion is developing electric powertrains for big-rig trucks. Romeo Power makes battery packs for commercial EV fleets. QuantumScape targets solid-state lithium metal batteries.
Magna supplies battery enclosures and e-drive gearboxes. It's also an EV contract manufacturer.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
