Best EV Stocks to Buy

XPeng

• Market value: $13.5 billion
• Analysts' ratings: 6 Strong Buy, 8 Buy, 9 Hold, 1 Sell, 3 Strong Sell
• Analysts' consensus recommendation: 2.52 (Hold)

Relations between the U.S. and China aren't great right now, so investing in Chinese stocks isn't exactly on a lot of investors' radars. But we should remember that China is the world's largest market for electric vehicles by a country mile. Last year, there were 5.9 million electric vehicles sold in China vs less than a million in the United States. So, any discussion on electric vehicles has to include a discussion of China.

With that said, consider the shares of XPeng (XPEV, $14.98), a leading EV maker in China. It offers SUVs under the G3, G3i and G9 names; four-door sports sedans under the P7 and P7i brands; and family sedans under the P5 line. The company also provides super charging, ride-hailing and advanced driver-assistance system technology.

XPEV should be considered highly speculative. The stock has a beta of 2.84, which means it is wildly sensitive to the market's moves. The company is also currently unprofitable. 

Still, if you are bullish on EV stocks and accept that China is the center of the action, then XPeng is a good way to get exposure to this fast-growing market.

Tesla

• Market value: $932.6 billion
• Analysts' ratings: 12 Strong Buy, 3 Buy, 18 Hold, 3 Sell, 2 Strong Sell
• Analysts' consensus recommendation: 2.47 (Buy)

Any discussion of EV stocks has to include the company that put the industry on the map: Tesla (TSLA, $291.26). Though TSLA faces stiff competition, it's still the biggest pure-play EV automaker.

For better or worse, it's hard to separate Tesla from its high-profile and controversial CEO Elon Musk. While the stock historically commanded a "Musk premium," the CEO's controversial purchase of social media platform Twitter and his generally erratic behavior have weighed on the share price over the past year. 

However, Tesla stock has been moving sharply higher since May, and has more than doubled since the start of the year.

The biggest knock on TSLA is simply its price. At a price-to-earnings (P/E) ratio of 86 and a price/sales (P/S) ratio of 12, the company is priced aggressively for even an upstart tech stock. And this is a company with a market cap of close to a trillion dollars.

Still, Tesla's growth continues to impress. Auto sales revenues were up 46% year-over-year in the second quarter, and total revenues were up 47%. The company delivered 466,140 cars last quarter, an 83% improvement over the year prior.

TSLA still has a profitability problem. It really needs to see fatter profit margins if it is to justify its valuation. But if you believe that the electric vehicle space is poised to boom in the years ahead, then it's hard to avoid Tesla.

General Motors

• Market value: $55.1 billion
• Analysts' ratings: 10 Strong Buy, 5 Buy, 9 Hold, 0 Sell, 1 Strong Sell
• Analysts' consensus recommendation: 2.08 (Buy)

General Motors (GM, $39.23) isn't generally the first stock you think of when you hear "electric vehicle." The parent company of the Chevrolet and Cadillac brands, among others, has more of a stodgy, old-school reputation.

Yet the company has formal plans to stop selling gas and diesel vehicles entirely by 2035, just 12 years from now. That's an ambitious goal, but even if the automaker ultimately falls short, it's clear that they are going big. 

The luxury Cadillac line will be all electric by 2030. And Chevrolet is launching an electric version of the popular Silverado pickup truck this fall that boasts a range of 400 miles on a full charge and up to 10,000 pounds of towing capacity.

Apart from its ambitions in the EV space, perhaps the most compelling reason to consider an investment in General Motors is the stock's valuation. GM trades at just 6.1 times earnings and 0.3 times sales. And, frankly, its profit margins are about in line with Tesla's.

General Motors is a cyclical stock, as car sales tend to decline in a recession. So, given that we're seeing early signs that an economic slowdown may be in store for us later this year, you might want to consider dollar-cost averaging into this stock little by little.

Nio

• Market value: $18.9 billion
• Analysts' ratings: 13 Strong Buy, 6 Buy, 8 Hold, 1 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.89 (Buy)

Similar to XPeng, Nio (NIO, $10.64) is a leading manufacturer of electric vehicles in China. The company offers five and six-seater electric SUVs and sedans. Taking a page out of Tesla's books, the company also offers home power solutions under the name Power Home.

The company has proven to be innovative. One of the major pain points on electric vehicles is finding a place to plug in when you're away from home. Well, Nio has the solution. Its Power Mobile is a mobile charging service that will send a van with a battery bank to juice up your car the same way that AAA will come to fix a flat tire.

Nio is another one of the EV stocks on this list that should be considered a speculative play. Apart from the country-specific risk of being located in China, the company is not currently profitable. 

But again, if you are bullish on EVs and appreciate that China is the world's biggest market for electric vehicles, then having exposure to one of the country's leading producers only makes sense.

Albemarle

• Market value: $27.3 billion
• Analysts' ratings: 15 Strong Buy, 4 Buy, 6 Hold, 1 Sell, 1 Strong Sell
• Analysts' consensus recommendation: 1.85 (Buy)

It's widely understood that the vast majority of miners that jumped into the California gold rush in the mid-1800s never made much money. They took enormous risk in the pursuit of getting wealthy… and ended up mostly empty handed.

The safest way to profit from the gold rush was serving the needs of the miners. Selling picks and shovels, if you will.

Well, the same logic applies to electric vehicles. We may not know which automaker or automakers will end up being the ultimate winner. But we do know that more electric cars means more demand for batteries … and that means more demand for lithium.

As a good long-term play on lithium demand, consider the shares of Albemarle (ALB, $232.52), one of the world's largest miners and producers of lithium. The shares are cheap at current prices, trading at just 7.5 times earnings.

The lithium stock is not without risk, particularly on the political side. Like crude oil, copper and other critical industrial commodities, lithium producers are ultimately at the mercy of the governments in the countries where they mine. 

For instance, Chile is the world's largest producer of lithium, and the government there is seeking to take more control over the industry. That's a risk for Albemarle, but it would seem that at current prices, the risk is already factored into the price.

If you're looking for a pure play in the single most important commodity for the EV revolution, it's hard to beat Albemarle.

ChargePoint Holdings

• Market value: $3.1 billion
• Analysts' ratings: 10 Strong Buy, 3 Buy, 5 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.72 (Buy)

For another "pick and shovel" play on this list of the best EV stocks, consider ChargePoint Holdings (CHPT, $8.69). CHPT provides electric vehicle charging solutions in the U.S. and internationally. It offers a portfolio of hardware, software and services for commercial, fleet and residential customers. When you see EV chargers in office parks or parking lots, there is a decent chance you're looking at one of ChargePoint's products.

In a list of fairly high-risk stocks, ChargePoint is going to be one of the riskier plays. The company is not currently profitable, and it faces competition from Tesla among others. But again, if the EV revolution comes to pass as expected, CHPT will likely see a major boost in revenue, and the profits should follow.

The shares recently took a tumble on news that General Motors, Ford Motor (F) and Rivian Automotive (RIVN) had all agreed to use Tesla's standard for fast charging, creating a perception that ChargePoint was being left behind. Yet this would seem to be overblown because CHPT has itself indicated that it was already exploring ways to make its products compatible with Tesla's standard.

Again, ChargePoint is a risky stock, and you might want to wait for an indication that the shares have started an uptrend before buying. Initiating a position today might be an attempt to catch that proverbial falling knife. But at the right price, the shares are an interesting play on the growing EV industry.

ON Semiconductor

• Market value: $44.0 billion
• Analysts' ratings: 17 Strong Buy, 3 Buy, 9 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.72 (Buy)

For one final "pick and shovel" play on EV stocks, consider the shares of ON Semiconductor (ON, $101.91).

As you probably guessed from the name, ON makes chips. And it so happens that the chips it makes are particularly well suited for electric vehicles.

ON's silicon carbide chips address the two major pain points of electric vehicles. They can extend driving range per charge compared with traditional silicon chips and they can help reduce the time it takes to charge a car battery.

How big is the opportunity here?

ON expects the silicone carbide market to see 33% compound annual growth through 2030. If that holds, it would be bigger than the expansion seen by CPUs in the 1990s and mobile processors in the 2000s, which saw growth rates of 20% and 18%, respectively.

The semiconductor stock isn't exactly an undiscovered gem. Its shares are up by roughly 400% since 2020. But the shares aren't excessively priced at 20 times forward earnings. And if the company's investments in silicon carbide pay off as expected, its massive move since 2020 could be only the beginning.