Electric vehicle (EV) stocks have seen some correction in this year. Despite that, investors who bought the right stocks have seen their investments rise multiple times. Let's look at two EV stocks that have generated multibagger returns for investors in three years and determine if they can generate similar returns in the future.

Tesla

People who invested $10,000 in Tesla (TSLA 1.50%) stock three years ago would have seen their investment rise to roughly $130,000 as of this writing. The EV pioneer has reported impressive sales growth during this period.

Charts showing upward trend in Tesla revenue.

TSLA Revenue (Quarterly) data by YCharts

In the second quarter, Tesla reported revenue of nearly $12 billion, up 98% year over year. The growth was driven by an increase in vehicle deliveries. Tesla delivered 201,304 vehicles during the quarter, up from 90,891 in Q2 last year. At the same time, its net income rose to $1.1 billion for the quarter. It generated operating margin of 11%. In the coming years, Tesla expects to grow its deliveries by an average rate of 50%.

What's more, Tesla is advancing well on the autonomous driving front. Based on autopilot miles data collected, the company seems well ahead of its competition when it comes to self-driving technology. However, there are certain risks to keep an eye on. The National Highway Traffic Safety Administration recently opened a probe relating to accidents involving Tesla cars with driver-assist systems. Further, the company faces competition from other players, some of whom already have autonomous driving permits, which Tesla does not have.  

Tesla expects that once developed, driver-assist systems will, in fact, help reduce accidents. As the system refines over time, that objective would most likely be achieved. Improved driver-assist systems could add a new chapter to Tesla's growth story. If Tesla's systems turn out to be better than that offered by other automakers, not only would the demand for its cars be higher, but the company could also command premium pricing.   

People charging electric car in domestic garden.

Image source: Getty Images.

Overall, Tesla looks well-placed to continue growing in the coming years. It may not generate the kind of returns that it did in the past, but it should generate market-leading returns in the long run. Furthermore, if the company succeeds in its autonomous driving efforts, the stock could well be set for multibagger returns even from its current levels.

Nio

If you had invested $10,000 in Nio (NIO 0.38%) three years back when it got listed, your investment would be worth more than $64,000 today. The Chinese EV maker has grown its revenue impressively, while it is moving toward profitability.

Chart showing upward trend in Nio's revenue.

NIO Revenue (Quarterly) data by YCharts

The company more than doubled its deliveries in the second quarter -- from 10,331 in Q2 last year to 21,896 in the latest quarter. Revenue for the quarter increased 127% year over year. In August, Nio's deliveries increased 48.3% year over year to 5,880 vehicles.

Like other automakers, Nio is facing semiconductor supply shortages. The company recently revised down its third-quarter production guidance to 22,500 to 23,500 vehicles, from its previous guidance of 23,000 to 25,000 vehicles. This is a short-term obstacle and is affecting all automakers.

Nio's Battery-as-a-Service (BaaS) model has been well received by the customers. Under this, customers can buy a Nio car without a battery and can then subscribe to battery packs as per need and pay monthly. Not only does this lower the cost of the vehicle at the time of purchasing, but it also addresses customer concerns relating to battery degradation and resale value. Nio continues to expand its battery swap station network.

Nio is also focused on developing low-price models for the mass market. In 2022, it expects to launch one of its lowest-priced Nio models so far. Over time, the company plans to sell low-priced models under a separate brand. This should help in the company's sales growth due to the expansion of its addressable market.

Nio stock has fallen roughly 36% from its high price this year of more than $62. That makes it attractive compared to where the stock was in January. However, investors should bear in mind that the young company faces significant competition and risks.