There has been a lot of hype surrounding electric vehicle (EV) stocks lately, though not without reason. EVs would slowly -- and eventually fully -- replace internal combustion engine (ICE) vehicles. Imagine the amount of effort and investment required to accomplish this transformation. This transition brings opportunities not only for EV makers but also for several other players in the EV space. Despite significant growth, EVs currently make up only 3% of global car sales.
In the U.S., President Biden has set a goal for half of all new vehicle sales to be electric by 2030. That's a bold target considering in the first half of 2021, only 3% of new cars sold in the U.S. were EVs. Clearly, there is immense growth potential for companies operating in this sector.
Let's look at three promising EV companies that are not profitable today but could be highly successful in the future. Investing in these companies' stocks could make you a fortune five years down the line or earlier.
Image source: Lucid Group.
Lucid Group
Lucid Group (LCID +2.66%) is one EV maker that is trying to challenge Tesla's dominance in the EV segment. It's too early to say whether the company will succeed in its efforts. However, it sure had a good start. In its top-line trim, the Lucid Air luxury sedan offers roughly 100 miles more range than Tesla's Model S. What's more, the car boasts a battery efficiency higher than the Tesla's and has bagged the 2022 MotorTrend Car of the Year award.
Lucid has clearly charted out its growth plans. It plans to deliver 20,000 vehicles in 2022. By 2030, the company aims to deliver 500,000 units annually. To help achieve that goal, Lucid is focusing on three key growth avenues. First, it plans to expand in international markets, starting with Europe and the Middle East. Then, the company plans to launch newer versions and models in the coming years. And finally, Lucid plans to cater to the mass market by launching lower-priced models.
All in all, backed by an experienced management team, Lucid Group stock holds huge potential.
Image source: Getty Images.
QuantumScape
The battery is probably the most important component of an EV. It is what differentiates an ICE vehicle from an EV. A superior battery means a longer range and less recharge time -- two key parameters that any EV buyer considers before making a purchase. QuantumScape (QS +2.24%) is working on the next-generation battery technology called solid-state batteries.
QuantumScape's battery technology is still in the development stage, and there is no guarantee that the company will succeed in commercializing it. However, early indications are in the company's favor. It has the backing of Volkswagen (VWAGY +5.67%), which has committed to providing $300 million in funding for the company.
In September, another top automaker agreed to buy 10 megawatt-hours of capacity after evaluating QuantumScape's early cells. In October, the performance of the company's single-layer cells was verified by an independent lab -- Mobile Power Solutions.
QuantumScape expects to begin commercial production of batteries only in 2024. There are many technical challenges the company will need to overcome before it starts producing at scale. Yet, if successful, QuantumScape stock's price could rise significantly.
Image source: ChargePoint Holdings.
ChargePoint Holdings
Another crucial element of the EV growth story is robust charging infrastructure. EV adoption is not possible in the absence of easily accessible chargers. ChargePoint Holdings (CHPT +4.51%) has the largest network of public chargers in the U.S. The company has more than 118,000 ChargePoint ports globally.
ChargePoint earns revenue from hardware sales and subscriptions for its software. Its software-as-a-service model generates recurring revenue with a 100% attach rate to the hardware. The company also generates revenue through warranty services. ChargePoint estimates that over time, the total recurring revenue from a typical charging unit should grow to equal the hardware revenue from that unit.
ChargePoint is not profitable yet, but that may change over time. The business model for EV-charging companies is still evolving, and the companies face significant risks and competition. Still, as a top player with a recurring revenue stream, ChargePoint Holdings seems to have a better chance of succeeding than many of its competitors.
