It's an exciting time to be an investor in electric vehicle (EV) stocks. We're already speaking of hypergrowth in the industry although it's just getting started: Electric car registrations jumped 41% in 2020 when sales of passenger vehicles declined 16% globally, according to the U.S. Energy Information Administration (EIA). BloombergNEF now projects 2021 global EV sales to be 168% higher over 2019, and the EIA expects EVs to make up 30% of all light-duty vehicle sales by 2050, up from only 0.7% in 2020.
Those are stunning numbers and explain why automakers that earlier shrugged off EVs are now jumping the bandwagon, and why there are more EV start-ups around now than you could possibly count. That also means plenty of compelling stocks to choose from to cash in the EV boom, though companies starting out early and well are most likely to survive and thrive. If you have some cash on you right now, here are three top EV stocks to buy and hold for the long term.
The electric car that's stunned them all
Let's start with the hottest EV stock of the year that some now view as controversial: Lucid Group (LCID 0.41%).
Lucid's valuation touched the skies within months of going public in the middle of this year. The dizzying exuberance wasn't unwarranted: Lucid pulled off multiple feats in a short span of time. To name a few, it built cars with an astounding battery-range rating that beat Tesla (TSLA -1.11%), delivered its first cars -- the premium Lucid Air Dream Edition -- within the promised timeline, and even bagged the 2022 MotorTrend Car of the Year award. Lucid shares also made it to the Nasdaq 100 Index as of Dec. 20.
Image source: Getty Images.
In early December, though, Lucid dropped a bomb when it said it's under investigation by the U.S. Securities and Exchange Commission (SEC) in relation to the company's SPAC merger and some projections and statements it made earlier. Shares tanked, but here's what I understand so far: We do not know yet what the SEC probe is about, but whatever it is won't change Lucid Air's record range rating for an EV, or the rave reviews Air Dream has received so far, or perhaps even CEO Peter Rawlinson's mission of building affordable electric cars for the masses powered by Lucid's in-house battery and powertrain systems.
The point I'm trying to drive home is that while the SEC probe undeniably adds an element of risk to investing in Lucid, the company isn't empty talk and no action. Lucid cars are already out there on the roads for all to see, and it'll start reporting its first revenue from the fourth quarter onward. Lucid is planning to launch the SUV Gravity in 2023, has aggressive global expansion plans, and could even license its promising battery technology to other EV makers in the long run. In short, if Lucid comes out clean of the SEC probe, the sky could potentially be the limit for Lucid stock in the coming years.
Ready to take the electric truck world by storm
Lucid is an EV startup with its fair share of risks, but if you want to play it safer, a legacy automaker that's diving head-on into EVs is your thing. Ford (F -1.92%) tops the list for me, simply because the company is electrifying what has been America's best-selling pickup truck for four decades, and counting. So when the F-150 is so loved, its all-electric F-150 Lightning version shouldn't be far behind.
Ford, in fact, is taking a leaf out of its traditional playbook and offering electric vehicles that have something for everyone. So among all electric vehicles, Ford has the F-150 Lightning pickup truck, the Mustang Mach-E SUV, and the E-Transit cargo van. Among hybrid vehicles, there's the Escape SE compact crossover, the Explorer Platinum SUV, and the Maverick compact truck.
Ford EVs are already seeing solid demand. At the Goldman Sachs Annual Global Automotive Conference, held on Dec. 3, Ford revealed it had nearly 200,000 retail reservations for the F-150 Lightning and said it had sold 22,000 units of the Mach-E year to date. Ford has also struck deals with multiple battery cell suppliers.
What I like most about Ford aside from F-150 Lightning potential is that Ford has the expertise to scale, and that's critical for growth in an industry where a new EV is being unveiled practically every day. Of course, Ford isn't a pure-play EV stock unlike Lucid or the next one I'm going to tell you about, but it wants EVs to make up almost half its sales by 2030, and that alone makes Ford a no-brainer stock to buy and forget.
The best bet in the world's No. 1 EV market
Ford and Lucid are focused on the U.S. markets, where 328,000 electric vehicles were sold in 2020. China, in comparison, sold nearly 1.25 million EVs in 2020. There's clearly no beating China when it comes to EV growth, so how could you not consider owning a stock in the world's largest EV market? Nio (NIO 8.72%) is one you'd want to pay close attention to.
Nio wants to beat Tesla in its home market and, while it's at it, expand its footprint in other parts of the world. Nio sells three EVs right now, but it has two models ready to hit the roads in 2022.
On Dec. 18, Nio unveiled a midsize sedan, the ET5, that comes with Nio's latest autonomous driving technology. Nio is wasting no time: It has already opened reservations for the ET5 and will start deliveries in September 2022. The ET5 has already become Nio's most preordered vehicle yet, according to CnEVPost.
Meanwhile, Nio said it'll confirm orders for its fourth vehicle, the flagship ET7 sedan, on Jan. 20 and start deliveries on March 28. As expected, both the ET7 and ET5 will offer battery swapping, giving buyers the option to buy a car without batteries for a lower price and instead subscribe to plans to charge and swap batteries at Nio's swapping stations when needed. This battery-as-a-service concept is also one of Nio's biggest competitive advantages.
Nio also plans to enter Germany, Sweden, and the Netherlands in 2022 after foraying into its first international market, Norway, this year. By 2025, Nio expects to have entered 25 countries and regions. In short, there's a lot to like here, and the ET5 could potentially mark the beginning of a new growth phase for Nio. At current price, Nio could be a steal for the long term.
