It's only been a few days into the 2022 investing year. And already, Tesla's (TSLA -1.06%) record-high Q4 2021 and full-year production numbers are all the buzz on Wall Street.
On Monday alone, share prices of Tesla gained $143 a share or 14%, catapulting the stock within just a few percentage points of an all-time high. Not only did Tesla's results beat expectations, but they came during a challenging global chip shortage that beleaguered the auto industry throughout 2021.
Despite the impressive performance, there's reason to believe that Tesla's $144 billion market cap gain on Monday was a bit too much. With a market cap that now stands at a whopping $1.2 trillion, investors are paying a premium for Tesla's future. The same goes for Lucid Group (LCID 0.83%) and Nio (NIO 2.62%). Here's what makes these two electric car stocks better buys now, even though all three are expensive.
Image source: Tesla.
Expectations are set
Daniel Foelber (Lucid): Lucid has done investors a favor by setting expectations for 2022. Flush with cash after its merger with Churchill Capital IV and a recent senior note offering, Lucid has over $6 billion in cash that should help propel its production and chart a path toward its first full year as a viable electric vehicle (EV) automaker.
2021 was a banner year for Lucid that proved the company's mettle when it comes to technology, engineering, and design. Yet those qualities pale in comparison to the importance of mass production, a skill Tesla knows too well is much easier said than done.
Lucid plans to produce and deliver 20,000 Lucid Airs in 2022. It has already ceased reservations for its Dream Edition sedan and is focused on rolling out its Grand Touring, Touring, and Air trims in 2022, as well as making progress on its Gravity SUV.
Lucid will probably get a pass on its financial figures in 2022, seeing as it's given every inclination that it won't generate sizable revenue, let alone profit, for a few more years. However, all eyes will be on Lucid's reservations, which currently stand at 17,000, as well as its success in developing and delivering all four trims of the Lucid Air on time and without complications. Doing that would support the investment thesis and chart a path toward long-term growth.
2022 will be a pivotal year
Howard Smith (Nio): While Tesla is currently the clear leader in EV sales, investors may want to look at stocks of smaller EV makers to buy before their businesses mature. Nio is already established and has an opportunity to grow in two substantial markets. While it's off of a much smaller base, Nio's 2021 deliveries increased by 109% versus Tesla's 87% year-over-year growth.
2022 is setting up to be a pivotal year for Nio in several ways. It has been growing its vehicle deliveries over the past two years, as can be seen in the following chart.
Data source: Nio. Chart by author.
2022 brings expanded production capacity, new vehicle offerings, and a further move into Europe. Nio, along with its state-owned manufacturing partner, is working on doubling production capacity to at least 20,000 electric vehicles per month. That work is scheduled to be completed this spring. As seen above, that would also amount to an approximate doubling of recent monthly delivery volumes.
Nio began sales in Norway last year and has established a full operation there, including Nio community gathering places, and it plans for charging and battery swap infrastructure. The company now plans to expand into Germany, the Netherlands, Sweden, and Denmark in 2022.
Nio also has said it will launch three new products in 2022. Two have already been announced with the ET7 luxury sedan and the smaller ET5. The company plans to begin delivering the ET7 in March 2022 and the ET5 by September. It is also potentially working on a partnership with China's largest automaker, BYD, to develop a sub-brand with mass-market appeal, according to industry follower CnEVPost.
2022 will undoubtedly be an important year for Nio. Investors that feel like they've missed out on the production ramp-up from Tesla might want to look at Nio shares as that company looks to accelerate its own growth this year.
Tesla isn't the only fast grower in town
Tesla's numbers deserve praise, as the company has gone from streaky profitability and production snags to a well-charged machine. However, Tesla's production is still a lot less than the legacy automakers. And companies like Lucid and Nio are showing signs that they can grow quickly too.
The EV landscape has changed, and Tesla is just the tip of the EV iceberg. With so many options out there, investors can pick and choose which companies pique their interest and match their risk tolerance.
