Maybe the sector has been beaten down too much, or it's the role oil (now up to $100 per barrel) is playing in current geopolitical events, but electric vehicle stocks are up strongly over the past month. While a number of legacy carmakers like Ford and General Motors are down by around 10%, many EV makers are higher by about the same percentage or more.
Their run is not over, and the industry still has a long ramp higher as technology, production, and capabilities all begin to align for a sector that has advanced in fits and starts over the years. While there will be plenty of speed bumps ahead, because no industry revolution ever goes smoothly, the following electric vehicle duo still looks ready for a bull run.
EV and fuel-cell vehicle maker Nikola (NKLA -3.72%) has taken its share of abuse, and not all of it is unjustified. But investors need to look past the past -- even its recent history -- and focus on what it can do in the future, and that still looks promising.
Where Tesla is focusing on sedans and Rivian on pickups, SUVs, and commercial vans, Nikola is now concentrating on the tractor trailer market. It achieved a major milestone in December by delivering four of its Tre semi trucks to a customer. The trucks were split evenly between battery-electric and fuel-cell vehicles. The customer intends to buy another 100 from Nikola this year, and the EV maker says it will be delivering between 300 and 500 in total.
That hasn't stopped Nikola's stock from falling 20% in 2022 even with its 13% gain in February. Yet, with a multiyear supply agreement with Proterra to power Nikola's semis beginning in the fourth quarter, the Tre battery-electric qualifying for California's incentive program, and several trial orders from commercial trucking companies, it's now showtime for the EV maker.
Wall Street expects revenue to soar in the coming years, reaching almost $5 billion by 2026 when it should also turn profitable. Considering its still-depressed stock status, investors might want to grab this bull by the horns now.
I'm still wary of investing in Chinese stocks, but you have to like the prospect of Nio (NIO 1.25%) achieving the new energy vehicle promise Beijing wants to deliver. Admittedly, production has slowed over the past few months as global supply-chain woes and computer-chip shortages persist, but deliveries continue to exceed year-ago figures across a broad range of styles.
Nio just reported February deliveries were up 10% year over year to 6,131 vehicles, but that's down from the 9,650 EVs it delivered in January, and the 10,500 vehicles in December. Most of the deliveries (54%) were of its premium ES6 smart SUV, followed by its premium EC6 coupe SUV, and its ES8. Altogether, Nio has cumulatively delivered over 182,800 vehicles as of the end of February.
Nio should be ready to take off, especially once the industrywide hurdles have been cleared. It's upgraded its existing manufacturing plant, plans on bringing a second plant online later this year, and intends to be in five additional countries. Most promising of all is the launch of its battery-as-a-service (BaaS) subscription program in which customers can upgrade or swap out their EV batteries. It's an innovative service that promises long-term revenue streams.
Nio's stock is down 28% this year and nearly 60% from its 52-week high reached last summer, but analysts are looking for shares to at least double in the coming year, if not triple or even quadruple in value.
The stock is up 8% over the past month, mostly on news this week of a secondary listing coming for the Hong Kong stock exchange, giving it a backup option in the event of a U.S. delisting. While that should give investors pause (note my reticence about investing in Chinese stocks), I still see Nio as an EV stock ready for a further run higher.