There's a shift underway in the automotive sector from gas-powered vehicles to battery-powered ones. The current evolution of transportation is, ahem, sparking a lot of interest in electric vehicle (EV) stocks.
But with so many new EV companies out there vying for a top spot at the same time that traditional automakers are ramping up EV plans of their own, it can be hard to figure out which EV stock to buy and hold.
If you're interested in EV stocks, here are three that you could end up being very glad you own a few years down the road.
Image source: Tesla.
1. Tesla
It's easy to think that Tesla's (TSLA 12.06%) meteoric rise is over and that you've already missed out on its share price gains. Sure, you likely won't see the same returns that early Tesla investors experienced, but that doesn't mean the company isn't still a great long-term investment.
Tesla's vehicle production is hitting its stride right now, with production up 70% year over year in the most recent quarter. That increase is impressive on its own, but it looks even better when you consider that it achieved that before the company brought its latest factory online in Germany.
Better still is the fact that Tesla will have another factory coming online in Texas in early April. In fact, Tesla CEO Elon Musk said in the company's recent earnings call that the automaker will increase vehicle deliveries by 50% in 2022, compared to 2021, which shows just how well the company's manufacturing process is working right now.
The point here is that while other smaller EV companies are struggling to get their production off the ground, Tesla's vehicle production is flying high. And with EVs still in their early stages -- just 9% of all passenger vehicles sold last year were EVs -- Tesla still has room to run as it expands further into the market.
2. Ford
There are other traditional automakers that deserve a spot on this list, but Ford Motor Company's (F 0.08%) shift toward EVs looks particularly intriguing.
For starters, the company already has one successful EV for sale -- its Mustang Mach-E -- and it delivered an impressive 27,140 of them in 2021. But that's just the start, of course. The company will start delivering its all-electric F-150 Lightning next year -- and already has 250,000 pre-orders for it.
Ford has said in the past that it will produce 600,000 electric vehicles by 2023, but its plans are far bigger than that. The company estimates that EV sales will account for 40% of vehicles sold by the end of this decade.
Ford's management recently reorganized the company into two distinct segments: Its traditional gas-powered business and its expanding EV business. Not only will that help Ford focus its attention on its new EV products, but it also comes as the company is reportedly spending $20 billion to build out its EVs.
Other traditional automakers are projecting a huge ramp-up in EVs as well, but Ford's early moves into the market and its strong initial reservations for F-15 Lightning trucks indicate that the company could be a good long-term winner in the EV space.
3. Rivian
I know, Rivian (RIVN -2.21%) isn't exactly a popular EV stock at the moment. But despite recent headwinds for the company, I think Rivian could end up being a good long-term investment.
First, if Rivian is able to reach its production goals in the coming years, the company could see significant expansion in the EV space. Rivian says it'll only produce 25,000 vehicles this year, but the capacity for its plant in Normal, Illinois -- and a new plant expected to come online in Georgia -- could reach 600,000 in the coming years.
And that's just the beginning of Rivian's EV goals. Management is targeting 1-million-vehicle production by 2030. Could the company miss that mark? Absolutely. But investors should keep in mind that Rivian has more than enough cash right now to fund its massive vehicle production plans.
Rivian ended 2021 with a very impressive $18.4 billion in cash that it will be using over the next few years to potentially build new plants, like the one that is in the works in Georgia.
In addition to its cash, Rivian is tapping into a unique niche in the EV market with its all-electric pickup R1T truck -- the first of its kind -- and its R1S SUV. Being a first-mover in this space -- as well as an EV-first company -- could give it an advantage over traditional automakers, which will have their attention split between developing EVs and gas-powered vehicles.
Admittedly, none of this is a slam dunk for Rivian. It's a young EV company in a nascent market. A lot of things could go wrong for Rivian in the coming years.
But with its stockpile of cash, superb EV tech that could hit its production stride in the next couple of years, and its potential to tap the EV truck and SUV markets earlier than some of its competitors, investors may want to consider putting a little money toward this EV maker right now.
