Excess market volatility related to high inflation, rising interest rates, adverse economic effects from the war in Ukraine, and ongoing supply chain disruptions from the pandemic has led many investors to seek out safer, value-oriented stocks. It's also led to large price corrections in 2022 for many growth stock stalwarts, including electric vehicle (EV) manufacturer Tesla (TSLA 5.34%).

The Musk-led enterprise has generated a lot of loyalty in the past from investors interested in taking advantage of the long-term potential of the EV industry. And it's made Tesla a clear winner as a company and as a stock, even with the 37% drop in the stock price since the start of the year.

Person using mobile phone while charging electric car.

Image source: Getty Images.

While Tesla stands out, investors interested in the EV sector should be aware that this market is young enough and potentially big enough to support multiple winners. And even if you're extremely bullish on Tesla in the long run, portfolio diversity is important too. With that in mind, let's discuss two alternative pure-play EV stocks that can help investors diversify their EV exposure to the multitrillion-dollar market.

1. Lucid Group

Lucid Group (LCID 10.05%), like Tesla, has seen its stock price take a hit in 2022 as part of the broader market sell-off. The stock price for the California-based EV manufacturer is down nearly 52% year to date. In its opening quarter of 2022, the emerging EV company generated $57.7 million in sales, largely in line with Wall Street estimates, and diluted earnings per share came in at a loss of $0.05. For the full fiscal year 2022, analysts are modeling a top line of $1.3 billion, which would be a massive jump from its $27.1 million in total sales a year ago, and a net EPS loss of $1.29. By the end of this year, the company expects to produce 12,000 to 14,000 vehicles, with plans to ramp up investments in the coming periods. 

In 2023, analysts are forecasting total revenue will surge 160% to $3.4 billion and EPS will remain relatively flat with a loss of $1.04. Lucid is a young company building out its operations so investors will need to be patient on profitability, which is likely to be years away. With plans to spend $2 billion on capital expenditures in 2022, it's clear that management is committed to scaling its business. The growing EV enterprise has a strong cash position of $5.4 billion and a debt-to-equity ratio of just 58%, providing it with sufficient liquidity through at least 2023. Trading at 22.5 forward sales today, Lucid is certainly richly priced, but it might be worth opening a small position given the untapped potential of the global EV market.

2. Li Auto

Li Auto (LI -0.93%) is a Chinese EV manufacturer that has shed roughly 25% of its market value since the start of the year. The company's biggest advantage is the market it serves. China's EV market is forecast to expand at a compound annual growth rate (CAGR) of 30% through 2027 and reach $800 billion annually. Li Auto is one of the country's most established electric car makers, which firmly positions it to capture market share over the next few years.

In the first quarter, the company's total sales climbed 176% year over year to 9.31 billion yuan ($1.5 billion), and its non-GAAP EPS finished in the green at $0.04. The company delivered 31,716 cars in Q1, up 152% year over year, and it ended the quarter cash flow positive, generating 502 million yuan ($79.2 million) in free cash flow.

For the full fiscal year 2022, analysts expect the company's revenue to rise 77% year over year and its net loss to equal $0.07 EPS. Next year, Wall Street is calling for $13.1 billion in sales, representing 81% growth from fiscal 2022 forecasts, and a positive adjusted bottom line of $0.24/share. Inching closer to profitability and trading at just 3.1 times forward sales today, Li Auto is a fantastic long-term play for patient investors.