While we can see the automotive industry slowly change gears from internal combustion engines to electric vehicles (EVs), the switchover may be picking up pace. Half the world's consumers that intend to purchase a car in the next two years say they will choose an EV or hybrid, according to research published by Ernst and Young.
If investors haven't considered EV companies before, now is the time to take a closer look. And if you favor looking for options that others are overlooking, there are three great EV stocks worth considering: Ford Motor Company (F -1.92%), Blink Charging (BLNK 4.76%), and QuantumScape (QS 5.69%). Let's find out a bit more about these three EV stocks.
Image source: Ford Motor Company.
1. Ford: Detroit auto evolution
Ford has been accelerating its EV strategy for some time now, expecting a 600,000 EV production run rate by late 2023 and an annual run rate of more than 2 million EVs by late 2026. That's a lot of capacity for growth.
But what's even more intriguing for investors is the long-term potential of Ford's F-150 Lightning, an all-electric truck. The reason for intrigue is simple: Full-size trucks drive a massive chunk of Detroit automakers' profits, and a decade ago, the idea of viable electric trucks seemed far-fetched.
That's no longer the case, as early adopters have taken to the F-150 Lightning, pushing its August sales to its best month since it was launched and claiming the title of best-selling electric truck for that month. Better yet, while truck consumers are historically -- and sometimes, absurdly -- brand loyal, 50% of F-150 Lightning customers are new to the Ford brand -- a big win in this industry segment.
Yes, to be fair, it's a small monthly sample size, and sales of the all-electric truck are still a fraction of the traditional F-150, but it shows that as the move to electric trucks takes place, Ford will have a credible, quality option to continue hauling heavy profits. More broadly speaking, Ford's EV sales expanded fourfold over a year ago and are growing almost four times faster than the EV sector overall.
Ford is overlooked as a future EV play simply because that segment remains a small portion of Ford's overall sales, but that could change soon, and Ford finally appears poised to capitalize.
2. Blink Charging: Opportunities are everywhere
In a world where every parking space is an opportunity for Blink Charging services and products, it's easy to understand how the company could thrive as the demand for charging infrastructure booms alongside EV sales.
Already the company's portfolio boasts 51,000 chargers, over 423,000 registered users, and over 1,800 marquee accounts across end markets. Not only is there staggering growth potential in North America, but there is also plenty of international growth, as the latter represents only 26% of the company's current charger count mix.
Investors are starting to see the potential in the company's top line, with second-quarter revenue increasing 164% to $11.5 million. If you take out 2022 acquisitions, that figure still doubled year over year. Blink Charging's second-quarter gross profit also jumped 203%.
Investors can expect increasing demand for global EV infrastructure, government commitment to EV growth, higher utilization rates from Blink customers, incremental growth from acquisitions, and a wave of EV adoption that brings in new consumers, to help push company growth.
While the company's upside is high, Blink Charging is also commonly overlooked by investors because it's a young company, and capitalizing on growth opportunities is expensive.
Blink Charging is burning through cash, and with a low barrier of entry to its business, it will have to continue innovating new products -- it has launched several during the first half of 2022 -- to fend off competition.
The potential is there for Blink Charging to become a great investment, but it's speculative, and investors may need to accept that the company will likkely need to raise more capital.
3. QuantumScape: Accelerating battery technology
There are two important things that we currently know about this sector: EV demand is rising, and any technology that enables EVs to drive further on a faster charge is extremely valuable. The latter of those two things has proved very challenging.
That's what makes QuantumScape a high-risk and high-reward stock. If successful, its lithium metal solid-state battery technology would be an incredible breakthrough for the EV industry, pushing the boundaries on driving distance and charging capability. Those are two big ifs, though.
Image source: QuantumScape investor presentation.
Right now, investors have accepted the risk as the company has made single-layer, four-layer, and 10-layer cells, and it has a 24-layer prototype tested. And so far, investors have largely accepted how early in the game it is, as the company is only on track to start production of its first battery cells in 2023 and might not be able to begin large-scale production in 2025 as management initially planned.
This is the definition of a "go big or go home" investment, and it's not a stock for the faint of heart. That's why, despite its tantalizing upside potential, many investors may overlook the company until its potential breakthrough technology is further established.
A long road ahead for EVs
One way to build generational wealth in the stock market long term is to identify megatrends and ride them for decades. Doing so is easier said than done, of course, and it's difficult to judge when it's the right time to jump aboard and what level of risk is acceptable.
Many overlook these three stocks for various reasons, but their potential alone is worth further research and understanding, and maybe even a small position for those willing to accept risk for potential upside.
