The transformation of the world's vehicle fleet to being powered by electricity is one of today's biggest growth trends. In 2021, sales of new light-duty fully electric vehicles (EVs) nearly doubled in the United States from the prior year, while overall light-duty vehicle sales increased by only 3%, according to government figures. International EV growth was also strong.
The great news for investors is that this secular trend is still in its early stages. The percentage of the world's light-duty vehicles on the road that are all-electric or plug-in hybrids is still very low. At the end of 2021, this figure was less than 2%.
Tesla was instrumental in ushering in the EV revolution and still has a potentially long runway for growth. Investors also have many other options to gain exposure to this space. Two stocks that have strong long-term growth potential are those of lithium producer Albemarle (ALB 1.27%) and EV maker Rivian Automotive (RIVN -0.69%).
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Albemarle: A profitable and dividend-paying EV play
There are many publicly traded companies involved in the EV supply chain, but not many are profitable, pay a dividend, and have substantial current exposure to EVs. Albemarle fits this bill.
The U.S.-based company is one of the world's top producers of lithium, a component of the lithium-ion batteries that power EVs. While it's not an EV pure play, its lithium business is the largest of its three segments (it accounted for 60% of total sales in the second quarter), and the bulk of the lithium it produces is used to make EV batteries.
Albemarle's results have come roaring back following being hurt during the earlier stages of the pandemic. Excluding the fine chemistry services segment it sold last year, sales have surged 98% over the one-year period through the second quarter. The main driver has been the rocketing price of lithium, whose supply is tight and seems poised to stay that way for some time. In Q2, revenue and adjusted earnings per share jumped 91% and 288%, respectively, year over year.
Albemarle stock's dividend is yielding 0.55%, as of the market's close on Sept. 23. Even a modest dividend can make a big difference over time. Over the last decade, the stock's total return was 488% (versus 207% for the S&P 500) -- and 82 percentage points were contributed by the dividend.
Rivian: A promising relatively newly public EV maker
The number of pure-play EV makers that have gone public in recent years keeps growing. Rivian is one of the newcomers that has a good shot at surviving and thriving. It's a U.S.-based company that held its initial public offering in November 2021.
Rivian was the first company to launch a mass-produced electric pickup truck, which should give it a first-mover advantage. Its partnerships with two big names should also prove to be positives. It has an order from Amazon.com, which owns a sizable stake of Rivian, to produce 100,000 custom-designed electric delivery vans. And earlier this month, the company and premium automaker Mercedes-Benz announced plans to create a joint venture to build a European factory that will manufacture electric vans for both companies.
Demand for Rivian's vehicles is robust, but its production has been constrained by the supply shortage that has plagued the auto industry. Last month, management said this issue has begun to ease and reaffirmed its 2022 production forecast of 25,000 total vehicles.
In the second quarter, Rivian produced 4,401 vehicles and delivered 4,467 vehicles. These numbers were up from 2,553 and 1,227, respectively, in the first quarter. It ended the quarter with about 98,000 preorders from U.S. and Canadian consumers for its two consumer vehicles, the R1T pickup and R1S SUV.
Investors should keep a close watch on Rivian's production numbers and its liquidity situation.
