Investors in electric vehicle (EV) stocks got a dose of reality in 2022. After much exuberance over the potential for many start-ups and related businesses, stocks in the sector were in correction mode last year. 

That included the industry leaders, even as profits soared. Tesla (TSLA -4.02%) shares, for example, plunged 65% in 2022. There were several reasons investors fled these names, but some are piling back in this year. It's not too late, though, to own shares in the two biggest global EV manufacturers. 

Profits are flowing

It may be surprising to some, but Tesla isn't the biggest maker of plug-in electric vehicles. That title now belongs to China-based BYD (BYDDY 1.42%) when you include both its fully electric as well as plug-in hybrid sales. Shares of both Tesla and BYD are on the rise so far this year, though. And there are good reasons for investors to own both.

Tesla's profits have accelerated over the last two years. At the same time, the company is reinvesting in the business to increase production and diversify its product offerings. It has already begun shipping its Semi electric heavy truck and will start commercial production of the Cybertruck pickup truck this year. Those investments can help continue to grow those profits if EV adoption increases as many expect and the company executes as it has in recent years.

line graph of Tesla quarterly net income since Q1 2021.

Data source: Tesla. Chart by author.

The company delivered 1.3 million vehicles in 2022 and it expects to grow that volume at a rate approaching 50% for several years. On its fourth-quarter conference call for investors, CEO Elon Musk reiterated that "demand far exceeds production." As its new factories ramp up, Tesla should be able to meet that goal as long as global demand for EVs stays strong.

Bet with Buffett

But China's BYD is already ahead of Tesla after it delivered nearly 1.9 million units in 2022. That total was split fairly evenly between fully electric and plug-in hybrid products. Nearly all of BYD's sales are made in mainland China. But the company has plans to change that.  

blue BYD electric HAN sedan.

Image source: BYD.

The company is eyeing Europe as its next market. BYD is in talks with Ford to purchase its German manufacturing plant, according to The Wall Street Journal. Ford has plans to end production at that facility in two years. 

BYD has been a holding of Warren Buffett's Berkshire Hathaway since his partner Charlie Munger brought it to his attention in 2008. Buffett and Munger may have liked BYD's diverse product offerings. Like Tesla, it makes more than just electric cars, including batteries, buses, rail, and renewable energy products. Berkshire has recently taken some profits on its long-held shares. But it still holds about two-thirds of its initial shares and owns nearly 12% of BYD's Hong Kong-listed shares. 

Like Tesla, BYD is also very profitable with 2022 earnings expected to approach $2.5 billion. Both Tesla and BYD should have bright futures as EV adoption increases. Fully electric offerings represented just 10% of global light vehicle sales in 2022. While the stocks of both EV makers have been on recent runs, it's not too late to take a position in the leading companies in this growing sector.