The automotive industry is on the cusp of evolving more over the next two decades than it has over the past century. We're in the early innings of a transition from internal combustion engines to electric vehicles (EVs), and that means there's a huge opportunity to find young companies poised to soar.
If you're willing to keep a long-term investing horizon, and are able to sleep at night with riskier investments, here are three potentially lucrative EV stocks that could drive your portfolio higher in the decades to come.
1. VinFast
You probably haven't heard of VinFast Auto (VFS -3.35%), but it has largely been busy dominating its home market of Vietnam, where it operates a state-of-the-art plant in Hai Phong boasting up to 90% manufacturing automation.
The automaker has discontinued internal combustion engine products and has gone all-in on EVs. It currently manufactures and exports a number of SUVs, scooters, and buses across its primary markets of Vietnam, North America, and soon Europe.
The young EV maker is unprofitable and burning cash, but has a trump card up its sleeve: VinGroup. VinFast is a part of the larger VinGroup, which has ties to everything from real estate to retail, and has poured billions of investment into its EV arm. That substantial backing could give the company the financial stability it needs to penetrate the lucrative North American market successfully over time.
In fact, its plans for the U.S. market are taking shape now. It plans to launch the VF3 with a price tag rumored to be as low as $20,000, well below the $35,000 threshold many analysts believe needs to be attained to attract mainstream consumers.
VinFast also plans to expand a dealership network that covers 125 points of sale across the U.S. market, backed by a $4 billion EV factory in North Carolina that will be completed by the end of 2025 and boast production capacity around 150,000 vehicles annually.
You may not have heard of VinFast yet, but with financial backing it could eventually become the next foreign automaker to make a name for itself in the U.S. market.
2. QuantumScape
Let's switch gears from an automotive manufacturer to a company trying to transform the battery technology that powers EVs. QuantumScape's (QS 5.69%) solid-state battery technology, if successfully put into mass production, could transform the industry.
To simplify the battery technology, imagine a battery that would charge faster, improve driving range, and be safer. Specifically, QuantumScape's batteries could recharge to 80% of capacity in about half the time of most lithium-ion EV batteries today, and extend range by roughly 80% over batteries with comparable weight. The solid-state battery would also remove the flammable liquid, making them safer and potentially cheaper.
While you might not have heard of QuantumScape, the automotive industry sure is interested. QuantumScape has deep ties with Volkswagen, including a 50/50 joint venture set to accelerate the commercialization of its battery technology. The company also has contracts with two other top-10 original equipment manufacturers (OEMs), two well-known global luxury automakers, and one EV company.
Currently, QuantumScape is focused on EV batteries, but an intriguing long-term catalyst is that the technology could extend far beyond vehicles. The technology could one day have applications in stationary storage and consumer electronics.
Investors have to dial down some of the hype, though. This technology is incredibly challenging, QuantumScape is still testing it, and the company remains pre-revenue -- which Wall Street likely doesn't appreciate seeing.
QuantumScape has a long, long way to go, but years down the road, if it perfects its technology on a commercial scale, the sky is the limit for this stock.
3. Rivian Automotive
This is yet another young EV maker, but the difference between Rivian Automotive (RIVN 6.10%) and VinFast is that the former has started to prove it can succeed in the highly valuable U.S. market.
One of the most important factors in luring early adopters is proven quality, and Rivian's R1T (truck) and R1S (SUV) have won numerous awards, including the R1T ranking for highest overall consumer satisfaction in J.D. Power's "2023 U.S. Electric Vehicle Experience Ownership Study," bumping Tesla's Model 3 down a peg.
Rivian is riding out of 2023 with momentum and is driving toward its next generation of vehicles, the R2, which will bring prices down to the $40,000-to-$50,000 range and should unlock more mainstream demand than its current vehicles, which start at roughly $78,000.
Beyond its trucks and SUVs, the company long ago inked a deal with retail juggernaut Amazon to supply 100,000 electric delivery vans. Best of all, the agreement is no longer exclusive and other companies can now purchase its vans -- AT&T has already signed up!
Rivian is still burning cash at a rapid rate, but management plans to become gross-profit positive this year, which would prove to investors that it's one step closer to turning a profit. Rivian is doing a lot of things right, and if it turns out home-run vehicles with its R2 platform, investors could be set up for a wonderful ride.
Potentially lucrative
With China's BYD and Tesla topping EV sales globally, EV sales have proven that this sector is no longer about size or legacy of automakers -- it's about quality and innovation. That gives Rivian and VinFast a perfect opportunity to get their feet in the door of the highly valuable U.S. EV market and reward investors in the process.
Meanwhile, QuantumScape is working on technology that could vastly improve all EVs on the road today. All three of these stocks are high-risk, and the EV industry will certainly face its share of speed bumps along the road, but each stock has lucrative long-term potential for the right investors.
