The Top 3 EV Stocks to Buy Heading Into Q4

Stocks to buy

Market participants are distinguishing EV sector leaders from laggards.

Unsurprisingly, the electric vehicle category is positioned to grow quickly in the years to come. In fact, EV sales are projected to account for up 18% of total auto sales in 2025 and an estimated 60% of total sales by the end of the decade. This offers substantial growth potential and value creation for market leaders.

For example, Chinese EV stocks are rising as reports suggest regulators might ease restrictions on foreign investors’ stakes in publicly traded Chinese companies. This could attract new funding and help the country’s post-pandemic recovery, benefiting companies amid economic challenges.

True, most EV stocks uphold a high valuation due to future growth expectations, but what are the top three EV stocks to buy heading into Q4? Let’s take a closer look at three of the companies I think are EV stocks to own right now.

XPeng (XPEV)

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Chinese electric vehicle maker XPeng (NYSE:XPEV) has introduced its 2024 P5 sedan.

Available in two trims, P5 500 Plus and P5 500 Pro, they’re priced at 156,900 yuan and 174,900 yuan, respectively. Notably, the P5 no longer features LiDAR technology, a departure from its initial launch in September 2021.

Additionally, XPeng has chosen Nvidia’s (NASDAQ:NVDA) Xavier smart driving chip for the Pro version of its 2024 P5 sedan, enabling highway Navigation Guided Pilot (NGP) functionality, as reported by CNEVPOST. Also, this decision comes despite LiDAR adoption by other automakers for advanced driver assistance systems.

Moreover, Xpeng has joined forces with Volkswagen (OTCMKTS:VWAGY) and announced expansion plans in Europe (Germany, Britain, France) for 2024. Their autonomous tech could thrive in Europe, and a partnership with Didi (OTCMKTS:DIDIY) may boost China’s robo-taxi business. With a low forward price-sales ratio, XPEV is a solid buy.

Nio (NIO)

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Nio (NYSE:NIO) stands out among its EV peers with its with Battery as a Service (BaaS) business model, as well as plans to expand its charging stations. The company is also venturing into smartphones, enhancing connectivity. Nio has its eye on a 2025 mass-market brand launch, specializing in high-end SUVs, competing with other luxury brands.

Nio offers electric SUVs priced between $50,000 and $70,000, expanding with new sedan models and a 2025 mass-market brand. It competes with luxury brands like BMW and Mercedes, boasting an advantage with its widespread battery swapping stations. Currently, those total over 1,747, with plans for expansion.

Nio reported Q2 2023 unaudited financial results with vehicle deliveries totaling 23,520, down 6.1% year over year (YOY) and 24.2% from Q2.

In other news, Nio unveiled its smartphone in Shanghai, designed exclusively for its EV owners. It features unique connected abilities like remote parking and instant car-related actions via an action button. The smartphone uses UWB technology to lock or unlock the vehicle based on proximity.

ChargePoint (CHPT)

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ChargePoint (NYSE:CHPT), an EV charging equipment company, plays a crucial role in global EV success.

In Q2, it achieved $150.5 million in revenue, up 39% YOY, and expects $605-630 million for the year. Growing subscription revenue, driven by expanding charging stations, is a positive indicator for future growth.

Investors should focus on subscription revenue growth at ChargePoint. The company generates revenue from charging system sales and software subscriptions. Expanding charging stations means higher subscription earnings. ChargePoint, with 200,000+ charging ports, surpasses Tesla in international reach. The stock, trading just north of $5 per share, seems undervalued, down 43% year to date (YTD).

Additionally, ChargePoint’s stock has faced recent challenges. As of now, shares are slightly up, possibly due to market factors. However, if TD analyst Cowen is correct in his assessment, the company’s prospects could brighten with increasing demand for charging services.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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