The appeal of electric vehicle (EV) stocks is clear to many investors. With the market size forecast to grow from $438.18 billion in 2023 to $1.09 trillion by 2030 at a CAGR (compound annual growth rate) of 13.92%, it’s easy to see why so many are keen to embrace this form of sustainable investing.
The European Union, United States, United Kingdom, Japan and India, among other leading global nations, have all ramped up their focus on phasing out petrol vehicles in the 2030s. This signifies the potential of EV markets and their long-term use cases within the automotive sector.
Stocks within this industry aren’t entirely free from volatility. Growing competition in China is forcing prices lower in a way that’s impacting the profitability of EV firms. However, there’s no doubt about the leading role that electric vehicles will play in the future of the automotive industry.
It’s for this reason that investors are looking to capitalize on EV stocks that hold promise for the future. Stocks that show a strong emphasis on innovation and environmental credentials can offer plenty of upside. This is especially true as battery performance, range and functionality become increasingly sought after.
The future of the automotive industry is green. These three stocks are the best options for investors to buy and hold as the EV industry continues to grow.
Li Auto (LI)
Li Auto (NASDAQ:LI) enjoyed an impressive Q2 2023 before weakening over the second half of the year. During this time, we saw plenty of growth on an operational level for the leading Chinese EV stock.
At the core of Li’s strong year was an astonishing 182.2% total deliveries growth to 376,030. Cumulative deliveries surpassed 600,000 vehicles. This makes the firm the most prolific among China’s emerging new energy automakers.
With the upcoming launch of Li MEGA, the firm’s flagship new MPV set to roll out in February 2024, the firm appears to be leading the charge to become China’s EV market leader. Also on the horizon for Li is the prospective expansion into Middle East markets, which the manufacturer is set to explore in the future.
With the support of a cash buffer of $12.13 billion reported in Q3 2023, we can see plenty of room for growth for this exciting stock in the future. In addition to this, LI remains an exciting stock for investors who are optimistic about the future of autonomous driving. Li Auto’s recently announced partnership with semiconductor giant Nvidia (NASDAQ:NVDA) will see Nvidia’s DRIVE Thor centralized car computer power Li’s future EV fleets.
Rivian (NASDAQ:RIVN) has endured a fairly torrid time on Wall Street since its debut in late 2021. Modest growth throughout 2023 points to a level of consolidation that could grow into outperformance in the future.
Crucially, Rivian has been busy securing transformative deals in recent months. The news that the auto manufacturer will be supplying its vehicles for AT&T’s (NYSE:T) fleet represents a significant coup for the firm.
Last year was key for Rivian to overcome production bottlenecks, with 57,232 vehicles produced and deliveries reaching 50,122 in 2023. In perhaps its biggest statement of intent, Rivian produced 17,541 vehicles in Q4 alone — offering a glimpse at the momentum it’s building.
Rivian’s management has boldly predicted that the firm will begin turning gross profit positive, making RIVN a solid pick for investors with a long-term outlook.
Tesla (NASDAQ:TSLA) is one of the EV industry’s more complex stocks. The tumultuous leadership of Elon Musk means that there’s rarely a dull moment for his firms. Still, the billionaire’s commitment to innovation is likely to secure the long-term viability of the likes of TSLA.
Tesla reached its target of selling 1.8 million vehicles in 2023. Furthermore, its deliveries in Q4 alone hit a total of 484,507.
On top of this, the highly anticipated launch of the Cybertruck has helped to keep the stock in the spotlight. Tesla’s commitment to autonomous driving is likely to ensure that it stays at the forefront of innovation.
Tesla’s profitability is a key factor for the stock’s sustainability. With three consecutive years of GAAP profits, there’s no longer a need to sell renewable energy credits to other automotive manufacturers to balance books.
One of the stock’s biggest supporters is Cathie Wood, CEO and CIO of Ark Invest. Before the stock’s 3-for-1 split in August 2023, Wood claimed that Tesla stock could reach the $4,600 mark. That would be a price target of $1,533.33 when adjusted for the split.
Today, this would equate to an upside of over 575%, and there’s little that’s changed in Tesla’s fundamentals to suggest that this isn’t a viable goal.
On the date of publication, Dmytro Spilka did not hold (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.