Electric vehicle (EV) stocks have already had a stupendous run so far this year. In fact, exclusive EV players mostly outperformed internal combustion engine (ICE) companies. This is primarily because worldwide, there is tremendous pressure on auto manufacturers to trim CO2 emission. And this shift from ICE to EV is likely to continue next year and beyond, which should encourage investors to keep an eye on solid EV stocks that have more room to run in the New Year.
To put things into perspective, EV sales across the globe are projected to grow 50% or more in 2021, compared to ICE’s expected sales growth of a meager 2% to 5% as predicted by analysts at Morgan Stanley, quoted in a
MarketWatch article
. EV penetration globally has also been projected at 4%, increasing to 31% by 2030.
The MarketWatch article further stated that Adam Jonas, analyst at Morgan Stanley, said that the New Year “is shaping up to be a critical year for EV adoption and (internal combustion engine) de-adoption that will dictate the pace of multiple expansion, contraction, consolidation and proliferation among the stocks.”
But it’s just not next year, EVs are expected to account for a third of the global auto market by 2025, and more than 50% by 2030, easily exceeding sales of ICEs, according to a study by the
Boston Consulting Group
.
The Boston Consulting Group also confirmed that tighter regulations on tailpipe emissions that do result in grave environmental issues will compel auto manufacturers to produce EVs to fulfil emission requirements. At the same time, battery prices are falling with extended driving range owing to these batteries. This should further encourage consumers to opt for EVs.
Further citing a
CleanTechnica article
, in the United States, EV sales are expected to jump 70% year over year next year. Similarly, a substantial increase in year-over-year sales of EVs is anticipated in Europe. Such EV sales include both plug-in hybrids and fully electric vehicles.
Of course, EV sales are expected to improve in the New Year on an improved economy and comparatively low interest rates. No doubt, a breakthrough in the coronavirus vaccine front leading to opening up of the economy along with low auto loan interest rates are surely expected to provide enough self-assurance to consumers to take the initiative to buy a new car.
But sales of EVs are not just focused on the United States and Europe. Even China is expected to witness a surge in new energy vehicles (NEV) or so-called plug-in electric vehicles in 2021. As mentioned in a
NIKKEI Asia article
, the China Association of Automobile Manufacturers recently said that sales of NEVs in China are projected to climb 40% to 1.8 million units next year. It’s worth pointing out that sales of NEVs are expected to improve in the near term in China, thanks to
Tesla, Inc
’s
TSLA
expansion of local production.
3 Electric Vehicle Stocks to Watch in 2021
With EV sales expected to surge in the New Year, electric car manufacturers are invariably poised to gain. Improved sales will in the end lead to greater profits and boost the company’s share price. With all that in mind, here’re the three EV stocks that should be on your radar in 2021.
Tesla should always be at the top of the list of EV stocks. After all, the company is helping the world rely much more on sustainable energy by selling electric cars. Tesla, in fact, has the largest market share in the electric car segment in the United States. The EV market in the US is largely dominated by Tesla’s Model 3.
Tesla has made sure that electric cars are now available for the masses and not just the affluent. The EV maker had already seen its shares jump a whopping 629% in the year-to-date period, easily outpacing the Zacks Automotive – Domestic industry’s increase of 224.7%. What’s more, Tesla’s expected earnings growth for the next year is still a healthy 60.1%. The Zacks Consensus Estimate for its next year earnings also increased 16.7% over the past 60 days. Tesla currently has a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Another big player in the EV market is
General Motors Company
GM
. The company is looking to catchup with Tesla in the EV segment and is expected to increase its production of electric cars as soon as possible.
Across the globe, General Motors now aims to launch more than 30 new electric vehicles by 2025, and the company’s CEO Mary Barra said that the company is willing to spend a staggering $27 billion on such vehicles, as quoted in
THEVERGE article
.
Shares of the auto manufacturer have advanced 32.7% over the past three-month period, outperforming the Zacks Automotive – Domestic industry’s rise of 31.3%. Additionally, the company’s expected earnings growth rate for the next year is 26.1%. The Zacks Consensus Estimate for its next-year earnings has also moved up 26.4% over the past 60 days. General Motors presently has a Zacks Rank #1 (Strong Buy).
Lastly,
Toyota Motor Corporation
TM
is joining the EV market and has plans to unveil an electric SUV in Europe in the near term. Toyota is aiming to launch its EV to meet customers’ needs. Shares of the Japanese automaker has risen 4.8% over the past month versus the Zacks Automotive – Foreign industry’s increase of 1.8%.
The company’s expected earnings growth rate for the next year is 32.3%. The Zacks Consensus Estimate for its next-year earnings has also climbed 15.8% over the past 60 days. Toyota Motor currently has a Zacks Rank #1.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it’s predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce “”the world’s first trillionaires,”” but that should still leave plenty of money for regular investors who make the right trades early.
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