Title: Two Sizzling Electric Vehicle Stocks Worth Investing in This December
In the chaotic realm of automotive stocks, electric vehicle (EV) companies have been a rollercoaster ride. Factors like rising inflation and parts shortages have pushed car prices up, dissuading some buyers and causing production headaches for numerous companies. Yet, it's becoming increasingly clear that EVs represent the future of the automotive market - a future that, though it may arrive slower than anticipated, is still incredibly promising.
Two electric vehicle stocks that stand out in this evolving market are Rivian and BYD.
1. Rivian
Back in 2022, I dipped my toes into the waters of Rivian Automotive (RIVN -4.87%), a company I remain bullish on, despite its stock price being somewhat stagnant since. Rivian continues to impress with its strategic partnerships and cost-cutting measures.
For starters, Rivian has been attracting the attention of large investors like Amazon, which owns 17% of the company. Amazon currently utilizes 10,000 electric delivery vans from Rivian, with an order of 100,000 vans set to be delivered by 2030. Mighty impressive, right?
More recently, Rivian has forged a joint venture with Volkswagen, a partnership that's a testament to the company's position at the cutting edge of EV technology. Volkswagen will invest $1.3 billion for a 50% equity stake in the venture, which aims to use Rivian's software and technology across its future models. This is set to kick off in 2027. Better yet, the partnership will net Rivian up to $5.8 billion.
These funds will be instrumental as Rivian delves into the launch of its smaller R2 and R3 models. And don't forget that Rivian has optimized the production of its current vehicle lineup, including its R1T trucks and R1S SUVs, resulting in cost savings of up to 35%. Rivian is set to achieve modest gross profitability by the end of 2022, something many of its peers in the electric vehicle startup scene can't boast about just yet.
The cherry on top? Rivian's shares sport a price-to-sales ratio (P/S) of a mere 2.8, while Lucid's P/S ratio clocks in at 7.2. A word of caution, though: Rivian shares are likely to be as wild as a rollercoaster ride as the company grows.
2. BYD
Next up, we have BYD, a China-based company that's the world's largest EV manufacturer, churning out more than 3 million vehicles in 2023, half of which are battery-powered EVs. This full range of vehicles allows BYD to capitalize on cost savings and production efficiencies that other EV manufacturers don't enjoy.
In the third quarter of 2023, BYD reported revenue of $28.2 billion, just edging out Tesla's $25.2 billion. BYD holds a 20% share of the automotive market in China and is aiming to ramp up its export activity, currently sending about 8% of its vehicles to international markets.
Europe was particularly welcoming, with BYD's European exports rising a robust 32.6% in the third quarter. It's no wonder, then, that BYD's price-to-earnings ratio (P/E) sits at just 21 - a tantalizingly low figure compared to Tesla's astronomical earnings multiple of 106. If this isn't enough to lure you in, consider that BYD is projected for rapid market growth, with its electric vehicle motor market expected to CAGR by more than 28% over the next five years.
In closing, the future of EV stocks might be a little bumpy, with challenges like rising inflation and tariffs inevitably emerging. But in the long run, the market's shift towards cleaner, greener vehicles is only going to become more pronounced. So if you're looking for a way to hitch a ride on this trend, Rivian and BYD make for compelling picks.
- Given the bullish outlook on Rivian Automotive, investing in their stocks could be a smart move for those with a long-term finance strategy, considering the company's strategic partnerships, cost-cutting measures, and promising future plans.
- On the other hand, BYD, with its large EV production volume and cost savings, provides an appealing investment opportunity in the finance sector. Its lower price-to-earnings ratio compared to competitors and projected market growth make it a potentially lucrative EV stock option.
