The global demand for electric vehicles continues to skyrocket. The need for lithium is experiencing exponential growth, making it an exceptionally sought-after commodity. This growing trend is catching the attention of investors now actively seeking the best EV stocks to invest in.
The electric vehicle industry is crucial to the world’s rapid transition towards a more sustainable future. As more countries aim to reduce their carbon footprint, the demand for EVs is expected to grow in the future.
But it’s not just about buying EV stocks at random. Savvy investors know they must identify EV innovators and disruptors to maximize their returns.
These companies are leading the way in developing innovative EV technologies.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is a dominant player in the EV industry known for its innovative technologies and strong market position.
In 2022, Tesla reported impressive financial results, with an operating income of $13.7 billion and a 16.8% margin. Additionally, the company enjoys various advantages through vertical integration, such as brand recognition, lower advertising costs, and improved manufacturing efficiencies.
Concerns about a price war and margin pressure in the EV industry may be overblown. Although EVs currently account for only 10% of new car sales, there is a significant projected increase in their market share.
Tesla is striving to make Autopilot and Full Self-Driving less reliant on active driver supervision.
Considering the anticipated significant growth in the global autonomous vehicle market, the company’s future success hinges on this aspect.
According to Next Move Strategy Consulting, the market achieved nearly $106 billion in 2021 and is projected to exceed $2.3 trillion by 2030.
Investors may benefit more from Tesla’s strategy of prioritizing market share over high margins and low volume. Overall, Tesla is well-positioned to capitalize on the industry’s growth and remain at the forefront of the EV market.
TSLA is one of the perennial best EV stocks to buy.
BYD (BYDDF)
Warren Buffett is investing in BYD (OTCMKTS:BYDDF), the Chinese automaker focused on electric vehicles, making it one of the bigger positions in Berkshire Hathaway’s (NYSE:BRK-A, BRK-B) portfolio.
BYD is aiming to take the lead in the battery-only EV market. However, investing in Chinese firms comes with its fair share of obstacles.
Chinese companies operate under a different regulatory framework than their US counterparts.
The influence of the Chinese government on publicly-traded companies may not always align with the interests of shareholders. Another concern for investors is the high stock price of BYD, which is trading at 30.94 times earnings.
While BYD has shown impressive growth, its margins pale compared to Tesla. With its ambitious sales target of 4 million EVs in 2023, BYD is competing head-to-head with Tesla to capture China’s enormous EV market.
Not only does BYD manufacture electric vehicles and plug-in hybrids, but it is also expanding its battery-manufacturing business.
The company maintains a strong presence in the electronics-manufacturing sector, producing smartphones, notebooks, PCs, and medical devices.
BYD has actively exported its NEV models to global markets such as Norway, India, Australia, Japan, and Latin America. The company even manufactures electric buses at its Lancaster, California plant, distributing them in the US market.
BYD’s successful strategy involves targeting the general population with its affordable NEV models.
All in all, BYD presents a promising investment opportunity as long as investors exercise prudence. Consequently, it is a good pick for investors looking for geographic diversification.
It’s certainly one of the EV stocks to buy, even if you only take a small position.
Sigma Lithium (SGML)
The development and success of electric vehicles heavily rely on lithium production. Specifically, lithium serves as a primary component in rechargeable batteries. In order to ensure a consistent and dependable supply of lithium for their batteries, Tesla has reportedly bid for Sigma Lithium (NASDAQ:SGML), a miner based in Canada.
Sigma Lithium is dedicated to producing cost-effective and environmentally sustainable lithium products. As the global demand for electric vehicles continues to skyrocket, the need for lithium is experiencing exponential growth, turning it into a highly sought-after commodity. Hence, Sigma Lithium is a great forward-looking pick.
Tesla’s bid for Sigma Lithium is a significant move in securing a reliable source of lithium for its batteries. As the world moves towards a greener future, experts anticipate a skyrocketing demand for lithium. However, stakeholders have raised concerns regarding the potential environmental impact of lithium mining, highlighting the significant damage it can cause if not conducted sustainably.
Sigma Lithium’s commitment to sustainable practices aligns with Tesla’s goal of promoting a cleaner future. Therefore, Tesla’s bid for Sigma Lithium secures a reliable source of lithium for its batteries and promotes environmentally sustainable practices.
As EVs become more prevalent and the demand for lithium continues to grow, securing a sustainable mineral source is crucial. By investing in Sigma Lithium, Tesla is taking a proactive approach toward securing a reliable source of lithium. An attractive investment opportunity for aggressive stockholders is also created in the process. Consequently, among the biggest EV stocks, Sigma Lithium is worth investing in.
On the publication date, Faizan Farooque did not hold (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.