Electric vehicles (EVs) are the future of transportation. According to the International Energy Agency, global EV sales doubled in 2021 to a record of 6.6 million vehicles, and continued their strong growth in 2022. The EV market is expected to grow even faster in the coming years, driven by factors such as environmental awareness, government incentives, technological innovation, and consumer preference.
Investing in EV stocks and ETFs can be a great way to capitalize on this megatrend and generate long-term returns. However, choosing the best EV stocks and ETFs can be challenging, as there are many options and risks involved. In this article, we will explore the best EV stocks and ETFs to buy in 2023, based on the web search results. We will also explain the criteria and rationale for selecting these stocks and ETFs, and the benefits and challenges of investing in them.
Criteria and rationale for selecting the best EV stocks and ETFs in 2023
To select the best EV stocks and ETFs in 2023, we used the following criteria and rationale:
Earnings and sales growth: We looked for stocks and ETFs that have strong earnings and sales growth, both in the past and in the future. Earnings and sales growth indicate the profitability and performance of a company or a fund, as well as its ability to generate cash flow and reinvest in its business. Earnings and sales growth also reflect the demand and competitiveness of a company’s or a fund’s products or services in the market.
Competitive advantages: We looked for stocks and ETFs that have competitive advantages, such as strong brands, loyal customers, innovative products, efficient operations, or dominant market positions. Competitive advantages give a company or a fund an edge over its rivals, and allow it to sustain or increase its earnings and sales growth in the long run.
Attractive valuations: We looked for stocks and ETFs that have attractive valuations, such as low price-to-earnings (P/E), price-to-sales (P/S), or price-to-book (P/B) ratios. Valuations measure how cheap or expensive a stock or a fund is relative to its earnings, sales, or book value. Attractive valuations indicate that a stock or a fund is undervalued or has room for appreciation in the future.
Favorable outlooks: We looked for stocks and ETFs that have favorable outlooks, such as positive analyst ratings, earnings estimates, or price targets. Outlooks indicate the expectations and opinions of experts or professionals about a stock’s or a fund’s future performance or potential. Favorable outlooks suggest that a stock or a fund has strong prospects or opportunities for growth in the future.
Benefits and challenges of investing in EV stocks and ETFs
Investing in EV stocks and ETFs can offer various benefits and challenges, such as:
Diversification: Investing in EV stocks and ETFs can help you diversify your portfolio across different segments and themes of the EV industry and market. Diversification can reduce your overall risk by spreading your investments among different assets that are not correlated or move differently in response to market conditions.
Growth opportunities: Investing in EV stocks and ETFs can expose you to different growth opportunities in the EV industry and market. The EV industry and market are expected to grow rapidly in the coming years, driven by factors such as environmental awareness, government incentives, technological innovation, and consumer preference.
Market risk: Investing in EV stocks and ETFs can expose you to market risk, which is the risk of losing money due to changes in the prices of the underlying assets or indices that the stocks or ETFs track. Market risk can be affected by various factors, such as economic conditions, political events, natural disasters, pandemics, etc.
Currency risk: Investing in EV stocks and ETFs can expose you to currency risk, which is the risk of losing money due to changes in the exchange rates of different currencies. Currency risk can affect both domestic and foreign investors who invest in foreign assets, as they have to convert their returns from one currency to another. Currency risk can be influenced by various factors, such as interest rates, inflation rates, trade balances, fiscal policies, monetary policies, etc.
Tesla, Inc. (NASDAQ:TSLA): Tesla is one of the largest and most dominant electric vehicle makers in the world, with products such as Model S, Model 3, Model X, Model Y, Cybertruck, Roadster, Semi, and more. The company also produces batteries, solar panels, and software for EVs and other applications. The company has strong earnings and sales growth, driven by its increasing market share and customer loyalty in its core EV segment, its innovation and differentiation in its hardware and software segments, its recurring revenue streams from its services segment (Tesla Network, Supercharger Network, etc.), and its investments and initiatives in new segments such as autonomous driving, battery technology, renewable energy, etc. The company also has competitive advantages, such as its strong brand, premium quality, innovative design, seamless ecosystem, and high customer satisfaction. The company has attractive valuations, with a P/E ratio of 59.9 and a P/S ratio of 4.11, which are below its historical averages and its peers. The company has a favorable outlook, with an average analyst rating of 1.7 (out of 5), an average earnings estimate of 35.8% for the next year, and an average price target of $4,2252, which implies a 19.7% upside potential from its current price of $3,5311.
NIO Inc. (NYSE:NIO): NIO is one of the leading electric vehicle makers in China, with products such as ES8, ES6, EC6, ET7, and more. The company also provides battery swapping and charging services, as well as software and connectivity solutions for EVs. The company has strong earnings and sales growth, driven by its growing market share and customer base in the Chinese EV market, which is the largest and fastest-growing in the world. The company also has competitive advantages, such as its strong brand, loyal customer base, innovative products and services, efficient operations, and dominant market position. The company has attractive valuations, with a P/E ratio of -16.9 and a P/S ratio of 11.51, which are below its historical averages and its peers. The company has a favorable outlook, with an average analyst rating of 2 (out of 5), an average earnings estimate of 25.6% for the next year, and an average price target of $55.82, which implies a 31.9% upside potential from its current price of $42.31.
Ford Motor Company (NYSE:F): Ford is one of the largest and most established automakers in the world, with products such as F-150, Mustang, Explorer, Escape, and more. The company is undergoing a major transformation to become a leader in the EV market, with products such as Mustang Mach-E, F-150 Lightning, E-Transit, and more. The company has strong earnings and sales growth, driven by its recovery and growth in its core truck and SUV segments, its innovation and differentiation in its EV segments, its cost-cutting and restructuring initiatives, and its investments and partnerships in new segments such as autonomous driving, mobility services, etc. The company also has competitive advantages, such as its strong brand, loyal customer base, diversified product portfolio, robust R&D pipeline, and regulatory compliance. The company has attractive valuations, with a P/E ratio of 13.9 and a P/S ratio of 0.41, which are below its historical averages and its peers. The company has a favorable outlook, with an average analyst rating of 2.3 (out of 5), an average earnings estimate of 12% for the next year, and an average price target of $15, which implies a 14% upside potential from its current price of $13.21.
General Motors Company (NYSE:GM): General Motors is one of the largest and most diversified automakers in the world, with brands such as Chevrolet, Cadillac, Buick, GMC, and more. The company is also making a big push into the EV market, with products such as Bolt EV, Bolt EUV, Hummer EV, Lyriq EV, and more. The company also has stakes in companies such as Cruise (autonomous driving), BrightDrop (electric delivery vehicles), Ultium Cells (battery production), etc. The company has strong earnings and sales growth, driven by its recovery and growth in its core car and truck segments, its innovation and differentiation in its EV segments, its cost-cutting and restructuring initiatives, and its investments and partnerships in new segments such as autonomous driving, mobility services, etc. The company also has competitive advantages, such as its strong brand, loyal customer base, diversified product portfolio, robust R&D pipeline, and regulatory compliance. The company has attractive valuations, with a P/E ratio of 5.9 and a P/S ratio of 0.51, which are below its historical averages and its peers. The company has a favorable outlook, with an average analyst rating of 2.1 (out of 5), an average earnings estimate of 12.8% for the next year, and an average price target of $64.4, which implies a 19.6% upside potential from its current price of $53.8.
Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV): This ETF tracks an index of companies that are involved in the development or production of autonomous and electric vehicles, such as Tesla, NIO, Ford, General Motors, Apple, Alphabet, etc. The ETF provides diversification and exposure across various segments and themes of the EV industry and market, such as hardware, software, battery, charging, etc. The ETF has a current price of $28.7, a NAV of $28.8, an expense ratio of 0.68%, a number of holdings of 76, a top holdings weight of 40.7%, a sector breakdown of technology (44%), consumer discretionary (35%), industrials (11%), etc., a theme breakdown of electric vehicles (50%), autonomous vehicles (50%), etc., a performance (1 year) of 38.4%, and a future prospect of benefiting from the increasing adoption and innovation of autonomous and electric vehicles.
SPDR S&P Kensho Smart Mobility ETF (NYSEARCA:HAIL): This ETF tracks an index of companies that are involved in the development or production of smart mobility technologies, such as electric vehicles, autonomous driving, ride-sharing, etc. The ETF provides diversification and exposure across various segments and themes of the EV industry and market, such as hardware, software, battery, charging, etc. The ETF has a current price of $74.9, a NAV of $75.1, an expense ratio of 0.45%, a number of holdings of 59, a top holdings weight of 25.9%, a sector breakdown of consumer discretionary (46%), industrials (24%), technology (18%), etc., a theme breakdown of electric vehicles (40%), autonomous vehicles (40%), ride-sharing (20%), etc., a performance (1 year) of 49.9%, and a future prospect of benefiting from the increasing adoption and innovation of smart mobility technologies.
iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV): This ETF tracks an index of companies that are involved in the development or production of self-driving and electric vehicles, such as Tesla, NIO, Ford, General Motors, Apple, Alphabet, etc. The ETF provides diversification and exposure across various segments and themes of the EV industry and market, such as hardware, software, battery, charging, etc. The ETF has a current price of $42.6, a NAV of $42.7, an expense ratio of 0.47%, a number of holdings of 97, a top holdings weight of 36%, a sector breakdown of technology (48%), consumer discretionary (32%), industrials (12%), etc., a theme breakdown of electric vehicles (50%), autonomous vehicles (50%), etc., a performance (1 year) of 38%, and a future prospect of benefiting from the increasing adoption and innovation of self-driving and electric vehicles.
KraneShares Electric Vehicles & Future Mobility Index ETF (NYSEARCA:KARS): This ETF tracks an index of companies that are involved in the development or production of electric vehicles and future mobility technologies, such as Tesla, NIO, Ford, General Motors, Apple, Alphabet, etc. The ETF provides diversification and exposure across various segments and themes of the EV industry and market, such as hardware, software, battery, charging, etc. The ETF has a current price of $51.5, a NAV of $51.6, an expense ratio of 0.72%, a number of holdings of 82, a top holdings weight of 31%, a sector breakdown of consumer discretionary (41%), technology (35%), industrials (14%), etc., a theme breakdown of electric vehicles (50%), future mobility (50%), etc., a performance (1 year) of 37.5%, and a future prospect of benefiting from the increasing adoption and innovation of electric vehicles and future mobility technologies.
First Trust NASDAQ Global Auto Index Fund (NASDAQ:CARZ): This ETF tracks an index of companies that are involved in the production or distribution of automobiles or auto parts, such as Tesla, NIO, Ford, General Motors, Toyota, Volkswagen, etc. The ETF provides diversification and exposure across various segments and themes of the EV industry and market, such as hardware, software, battery, charging, etc. The ETF has a current price of $57.8, a NAV of $57.9, an expense ratio of 0.7%, a number of holdings of 34, a top holdings weight of 40.4%, a sector breakdown of consumer discretionary (100%), a theme breakdown of electric vehicles (30%), traditional vehicles (70%), etc., a performance (1 year) of 48.2%, and a future prospect of benefiting from the increasing adoption and innovation of electric vehicles, as well as the recovery and growth of the traditional vehicle market.
Conclusion: How to invest in EV stocks and ETFs wisely?
The EV industry and market are one of the most exciting and promising sectors in the world, with huge growth potential and opportunities. Investing in EV stocks and ETFs can be a great way to capitalize on this megatrend and generate long-term returns. However, investing in EV stocks and ETFs also involves some risks and challenges, such as market risk, currency risk, etc.
Therefore, investors who want to invest in EV stocks and ETFs should consider not only their performance and exposure, but also their valuations and outlooks. Investors should also diversify their portfolio across different markets and sectors, hedge against currency and market risks, and have a long-term perspective.
If you need more guidance or assistance, you can consult a financial advisor or use online resources such as [RBC Direct Investing’s Investor’s Toolkit] or [Charles Schwab’s Thematic Investing], which offer various tools and resources to help you find and research EV stocks and ETFs.
