Stocks to buy

The 3 Hottest EV Stocks to Own for 2023 and Beyond

Electric vehicle stocks have been among the underperforming names for the year. Growth stocks have generally suffered due to contractionary monetary policies and adjustments to growth expectations. However, EV stocks have also been impacted due to geopolitical tensions and supply chain headwinds. I believe that the correction is a good time to accumulate the hottest EV stocks for 2023 and beyond.

The reason is – Global electric vehicle adoption is still at an early stage. For example, there are approximately 11 million electric cars, vans, and buses on the road.

This number is expected to increase to 145 million by 2030. Further, if government policies remain conducive, EVs will likely swell to 230 million. By 2030, it’s expected that 60% of vehicles sold globally will be electric vehicles.

Considering this outlook, EV is a long-term investment theme. There will be intermediate corrections in EV stocks. However, the trend is likely to remain positive.

Let’s, therefore, talk about three of the hottest EV stocks to buy for healthy returns in 2023 and beyond.

Symbol Company Price
RIVN Rivian Automotive $26.32
LI Li Auto $21.31
TSLA Tesla $171.13

Rivian Automotive (RIVN)

Source: James Yarbrough / Shutterstock.com

Rivian Automotive’s (NASDAQ:RIVN) stock has corrected sharply for year-to-date 2022. However, that’s the case for most electric vehicle stocks. Considering the business developments, it’s among the hottest EV stocks for 2023 and beyond.

For Q3 2022, Rivian produced and delivered 7,363 and 6,584 vehicles, respectively. The company has reaffirmed its guidance for the annual production of 25,000 vehicles.

Another bullish trigger is the continued growth in order backlog for R1. As of November 2022, the company reported a backlog of 114,000 vehicles. It’s worth mentioning that Rivian has a backlog of 100,000 electric delivery vans from Amazon (NASDAQ:AMZN). RIVN stock is likely to trend higher as the backlog continues to swell.

Rivian ended Q3 with cash and equivalents of $13.8 billion. The company expects to fund operations with this cash buffer through 2025. Therefore, there is no near-term risk of equity dilution.

Overall, with R2 in the pipeline, an impending global expansion, and a significant ramp-up in manufacturing capacity, Rivian looks attractive.

Li Auto (LI)

Source: Robert Way / Shutterstock.com

From October lows of $12.5, Li Auto (NASDAQ:LI) has bounced back strongly by 69%. Li stock still seems undervalued from a long-term perspective. I would include it among the hottest EV stocks to buy and hold.

For Q3 2022, Li reported vehicle delivery growth of 5.6% on a year-on-year basis to 26,524 vehicles. While growth was muted, the outlook is bullish for 2023. The key reason is a strong line-up of models. The company’s second model, Li L9, has already received a strong market response. Li L8 and Li L7 will contribute to delivery growth in 2023 and beyond.

It’s also worth noting that Li Auto has a robust cash buffer of $7.85 billion. This provides Li with ample flexibility for expansion within China. Additionally, the company’s investment in research and development has been robust.

I would also expect Li Auto to pursue international expansion similar to Nio (NYSE:NIO) and XPeng (NYSE:XPEV). This is likely to be another catalyst for delivery growth in the next few years.

Tesla (TSLA)

Source: helloabc / Shutterstock.com

Tesla’s (NASDAQ:TSLA) stock has looked extremely weak, with a correction of 55% for year-to-date 2022. For investors who are bullish on the long-term EV growth story, it’s a golden buying opportunity.

Weak broad market sentiments and intensifying competition are some reasons for TSLA stock trending lower. Additionally, production and deliveries have missed relatively optimistic market expectations.

However, Tesla has a strong product line-up that will boost growth in 2023 and beyond. This includes Cybertruck, Tesla Roadster, and Semi.

It’s also worth noting that the company generated an operating cash flow of $11.4 billion for the first nine months of 2022. With high financial flexibility, Tesla is positioned to make gigafactory investments globally.

Tesla has set an ambitious target of producing 20 million EVs annually by 2030. This seems realistic, with the company still making an entry into high-growth markets like Southeast Asia and India.

On the date of publication, Faisal Humayun 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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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