Some of the best electric vehicle (EV) stocks seem to be running out of steam in August. Undoubtedly, the broader tech market sell-off has been quite harsh among EV plays, as fears of a recession could further soften demand for such big-ticket purchases. Though a harder-than-expected landing would surely weigh on demand for autos, there are certain names in the EV scene that can gain over the competition.
Indeed, Tesla (NASDAQ:TSLA) isn’t the only EV play anymore. While Elon Musk’s legendary firm has been able to steer clear of devastating pitfalls many up-and-coming rivals fell into, the stock remains in the midst of a historic rut. As new, emerging competitive threats arise while consumers steer toward hybrid options or more affordable fully-electric vehicles, perhaps Tesla is no longer the go-to option for investors seeking EV exposure.
Either way, let’s check out three bruised EV stocks that may have too much negativity baked in.
Tesla (TSLA)
It didn’t take long for Tesla stock’s early-summer melt-up to meltdown in a violent way. The EV behemoth’s (delayed) big robotaxi day is now two months away, yet enthusiasm and expectations seem to be as grounded as they’ve been since the event was announced. That’s thanks in large part to last week’s weak jobs number, which sent most stocks rolling lower in a hurry.
More recently, jobless numbers came in below expectations, soothing recession fears that built up in recent sessions. In response, TSLA stock rebounded 3.7% alongside the rest of the market in response to easing recession jitters. Despite an upbeat Thursday, the name is still off 7% over the past week and more than 22% in the past month.
At 55.7 times trailing price-to-earnings (P/E), Tesla isn’t exactly a cheap EV stock, but it’s still one of the best. If no recession materializes, TSLA stock seems like the Magnificent Seven stock that could have the most room to run.
BYD (BYDFF)
BYD (OTCMKTS:BYDDF) is a Chinese EV maker that Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) recently trimmed such that it comprises less than 5% of the conglomerate’s public stock portfolio. Undoubtedly, Berkshire has been taking profits in a wide range of firms of late, sparking fears that Warren Buffett may be prepping for a painful market sell-off.
Though Buffett didn’t address why his firm is trimming its BYD stake, I do think it’s a mistake to follow Berkshire out of the name while it’s down more than 14% from its 52-week high and close to 35% from its all-time high.
At these depths, the EV stock goes for just 18.3 times trailing P/E, well below that of Tesla. Not at all a bad price to pay for an EV firm with a CEO (Wang Chuanfu) that the late Charlie Munger praised as a “natural engineer” and a genius.
If there’s a firm that can top Tesla in the coming years, it’d have to be BYD. The Chinese EV maker is expanding rapidly across Asia, even in the face of macro uncertainties. Arguably, keeping a foot on the gas may be the best course of action as the firm looks to add to its market share.
Rivian (RIVN)
Finally, we have Rivian (NASDAQ:RIVN), which is starting to pick up traction after spending the last few weeks sinking steadily lower. Interestingly, RIVN stock rose close to 7% on Thursday, regaining most of the ground lost on the previous day after the firm fell short of quarterly estimates.
Despite clocking in a wider per-share loss for the quarter, investors seem more focused on sales, which are largely dependent on a healthy economy. Management sees full-year production staying at 57,000 vehicles, which is about 1,000 more vehicles than analysts think the firm can sell this year.
If the economy goes downhill from here, hitting such sales targets will get incredibly difficult. Like Tesla, Rivian vehicles do not come cheap, making them more sensitive to the state of the economy and consumer mindset.
All considered, the latest post-earnings seem more “mixed” than anything, at least according to Baird’s Ben Kallo, who has a $20 price target on the stock that’s currently trading just shy of $15 per share.
On the date of publication, Joey Frenette held a long position in BRK-B. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.