Last month, the European Commission, the executive branch of the European Union, outlined ambitious targets as part of a European Green Deal, mandating a 55% cut in carbon emissions by 2030, and 100% cut by 2035. As part of this plan, the EU plans to ban the internal combustion engine in the region by 2035, much sooner than other areas of the world. The announcement has given a boost to American EV stocks that have an expanding presence in Europe, like Tesla, Inc. (NASDAQ: TSLA) and ChargePoint Holdings, Inc. (NYSE: CHPT).
Tesla, Inc. (NASDAQ: TSLA), the largest EV maker in the world in terms of market capitalization, recently beat market expectations on earnings per share and revenue for the third quarter. ChargePoint Holdings, Inc. (NYSE: CHPT), the premier EV infrastructure firm in North America, recently acquired the largest electric vehicle solutions provider in Europe. Finance experts are bullish on the long-term future of the industry. According to a report by the International Energy Agency, EV sales in the first quarter of 2021 were up 140% year-on-year.
Tesla, Inc. (NASDAQ: TSLA): Not an Ideal EV Stock Pick for Beginner Investors?
"Egregiously Overvalued"
Investors are naturally keen to gain some exposure to the EV market but the share price of Tesla, Inc. (NASDAQ: TSLA) often discourages those who cannot afford the stock. There is also a lot of chatter around the firm being overvalued. In April this year, Craig Irwin, a senior research analyst at Roth Capital Partners, told news platform CNBC that the firm was 'egregiously' overvalued, noting that the firm had a market cap that was more than the total value of the automotive industries in the US and Europe.
"Nothing Short of Bad" Sales in China
On August 10, the bearish outlook on Tesla, Inc. (NASDAQ: TSLA) gathered momentum after investment firm GLJ Research maintained a Sell rating on the stock and lambasted the China sales numbers of the company. Gordon Johnson, an analyst at the firm, termed the 69% month-over-month decline in shipments of China-made cars as "nothing short of bad" for the firm and further said that the company may have peaked in China. However, for all the bearish predictions, there are as many bulls of the EV maker as well.
Stocks Better than Tesla?
For those who want to avoid the expensive option, there are some fantastic stocks in the EV space that are presently trading at comparatively cheap prices and have explosive growth potential. These include Ford Motor Company (NYSE: F) and NIO Inc. (NYSE: NIO), among others discussed in detail below. NIO Inc. (NYSE: NIO) recently reported that it had delivered 7,931 EVs in July, up 124% year-on-year.
Electric cars have revolutionized transport in much the same way the fintech firms have transformed access to finance. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Forget Tesla: Cheap EV Stocks to Buy Now
10. BYD Company Limited (OTC: BYDDF)
Number of Hedge Fund Holders: N/A Price as of August 13, 2021: $35.20
BYD Company Limited (OTC: BYDDF) is a Chinese company that makes and sells automobiles around the world. It is placed tenth on our list of 10 cheap EV stocks to buy now. Some of the EV-related items the company sells include battery-electric passenger vehicles and lithium-ion as well as nickel batteries. It has a market cap of over $118 billion and posted close to $24 billion in revenue last year. The firm is one of the largest EV firms in China in terms of sales. In March, the firm reported that it had sold 16,301 EVs.
In March, investment advisory Goldman Sachs upgraded BYD Company Limited (OTC: BYDDF) stock to Buy from Neutral with a price target of RMB249, noting a recent selloff as the primary reason behind the ratings update.
In early June, BYD Company Limited (OTC: BYDDF) announced that it dispatched 100 electric vehicles to Norway as part of a deal to export 1,500 EVs to the country. The firm revealed that all units dispatched were the Tang SUVs made by the firm.
9. Ideanomics, Inc. (NASDAQ: IDEX)
Number of Hedge Fund Holders: 7 Price as of August 13, 2021: $2.40
Ideanomics, Inc. (NASDAQ: IDEX) is a New York-based firm that offers services which make it easier for companies and individuals to adopt electric vehicles. It is ranked ninth on our list of 10 cheap EV stocks to buy now. On August 2, the firm announced that it had made an investment worth $9 million to acquire a 30% stake in Prettl Electronics, a German company focusing on making and selling industrial components for the automotive and other industries. The share price of the American firm jumped 3% after the announcement.
In April, investment advisory Roth Capital initiated coverage of Ideanomics, Inc. (NASDAQ: IDEX) stock with a Buy rating and a price target of $7, noting that the firm was targeting emerging markets with a strong strategic plan.
At the end of the first quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $20 million in Ideanomics, Inc. (NASDAQ: IDEX), up from 5 in the preceding quarter worth $3.4 million.
8. Arrival (NASDAQ: ARVL)
Number of Hedge Fund Holders: 14 Price as of August 13, 2021: $11.87
Arrival (NASDAQ: ARVL) is placed eighth on our list of 10 cheap EV stocks to buy now. The company is headquartered in Luxembourg. It designs, assembles, and distributes commercial electric vehicles and buses. On August 5, the company revealed that it had agreed to a partnership with software giant Microsoft to use the cloud services of the latter to develop digital fleets and vehicle capabilities. The company noted that the goal of the deal was to simplify data sharing within the mobility and freight ecosystem.
On June 3, investment advisory Barclays initiated coverage of Arrival (NASDAQ: ARVL) stock with an Overweight rating and a price target of $25, underlining that the firm was positioned to take a large share in the electric vans and buses segment.
At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $164 million in Arrival (NASDAQ: ARVL), up from none in the previous quarter.
7. Canoo Inc. (NASDAQ: GOEV)
Number of hedge fund holders: 16 Price as of August 13, 2021: $7.64
Canoo Inc. (NASDAQ: GOEV) is ranked seventh on our list of 10 cheap EV stocks to buy now. The company operates from California and makes and sells electric vehicles. On June 17, the firm announced that it would concentrate on building a US-based mega factory while VDL Nedcar, the manufacturing partner of the company, manufactures vehicles designed by the firm for the US and European markets. The Nedcar facility will make up to 1,000 units to be sold across the two continents in 2022.
On July 26, investment advisory RF Lafferty maintained a Buy rating on Canoo Inc. (NASDAQ: GOEV) stock and raised the price target to $19 from $18, noting that the price target was based on the 2023 revenue estimate for the company.
At the end of the first quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $14.8 million in Canoo Inc. (NASDAQ: GOEV), down from 17 in the previous quarter worth $96.6 million.
6. Li Auto Inc. (NASDAQ: LI)
Number of hedge fund holders: 18 Price as of August 13, 2021: $30.11
Li Auto Inc. (NASDAQ: LI) is a Chinese firm that makes and sells electric SUVs. It is placed sixth on our list of 10 cheap EV stocks to buy now. The company debuted on the Hong Kong Stock Exchange on August 12 in a muted debut that saw the stock fall 2.1% during trading and finish the day down 0.7%. The company recently raised more than $1.5 billion from a stock offering and plans to use the proceeds to fund research and development, expand production, and launch new EV models for customers.
On August 12, investment advisory Goldman Sachs reiterated a Buy rating on Li Auto Inc. (NASDAQ: LI) stock with a price target of $62, keeping the firm on a list of Conviction picks of the advisory. Fei Fang, an analyst at the firm, issued the ratings update.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $493 million in Li Auto Inc. (NASDAQ: LI), down from 31 in the previous quarter worth $497 million.
5. Stellantis N.V. (NYSE: STLA)
Number of Hedge Fund Holders: 21 Price as of August 13, 2021: $21.70
Stellantis N.V. (NYSE: STLA) is a Netherlands-based company that develops and sells different types of automotives. It is ranked fifth on our list of 10 cheap EV stocks to buy now. It has a market cap of more than $66 billion and posted over $74 billion in revenue last year. The firm has already announced a jam-packed EV lineup this year, with 11 battery electric vehicles and 10 plug-in hybrids set to debut on the market over the next two years. The firm controls more than 23% of the EV market in South America, making it the largest EV firm in the region.
On August 4, investment advisory JPMorgan reiterated an Overweight rating on Stellantis N.V. (NYSE: STLA) stock and raised the price target to EUR27 from EUR20. Jose Asumendi, an analyst at the firm, issued the ratings update.
At the end of the first quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $751 million in Stellantis N.V. (NYSE: STLA), up from 19 in the previous quarter worth $359 million.
4. Fisker Inc. (NYSE: FSR)
Number of Hedge Fund Holders: 22 Price as of August 13, 2021: $15.15
Fisker Inc. (NYSE: FSR) is placed fourth on our list of 10 cheap EV stocks to buy now. The firm is headquartered in California. It engages in the development and sale of electric vehicles. In earnings results for the second quarter, posted on August 5, the firm reported that cash and equivalents at the end of June were $962 million. The net cash used in operating activities was $28 million and the cash paid for capital expenditures was $0.3 million. The company has a market cap of over $5.3 billion.
On August 9, investment advisory Morgan Stanley resumed coverage of Fisker Inc. (NYSE: FSR) stock with an Overweight rating and a price target of $40, with a bull case target of $90, identifying the firm as one of the highest rated de-SPAC EV firms.
At the end of the first quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $337 million in Fisker Inc. (NYSE: FSR), up from 18 the preceding quarter worth $146 million.
3. ChargePoint Holdings, Inc. (NYSE: CHPT)
Number of Hedge Fund Holders: 24 Price as of August 13, 2021: $25.18
ChargePoint Holdings, Inc. (NYSE: CHPT) is ranked third on our list of 10 cheap EV stocks to buy now. The firm is based in California and markets charging solutions for electric vehicles. On August 11, as part of a plan to expand in Europe, the firm announced that it had purchased ViriCiti, a Netherlands-based electric fleet manager, for close to $88 million. The Dutch firm is the largest electric solutions provider for commercial fleets in the region. The firm stands to benefit from an EU plan to phase out the internal combustion engine by 2035.
On July 29, investment advisory DA Davidson initiated coverage of ChargePoint Holdings, Inc. (NYSE: CHPT) stock with a Buy rating and a price target of $30, noting that the firm owned the largest active charging port count in North America and had an emerging presence in Europe.
At the end of the first quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $207 million in ChargePoint Holdings, Inc. (NYSE: CHPT).
2. NIO Inc. (NYSE: NIO)
Number of Hedge Fund Holders: 28 Price as of August 13, 2021: $42.47
NIO Inc. (NYSE: NIO) is a Chinese firm that makes and sells electric vehicles. It is placed second on our list of 10 cheap EV stocks to buy now. In earnings results for the second quarter, posted on August 11, the firm reported earnings per share of -$0.03, beating market predictions by $0.08. The revenue over the period was $1.3 billion, up 127% compared to the revenue over the same period last year and beating market estimates by $20 million. The firm also boosted delivery guidance for the third quarter to up to 25,000 EVs from up to 22,000 EVs.
On July 9, investment advisory HSBC upgraded NIO Inc. (NYSE: NIO) stock to Buy from Hold and raised the price target up to $69 from $54. Yuqian Ding, an analyst at the firm, issued the ratings update.
At the end of the first quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in NIO Inc. (NYSE: NIO), down from 34 in the preceding quarter worth $2.6 billion.
In its Q2 2020 investor letter, McLain Capital, an asset management firm, highlighted a few stocks and NIO Inc. (NYSE: NIO) was one of them. Here is what the fund said:
“Nio, Inc. (NIO): It’s stock up 360% since the beginning of June on no news, and one of our more troublesome short positions, the Chinese electric vehicle manufacturer is valued at a whopping $17bln on trailing revenue of only $1.1bln. In 2019, the business ran a -17% gross margin, a -140% EBITDA margin & burned ~$1.5bln in cash in 2019. The stock has become one of the most popular stocks among retail traders with approximately 250,000 accounts holding the name just on the popular Robinhood trading platform.”
1. Ford Motor Company (NYSE: F)
Number of Hedge Fund Holders: 49 Price as of August 13, 2021: $13.90
Ford Motor Company (NYSE: F) is a Michigan-based automaker. It is ranked first on our list of 10 cheap EV stocks to buy now. The firm has a market cap of over $55 billion and posted more than $127 billion in revenue last year. On August 4, while reporting vehicle sales numbers for July, the firm reported that electric vehicle sales of the company had jumped more than 57% with the sale of 9,103 vehicles over the period. Reservations for the F-150 Lightning, the newest EV marketed by the firm, had exceeded 120,000.
On July 16, investment advisory Bank of America maintained a Buy rating on Ford Motor Company (NYSE: F) stock and raised the price target to $18 from $17, noting that the firm was expected to beat market expectations on earnings.
At the end of the first quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Ford Motor Company (NYSE: F), up from 41 in the preceding quarter worth $1.6 billion.
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE: F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”