Three Affordable Electric Vehicle Shares to Invest In Immediately, Costing Under $1,000 Each
In the ebb and flow of the electric vehicle (EV) market, notable challenges like inflation, rising interest rates, and supply chain disruptions have cooled off the sector in recent years. Yet, these fluctuations also present attractive investment opportunities for patient investors. A judicious allocation of less than a grand could yield substantial returns if the right stocks soar, mitigating any potential losses from underperforming stocks.
Three intriguing EV plays worthy of consideration include Li Auto, Nio, and QuantumScape. At this juncture, it's prudent to be cautious before making substantial financial commitments, but these stocks could serve as a promising playground for modest investments over a few years.
Li Auto
Li Auto, a leading manufacturer of plug-in hybrid electric vehicles (PHEVs) in China, has gained significant momentum over the years. From barely 32,624 deliveries in 2020, the company burst into the limelight by selling 376,030 vehicles in 2023, marking a formidable jump. The company attained profitability in 2023 and continued its momentum in the first nine months of 2024, with deliveries increasing by 40%.
Li Auto has aggressively expanded its supercharging station network to 894 stations, featuring 4,286 charging stalls, and 479 retail stores in 145 cities across China. The growing infrastructure bodes well for the company's goal of bolstering its market presence.
Analysts anticipate Li Auto's revenue to surge by 18% in 2024, subsequently growing at a compound annual growth rate (CAGR) of 28% from 2024 to 2026. The company is projected to dip mildly in net income in 2024 as it ramps up production of its new Mega minivan, but analysts forecast a robust 53% CAGR rise from 2024 to 2026 as Li Auto scales its business.
On the valuation front, Li Auto boasts a reasonable enterprise value of 75.2 billion yuan ($10.3 billion), inferring a mere 0.5 times multiplier of its 2024 sales. The company's valuation is being compressed due to concerns around the Chinese economy, increased tariffs, and market volatility, making this an opportune time to consider Li Auto as a lower-risk investment.
Nio
Nio, another influential Chinese EV manufacturer, carves out its niche by offering a suite of sedans and SUVs featuring removable batteries that can be swapped out across its proprietary battery-swapping network. The service can be purchased on a pay-per-swap basis or via monthly subscriptions.
From 2019 to 2023, Nio's deliveries skyrocketed from 20,565 units to a staggering 160,038 vehicles, with the first nine months of 2024 outputting another 149,281 vehicles, showcasing a 36% year-over-year growth. This rapid expansion can be attributed to enhanced market share, the popularity of its premium ET-series sedans, and the introduction of more affordable Onvo smart vehicles in China, along with expansion into European markets, with plans to ramp up deliveries of its new Firefly compact EV in both regions during 2024.
Analysts forecast Nio's revenue to climb by 23% in 2024, promising robust growth from 2024 to 2026 at a CAGR of 33%. As the company strengthens its financial footing, it's projected to narrow its net losses over the following two years.
With an enterprise value of 62.1 billion yuan ($8.5 billion), Nio's valuation is similarly impacted by concerns around the Chinese economy, tariffs, and market conditions. If Nio can surmount these challenges, its stock could command a significantly higher valuation in the near future.
QuantumScape
QuantumScape represents a more speculative option, as a developer of solid-state lithium metal batteries that have yet to be commercially launched. Despite its unproven track record, the company's research and development have yielded promising results, as first-generation solid-state batteries exhibit superior performance compared to conventional lithium-ion batteries.
By the third quarter of 2024, QuantumScape began shipping samples of its QSE-5 batteries to various automakers, with plans to continue disbursing low-volume test samples throughout 2025 as the company transitions from its current Raptor separator process to its new Cobra process, which promises to boost its productivity and yields.
QuantumScape's enterprise value of $2.3 billion may seem pricey to some investors given its lack of revenue, but its transformation into a revenue-generating company could result in substantial income gains in the coming years.
In conclusion, the EV landscape is fraught with risks and opportunities. Li Auto, Nio, and QuantumScape offer intriguing investment prospects for those willing to assume calculated risks. With an informed strategy and a patient approach, these EV plays could potentially reward savvy investors with lucrative returns.
In the realm of investing, these EV companies present unique opportunities for finance enthusiasts. Given Li Auto's profitable 2023 and promising growth projections, it could be an attractive option for investors seeking lower-risk investments in the EV sector, considering its reasonable valuation of 75.2 billion yuan. On the other hand, Nio, with its rapid expansion and forecasted revenue growth, could offer higher returns, but its value is also influenced by concerns surrounding the Chinese economy and market conditions. As for QuantumScape, despite being a more speculative option due to its unproven technology, its promising developments in solid-state batteries could lead to significant income gains in the future.
