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Investors Flock to Electric Vehicle Stocks as Tesla Beats Delivery Expectations
Rotating from AI Stocks to EVs
Investors are showing a strong interest in electric vehicle (EV) stocks following the release of Tesla's latest vehicle delivery numbers, which exceeded expectations. This positive news has resulted in a surge in Tesla's stock, with a 124% year-to-date increase. Rivian, another EV company, also experienced a boost in its shares after reporting deliveries that surpassed estimates. Vanda Research has noticed signs of a rotation from artificial intelligence (AI) stocks to EVs and predicts a rise in retail demand for EV stocks in the future. Nio, Li, and Plug are among the "laggards" mentioned in the note.
Morgan Stanley's Optimistic View on China-Made EVs
Morgan Stanley has expressed optimism about the growth of China-made EVs, stating that a flood of affordable electric vehicles from China and other emerging markets will meet the demand for cheaper EVs. The bank notes that China-made cars, which were once considered inferior in quality and design, now surpass foreign models in terms of affordability, quality, and user experience. Morgan Stanley predicts a 38% annual offshore sales growth in China-made EVs through 2030.
EV Stocks with Upside Potential
CNBC Pro analyzed two ETFs to identify EV stocks that are expected to continue rising. The KraneShares Electric Vehicles & Future Mobility Index ETF and the Global X Autonomous & Electric Vehicles ETF were screened on FactSet to determine the stocks with at least a 10% average upside to their price target, coverage by 10 or more analysts, and a buy rating from at least 50% of those analysts. Chinese EV makers BYD and Geely Automobile emerged with the highest potential upsides of 31% and 45% respectively. BYD recently announced plans to launch a new electric SUV, making it a direct competitor to Tesla's Model Y. Stellantis, a multinational automotive company, received the highest buy rating from 78% of analysts. Bernstein, in a June report, predicted that car manufacturers will see increased revenues from investments in software and highlighted Stellantis' forecast of $23 billion in annual revenue by 2030.
The recent surge in interest and investment in electric vehicle (EV) stocks, driven by Tesla's impressive delivery numbers, presents a compelling opportunity for new businesses looking to enter the EV market. The shift of investor attention from AI stocks to EVs and the predicted rise in retail demand for EV stocks indicate a strong market trend towards this sector.
Morgan Stanley's optimistic view on China-made EVs further strengthens the case for new businesses to consider entering the EV market. The flood of affordable electric vehicles from China and other emerging markets, which now offer superior affordability, quality, and user experience, presents an opportunity for newcomers to tap into the demand for cheaper EVs. With Morgan Stanley predicting a significant annual offshore sales growth rate in China-made EVs, new businesses can strategically position themselves to capitalize on this market potential.
Identifying EV stocks with upside potential is crucial for new businesses seeking to enter the market. Stocks like BYD and Geely Automobile, with high potential upsides, indicate the growth potential within the industry. The announcement of BYD's plans to launch a new electric SUV and its direct competition with Tesla's Model Y showcases the innovation and competition in the EV market. Additionally, the high buy rating of Stellantis, along with Bernstein's prediction of increased revenues from software investments and Stellantis' own ambitious revenue forecast, further highlight the growth prospects for new businesses within the EV sector.
In conclusion, considering the current market trends, increasing demand for EVs, and the potential for significant growth within the industry, new businesses should seriously consider entering the electric vehicle market. Strategic positioning, innovative products, and a focus on meeting consumer demand for affordable and high-quality electric vehicles can pave the way for success in this rapidly expanding sector.
Article First Published at: https://www.cnbc.com/2023/07/10/as-investor-focus-shifts-to-evs-analysts-expect-these-auto-stocks-to-soar.html