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Forget Lucid group, Buy These 4 Electric Vehicle Stocks Instead

Stock MarketsNov 23, 2021 11:30AM ET
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© Reuters. Forget Lucid group, Buy These 4 Electric Vehicle Stocks Instead

Carmakers are focusing intensely on the EV industry as regulatory measures become stricter amid climate concerns, with many countries aiming to phase-out internal-combustion vehicles. The shares of Lucid Group (LCID) have gained recently despite the company’s weak fundamentals. So, we think they could witness a pullback in the near term. We also believe that the stocks of fundamentally strong EV companies NIO Inc. (NIO), XPeng Inc. (XPEV), Li Auto (LI), and Hyzon Motors (HYZN) are better bets than LCID now. So, let’s discuss.Concerns about climate change are causing carmakers to turn to electric vehicles (EVs). According to a Reuters study, carmakers plan to spend $515 billion over the next five to 10 years on developing battery-powered vehicles and financing the shift away from internal-combustion automobiles. Regulatory pressures on the industry are also powering this shift. Besides President Biden’s target of 50% of automobile sales to be EVs by 2030, countries including Sweden and Singapore are set to ban the sale of new combustion vehicles by 2030. As a result of these imperatives, the global EV market is expected to generate $812.89 billion by 2028, growing at a healthy 19.8% CAGR.

Last week, shares of EV start-up Lucid Group, Inc. (LCID) skyrocketed in price. The company’s market value increased to $89.9 billion following the stock’s 24% gain on November 16, after the announcement of increased reservations for its first vehicles. Company management also confirmed that its production plans for 2022 were still on track. However, the company’s fundamentals look weak. For its fiscal third quarter, ended September 30, LCID’s revenue decreased 30.5% year-over-year to $0.23 million. Its net loss and comprehensive loss increased 225.2% from the prior-year quarter to $524.40 million. Furthermore, Wall Street analysts expect a 12-month median price target of $44.33, indicating a 13.3% potential downside.

While LCID doesn’t look sufficiently fit to capitalize on the industry tailwinds, we think it could be wise to invest instead in the stocks of fundamentally strong EV companies NIO Inc. (NIO), XPeng Inc. (XPEV), Li Auto Inc. (LI), and Hyzon Motors Inc. (HYZN).

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Forget Lucid group, Buy These 4 Electric Vehicle Stocks Instead
 

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