These 3 electric stocks are a Buy as a plethora of more affordable EV models is expected over the next years
- Toyota (TM): Aiming to release 30 electric vehicles by 2030
- Honda (HMC): It will spend $40 billion on electrification over the next 10 years
- Volkswagen Group (VWAGY): Investing $7.1 billion to build electric cars in North America
Electric vehicles are the future of transportation, addressing climate change and being environmentally friendly, especially in urban spaces like big cities. There are already more than 10 million electric cars on the public roads and by the year 2030 a scenario “projects 300 million electric cars on the road and they account for over 60% of new car sales.” This has propelled electric vehicle stocks on to the next level.
Today the adoption of electric vehicles is slow mainly for four reasons. They are expensive, there are not enough chargers, there is a chip shortage that has caused delays in the production of all cars, not just electric ones, and people are concerned over a battery fire risk. All these concerns are expected to be solved as the automotive industry evolves and adapts rapidly to the electrification of mobility.
There is good news announced about the first concern about electric vehicles, being expensive as General Motors (NYSE:GM) and Honda have announced a partnership to produce low-cost and affordable electric vehicles, at a cost of less than $30,000. These cars will share a common shared battery architecture but will differ as each brand will add its own identity that sets it apart and makes it unique.
The big news for more affordable electric vehicles comes from the intention, and focus of the development of the next generation of batteries. “GM and Honda are already examining new options like silicon, lithium-metal, and solid-state batteries” and this should be no surprise, as the battery of an electric vehicle accounts for a considerable cost that plays a big part in the profitability of each unit sold by automakers.
Here are three electric vehicle stocks to consider now investing in.
| TM | Toyota | $170.62 |
| HMC | Honda | $25.91 |
| VWAGY | Volkswagen | $22.16 |
Electric Vehicle Stocks: Toyota
Toyota (NYSE:TM) has recently launched its new all-electric bZ4X model starting at $42,000. Toyota is one of the largest automobile manufacturers in the world with plans to offer 30 battery-electric models, both passenger, and commercial by 2030.
Toyota has the expertise to produce cheap electric cars as in Europe its best-seller model Yaris a super-mini vehicle is offered at a price below $25,000 both in internal-combustion engines and in a very popular hybrid model.
The fundamentals of TM stock are very strong. Shares of Toyota closed at $168.44 on April 13 having a PE Ratio (TTM) of 9.55, and a forward dividend & yield of $4.55 and 2.74% respectively.
The shares have losses of nearly 9% year-to-date and profitability is strong and has improved over the past two consecutive years.
Other reasons that make TM stock very attractive now are the low PEG ratio of 0.39 and expectations of an EPS growth for the next 3 years-5 years of 22.31%.
Honda
Honda (NYSE:HMC) will co-develop affordable electric vehicles with General Motors and is expected to benefit from sharing ideas and best practices on important aspects like technology, design, and more efficient manufacturing strategies from this partnership.
Honda has announced plans to spend $40 billion on electric vehicles over the next 10 years launching 30 EV models by 2030 reaching a production volume of more than 2 million vehicles a year.
Its fully-electric model Honda e is already in the market sold in Europe with a starting price near $40,000 in the Greek market.
Honda plans to invest near $64 billion in research and development over the next 10 years and “is planning to introduce an insanely cheap mini-EV model for commercial use at the $8,000 (1 million yen) price range in Japan by 2024.” We can expect Honda to target selling this model with proper modifications for the European and the U.S. market depending on its success.
Shares of Honda closed at $25.97 on April 13 and have losses of nearly 9% year-to-date. Net income surged 44.25% in 2021 and the PE Ratio (TTM) of 7.06 is too low. It gets even better for HMC stock as it offers a forward dividend & Yield of $1.40 and 5.44% respectively. With a PEG ratio of 0.42 and expected EPS growth of 14.76% over the next 3 years-5 years, the shares of Honda are very attractive now.
Electric Vehicle Stocks: Volkswagen Group
Volkswagen Group (OTCMKTS:VWAGY) is among the largest automobile companies globally and has launched with great success its full-electric ID. models, ID.3 a hatchback compact car and ID.4 an SUV model.
Volkswagen plans to invest $7.1 billion to manufacture electric cars in North America with the ambition of 55% of its cars by the next decade to be electric ones.
The firm has the vision to become climate-neutral by 2050 and to make the adoption of EV cars faster will install about 18,000 fast-charging stations in Europe by 2025.
Volkswagen has revealed its ID Life concept model to go on sale not until 2025 with a cost of nearly $24,000.
Shares of Volkswagen closed at $22.85 on April 13 and seem very attractive having a PE Ratio (TTM) of 7.09 and a forward dividend & yield of 0.82 and 3.64% respectively.
Turning to valuation things look good for VWAGY stock with a PEG ratio of 0.57 and expected EPS growth for the next 3 years-5 years of 12.21%.
This article originally appeared at InvestorPlace.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com.
