The Biden administration has announced a framework for a slimmed-down $1.5 trillion infrastructure bill. Part of that framework will be a $12,500 tax credit for electric vehicle purchases. That increases the current subsidy by $4,500. And it’s music to the ears of EV companies in the United States who are making plans to scale production.
This doesn’t mean the country is close to having an EV in every driveway. There is still the issue of a charging infrastructure. The chip shortage will be a headwind on auto production of all types for at least the next several quarters. And many EV companies are not even on the starting blocks yet.
But It does mean that momentum is building. And for investors who retreated to the sideline after the EV bubble burst in early 2021, it may be time to get back in the game.
In this special presentation, we’re looking at seven stocks that stand to benefit from these subsidies in the United States.
Quick Links
- Tesla
- Ford
- General Motors
- Electrameccanica Motors
- Fisker
- Canoo
- Arcimoto
#1 - Tesla (NASDAQ:TSLA)
Earlier this year, we left Tesla (NASDAQ:TSLA) off a list of seven EV stocks. Part of that was that it seemed too obvious. But TSLA stock also was looking overvalued. Since then, the stock received a haircut but has now pushed to a record high. In fact after receiving an order for 100,000 of its vehicles from Hertz (OTCMKTS:HTZZ), Tesla stock became the latest stock to achieve a $1 trillion market cap.
The company posted earnings in October and beat on both the top and bottom lines. Perhaps more impressive was the degree to which the company beat year-over-year (YOY) comparisons. Revenue was 56% higher and earnings were 144% higher from the same quarter in 2020.
Although Tesla CEO Elon Musk has expressed his displeasure that this subsidy will benefit the unionized big three automakers, Tesla should come out alright. The company is well-positioned to take advantage of these tax credits. Not only is it already delivering EVs, but it has a charging infrastructure in place to help reduce the range anxiety that other EV manufacturers will have to overcome.
About Tesla
Tesla, Inc designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits; and non-warranty after-sales vehicle, used vehicles, body shop and parts, supercharging, retail merchandise, and vehicle insurance services.
Read More - Current Price
- $421.06
- Consensus Rating
- Hold
- Ratings Breakdown
- 17 Buy Ratings, 14 Hold Ratings, 9 Sell Ratings.
- Consensus Price Target
- $272.06 (35.4% Downside)
#2 - Ford (NYSE:F)
I was a fan of Ford (NYSE:F) as a player in the electric vehicle sector because I saw the company as an example of perseverance paying off. The company was the first of the Big 3 to go all-in on electric. But investors don’t typically reward good efforts they want to see results. We can be a “what have you done for me lately” bunch.
Well, Ford has answered that question in a big way. The legacy automaker posted earnings on October 26 and gave analysts a lot to think about. In addition to beating forecasts on the top and bottom line, the company raised its full-year profit forecast and restored its dividend.
And the company’s optimism comes, in large part, to demand its EVs. Chief executive officer Jim Farley remarked that the company has 200,000 orders for its electric Mustang Mach-E SUV. The company is also beginning to scale its EV production and Farley believes by the middle of this century Ford will be able to build over 1 million battery electric vehicles with more capacity likely to be needed. About Ford Motor
Ford Motor Company develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles worldwide. It operates through Ford Blue, Ford Model e, and Ford Pro; Ford Next; and Ford Credit segments. The company sells Ford and Lincoln vehicles, service parts, and accessories through distributors and dealers, as well as through dealerships to commercial fleet customers, daily rental car companies, and governments.
Read More - Current Price
- $9.88
- Consensus Rating
- Reduce
- Ratings Breakdown
- 3 Buy Ratings, 7 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $11.83 (19.8% Upside)
#3 - General Motors (NYSE:GM)
The first two electric vehicle stocks on this list are currently trading above the consensus price target of analysts. That’s not the case for General Motors (NYSE:GM). According to analysts, GM stock has a 28% upside from its level as of this writing.
General Motors is attacking the electric vehicle market on multiple fronts. First, it “aspires to eliminate tailpipe emissions from new light-duty vehicles” by 2035. And to support that aggressive target, GM is developing its own EV charging service, the Ultium Charge 360. I’m an investor that is a fan of companies that give consumers a reason beyond price to choose their products. And that could be what GM is achieving with this service. It doesn’t hurt that it’s another potential revenue stream.
GM stock dropped after delivering a mixed earnings report. It beat on earnings but came in light on revenue. However, if you’re looking to invest in a company that will be a major player in the EV market, you should look at this dip as an opportunity.
About General Motors
General Motors Company designs, builds, and sells trucks, crossovers, cars, and automobile parts; and provide software-enabled services and subscriptions worldwide. The company operates through GM North America, GM International, Cruise, and GM Financial segments. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Baojun, and Wuling brand names.
Read More - Current Price
- $51.81
- Consensus Rating
- Hold
- Ratings Breakdown
- 10 Buy Ratings, 9 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $58.70 (13.3% Upside)
#4 - Electrameccanica Motors (NASDAQ:SOLO)
Are you ready for an autocycle? Electrameccanica Motors (NASDAQ:SOLO) is betting that you are. The company recently announced that they are beginning to deliver its electric vehicles. The company is bringing a single-seat vehicle to market.
It’s fair to question how big the audience will be for its vehicles which aren’t exactly made for big people. And it bears watching to see if the company can get any contracts from last-mile delivery companies.
However with the stock price now in the penny stock range (it was trading at nearly $11 a share earlier this year), there looks to be a lot of untapped value for speculative investors. Analysts agree and give SOLO stock a $9.42 price target which is 176% higher than its current price.
I thought it was irrational exuberance to see SOLO stock post a $1 billion market cap at one point this year. I also think that with the company delivering on its promises and beginning to have revenue coming in the door, it’s time to give the company a second look.
About Electrameccanica Vehicles
Electrameccanica Vehicles Corp. develops, manufactures, and sells electric vehicles in the United States and Canada. Its flagship product is the SOLO, a single seat vehicle. The company is also developing four-wheeled eRoadster and Tofino. In addition, it provides services, repairs, and support services, as well as sale of parts and custom built vehicles.
Read More - Current Price
- $0.21
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $0.40 (88.5% Upside)
#5 - Fisker (NYSE:FSR)
A key selling point for Electrameccanica is that it’s starting to deliver vehicles. The same can’t be said of Fisker (NYSE:FSR) … yet. The company’s first foray into the EV space will be an electric SUV, the Ocean. The vision behind the Ocean, which is set by designer and Fisker CEO Henrik Fisker, is to make the Ocean, in part, out of recycled materials from the ocean.
Projection is not scheduled to begin until late 2022, and that’s one reason that the stock is down from its 2021 highs. However, the company has been steadily checking off the boxes. Earlier this year it signed an agreement with Magna International (NYSE:MGA) to outsource the manufacturing of the Ocean. Fisker also has 10,000 non-binding pre-orders.
And on November 17, 2021, a year to the date when production is scheduled to begin, the company will show off the Ocean at the L.A. Auto Show. Positive reviews could push FSR stock much closer to the $23.92 price target set by analysts.
About Fisker
Fisker Inc develops, manufactures, markets, leases, or sells electric vehicles. It operates through three segments: The White Space, The Value Segment, and The Conservative Premium segments. The company is also involved in asset-light automotive business. In addition, it offers fisker flexible platform agnostic design, a process that develops and designs electric vehicles in specific segment size.
Read More - Current Price
- $0.09
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $1.20 (1,237.8% Upside)
#6 - Canoo (NASDAQ:GOEV)
I’ll admit to being all over the map on Canoo (NYSE:GOEV). When I first began researching the company, I loved the company’s story. It was going to use its proprietary “skateboard” platform to create a multipurpose lifestyle vehicle that would be the first to feature a “by wire” design. Plus, the company was promoting a “pay as you go” subscription model.
Those plans have been brought back to earth. The company is still launching its lifestyle vehicle, but they’ve added a delivery fan and pickup truck to its lineup. And in the company’s last earnings call in August the truck makes up the majority of the company’s 9,500 preorders. A delivery van and pickup truck are practical if not exactly innovative. But it may be reflected by the leadership change at the company that is pledging an underpromise/overdeliver culture.
With that in mind, the company has some things in its favor. Like Fisker, Canoo is not planning to be in production until late 2022. But they have a contract manufacturer picked out. And the company recently announced that Panasonic (OTCMKTS:PCRFY) will supply the company’s batteries which features proprietary technology.
About Canoo
Canoo Inc, a mobility technology company, designs, develops, markets, and manufactures electric vehicles for consumer, commercial fleet, government, and military customers in the United States. the company utilizes its multi-purpose platform architecture, a self-contained, fully functional rolling chassis that directly houses the critical components for operation of an electric vehicle, including its in-house designed proprietary electric drivetrain, battery systems, advanced vehicle control electronics and software, and other critical components.
Read More - Current Price
- $0.09
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 5 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $22.71 (26,428.4% Upside)
#7 - Arcimoto (NASDAQ:FUV)
Arcimoto (NASDAQ:FUV) combines a couple of compelling narratives in the EV sector. Arcimoto’s Fun Utility Vehicle (FUV) is another autocycle. Except unlike Electrameccanica Vehicles, the FUN is an autocycle built for two. In addition to its passenger vehicle, Arcimoto has two additional models. The Rapid Responder model is for security, emergency, and law enforcement services. The Deliverator is for last-mile service.
There are a couple of compelling reasons to consider FUV stock. The first is that the company is partnering with REEFDrive to offer a rental program. The rollout will be in Santa Monica, California. Renting the vehicle for an hour will cost about $15 which will be within the range of most consumers.
Plus, many prospective customers may not even have to worry about the tax credit as the price of a vehicle is currently around $18,000 and may go lower as the company scales its production.
About Arcimoto
Arcimoto, Inc designs, develops, manufactures, sells, and rents three-wheeled electric vehicles in the United States. Its flagship product is the Fun Utility Vehicle (FUV) use for everyday consumer trips. The company also provides Deliverator, an electric last-mile delivery solution to get goods where they need to go; TRiO, a bolt on kit that converts a two wheeled motorcycle into a tilting three wheeled motorcycle; and Arcimoto Flatbed, a prototype that eschews the rear seat.
Read More - Current Price
- $0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
The potential tax credit for individual consumers may provide some temporary juice to the EV market. But the momentum has been building for over 20 years. Two of the key obstacles in the way of mass adoption are the lack of nationwide charging infrastructure and battery technology that keeps the price of building an EV more expensive than its internal combustion equivalent.
Those are larger issues that are being worked on in parallel with the production of electric vehicles. Many investors have been burned by the words, “this time it’s different.” However, this time it may very well be different. The growth won’t come overnight. But it does appear that the industry has reached a tipping point and it’s not going backward.
Now is the time to do your due diligence and find the EV stocks that you find the most appealing. However, the seven EV stocks in this presentation look like ideal candidates to be part of the growing EV sector.
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