Friday, February 23, 2024
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3 EV Stocks With Serious Potential to Make You a Millionaire

There is no doubt that companies in the EV industry face some near-term challenges. This includes intense competition and supply chain issues. However, going by the EV penetration, the best part of growth might still be due for the best companies. Therefore, there are EV stocks with millionaire potential that are worth buying and holding until 2030.

Coming to the point on EV penetration, electric cars represented 18% of total car sales last year with approximately 14 million cars sold. By 2030, it’s forecasted that EVs will account for more than 60% of vehicles sold globally. Further, the “global electric car stock expands to almost 350 million vehicles by 2030.”

Clearly, the industry has immense growth potential and some of the best companies will create massive value in the long term. This column discusses three EV stocks with millionaire potential that look undervalued at current levels.

Tesla (TSLA)

Tesla (NASDAQ:TSLA) stock is an obvious choice among EV companies with multibagger returns potential. Over a 12-month period, TSLA stock has remained sideways amidst volatility. Intense competition has impacted Tesla from a growth and margin perspective.

However, with the industry still at an early-growth stage, I remain bullish. Tesla has been an innovator and will continue to be among the leading EV players. It’s worth noting that the Company has an attractive line-up that includes the Cybertruck, Roadster, and Tesla Semi. This provides visibility for deliveries growth.

Last year, Tesla indicated that its working towards cutting the cost of next-generation vehicles in half. This will be through innovation in manufacturing and smaller factories. If this is achieved, Tesla can make major inroads in emerging markets.

Overall, Tesla has set an ambitious target to produce 20 million EVs annually by 2030. Low-cost vehicles can be a major catalyst towards achieving this target.

Li Auto (LI)

Li Auto (NASDAQ:LI) stock has been beaten down due to negative sentiments related to China. However, on a company specific level, the performance has been stellar. I therefore believe that the correction in LI stock is a good accumulation opportunity. I would not be surprised if the stock delivers 10-bagger returns by 2030.

Li Auto has started the new year with a bang with 105.8% year-on-year growth in vehicle deliveries to 31,165 vehicles. The Company has set an ambitious target to deliver 800,000 vehicles during the year and position itself as the “best-selling premium auto brand in China.”

An important point to note is that Li Auto reported a cash buffer of $12.13 billion as of Q3 2023. Further, the Company has been delivering robust free cash flows. This positions Li Auto for aggressive investments in R&D and retail network expansion. At the same time, foray into international markets seems to be on the cards.

Panasonic Holdings (PCRFY)

Panasonic Holdings (OTCMKTS:PCRFY) is another undervalued EV stock with millionaire potential. The EV battery maker trades at a forward price-earnings ratio of 7.2 and offers a dividend yield of 2.34%. Considering the Company’s expansion plans, I am bullish on multibagger returns in the next five years.

It’s worth noting that Panasonic has already set an ambitious target of quadrupling its EV battery capacity to 200GWh by 2031. This is likely to be associated with EBITDA margin expansion and significant upside in cash flows.

The Company also intends to continue to “innovate as a pioneer in battery technology.” As an example, Panasonic is targeting 25% increase in volumetric energy density for batteries. I must add here that the Company plans to produce solid-state batteries for drones by 2029. This will be another big addressable market.

Big expansion plans coupled with investment in innovation will ensure that Panasonic maintains or increases its market share. PCRFY stock therefore looks attractive from a long-term investment horizon.

On the date of publication, Faisal Humayun did not hold (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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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