5 Best Electric Vehicle (EV) Stocks to Invest in January 2022

While the broader markets had one of their best risk-adjusted performance in 2021, green energy stocks, which includes EV (electric vehicle) stocks were much more volatile. Also, unlike 2020 where we saw an almost secular rally in EV stocks, 2021 was a mixed bag.

While Tesla stock gained 50% in the year and its market cap rose above $1 trillion, NIO was the worst-performing major EV stock of the year. Also, we had two of the bumper listings in the EV industry. While Lucid Motors went public through a SPAC reverse merger, Amazon-backed Rivian opted for a traditional IPO. It became the biggest IPO since the bumper listing from Facebook in 2014.

As we enter 2022, what’s the outlook for electric vehicle stocks? Would the sector see better days ahead and could the laggards of 2021 rebound in the year? Here are the five best EV stocks that you can consider in January 2022.

1. NIO (NYSE: NIO)

The Chinese electric vehicle company had a tough ride in 2021. However, it still managed to more than double its deliveries in the year. The company delivered a total of 91,429 EVs in 2021 and the monthly deliveries are now running above 10,000. Earlier in 2021, the company had expanded its partnership with state-owned automotive company JAC Motors to more than double the annual production capacity to 240,000 cars.

NIO looks among the cheapest electric vehicle stocks

After the massive underperformance in 2021, NIO looks among the cheapest EV stocks to buy in January 2022. The company is expanding in five new markets in Europe this year and by 2025 it plans to enter 25 more markets. This year, it would start delivering two sedans, the ET5 and ET7 which would strengthen its portfolio as it only has SUVs till now.

NIO is among the most promising Chinese EV stocks and has built a niche for itself in the premium EV market. The company’s BaaS (batter-as-a-service) is another differentiator and helps it lower the initial buying price for its cars.

The outlook for Chinese EV stocks in general looks positive looking at the impetus that the government has placed on the sector. The Chinese government sees electric cars as a strategic industry and the sector forms part of its “Make in China 2025” program.

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2. Tesla (NYSE: TSLA)

Tesla stock rose 740% in 2020 and 50% in 2021. The stock is looking strong on the first trading day of the year as markets gave a thumbs up to its 2021 delivery report. In the fourth quarter of 2021, Tesla produced 305,840 electric cars which took its total 2021 production to 930,422. The company delivered 936,172 electric cars in the year which is 87% higher than 2020. 2021 was a good year for Tesla and its deliveries were higher than expected in all four quarters.

Tesla outperformed electric vehicle stocks in 2021

Tesla stock outperformed electric vehicle stocks in 2021 and should continue its good run in 2022 also. Deutsche Bank analyst Emmanuel Rosner issued a bullish note on the stock after the delivery report. He said in his note that “While we maintain for now our 2022 deliveries estimate of 1.47mn units, 4Q production suggests upside potential to our forecast. Our 2022 deliveries represent 58% YoY growth, which should be supported by the new Berlin and Austin factories, as well as capacity expansion in existing factories.”

Here it is worth noting that it is not certain whether Austin and Berlin plants contributed to the company’s record fourth-quarter deliveries. “We continue to believe 2022 could be a pivotal year for Tesla’s future growth and profitability with ramp up of new Berlin and Austin plants, start of new vehicles, initial in-house production of 4680 battery cells, and likely broader rollout of [full self-driving] software,” said Rosner who has a $1,200 target price on the stock.

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3. General Motors (NYSE: GM)

General Motors is investing in its electric vehicle and autonomous driving ventures and has set itself a deadline of 2035 beyond which it won’t sell ICE (internal combustion engine) cars. The stock underperformed Ford by a big margin in 2021 and its market cap fell below that of Ford for the first time in five years. Meanwhile, after the massive underperformance, it looks like among the best stocks to play the transition towards electric cars. Goldman Sachs is also bullish on the stock and expects it to outperform in 2022.

Analysts are bullish on General Motors

Wall Street analysts are also bullish on GM stock and consensus estimates call for an upside of almost 23% from these levels. GM’s valuations look quite attractive when compared to other legacy automakers. As the company ramps up its EV deliveries, its stock should also react positively.

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4. Gores Guggenheim (NYSE: GGPI)

GGPI is set to merge with Polestar, which is an electric vehicle company backed by Volvo. While some of the startup EV companies are yet to deliver their first cars, Polestar already has two running models and expects to add more models over the next three years. The implied market cap of Polestar is much lower than that of Rivian and Lucid Motors even as both these companies only recently started to deliver vehicles. Looking at the valuation disconnect; it looks like a good EV stock to buy and hold for the long term.

Polestar is an attractive electric vehicle play

Polestar expects to post revenues of $1.6 billion in 2021 which are expected to rise gradually to $3.2 billion in 2022 and $17.8 billion in 2025. It expects its EBITDA to turn positive by 2023 and then gradually rise to $2.1 billion or around 11.8% of sales in 2025. GGPI stock has come down as other newly listed EV companies like Rivian and Lucid Motors also tumbled.

However, at current prices, GGPI looks at attractive electric vehicle stock to buy ahead of its merger with Polestar.

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5. Lordstown Motors (NYSE: RIDE)

If you are a risk-tolerant investor, Lordstown Motors is one electric vehicle stock that you can consider. The stock has tumbled badly from the highs and now has a market cap of only about $720 million. RIDE is now a penny stock after the crash in 2021. Like fellow EV stocks, it has started 2022 on a positive note and is up sharply on 3 January.

RIDE is an electric vehicle stock for risk-tolerant investors

RIDE seems to have left the worst behind. The partnership with Foxconn would also lower the execution risk for Lordstown. Notably, Foxconn sees contract EV manufacturing as a big opportunity and has also tied up with Fisker for their second car which has been named Project PEAR.

If the Endurance model can compete effectively against the upcoming pickup models from Tesla and Ford, RIDE stock can see much better days ahead. While it won’t be easy to take on Ford’s F-150 electric and Tesla’s Cybertruck in the category, even if the company can manage to capture a small size of the market, it could create significant shareholder value.

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