5 Best EV Stocks to Buy in August 2021

Electric vehicle (EV) stocks have looked weak in 2021 after the sharp rise in 2020 where Tela soared 740% while NIO rose over 1,100%. While many EV stocks are still trading with a YTD loss and below their 52-week highs, they have recouped some of their losses. What’re the five best electric vehicle stocks that you can buy in August 2021

The pivot towards EVs is among the most tectonic shifts that we’ve seen in a generation. Only about a few years back, mainstream automakers saw electric cars as a niche and only had a few electric and hybrid models for the namesake. However, over the last year, several of them of committed themselves to a zero-emission future.

1. Fisker (NYSE: FSR)

Fisker is a startup electric vehicle company. It has recouped its 2021 losses and is now in the green for the year. It went public last year through a SPAC merger but soon saw a sell-off amid the pessimism towards EV stocks and SPACs. Fisker is expected to start generating revenues from the next year as it begins deliveries to customers.

The company expects to begin production of its first vehicle, the Ocean SUV in Europe next year. It has partnered with Magna to produce the vehicle.

For its second vehicle named Project Pear, Fisker has partnered with Foxconn to produce the vehicle. The company has priced its vehicles competitively and can give a tough fight to other electric vehicle companies.

Fisker looks like a good EV stock to buy in August

Wall Street analysts are bullish on Fisker and its median target price of $24 implies a 54% upside over the next 12 months. Its highest target price of $40 is a premium of 157% over current prices. Of the 11 analysts covering Fisker, seven rate them as a buy while three rates them as a hold. One analyst has rated Fisker as a sell.

This year, several brokerages have taken a bullish view of Fisker and in April, Bank of America initiated the electric vehicle start-up as a buy. “Besides Chairman, Co-Founder & CEO Henrik Fisker’s experience, FSR’s key competitive advantages are interesting/attractive product and its platform sharing and contract manufacturing with Magna and Foxconn,” it said in the note.

Bank of America is bullish on FSR stock

The analyst, however, sounded a note of caution and said “we remain a bit cautious on FSR’s go-to-market strategy, namely its flexible leasing program, which we believe may overcomplicate the business model, although this business will likely be limited in scope.”

Looking at the technicals, FSR stock trades below the 50-day and 100-day SMA (simple moving average). Its 14-day RSI (relative strength index) is 34.4 which indicates that it is getting near oversold levels.

If you are looking at an electric vehicle startup stock with a clean history unlike some of the peers that have been involved in one or the other controversy, FSR would fit the bill. The company has a market cap of only about $4.6 billion and should rise significantly if it can execute the plans well.

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2. Xpeng Motors (NYSE: XPEV)

Xpeng Motors stock tumbled amid China’s tech crackdown but has since recovered some of the losses. The stock is now down only 3% for the year. It posted a record July deliveries which helped the electric vehicle stock move higher. XPEV delivered 8,040 electric vehicles in July which took its YTD deliveries to 38,788—a year-over-year rise of 388%.

“P7 deliveries continued record-breaking momentum in July, reflecting the P7’s rising popularity among China’s tech-savvy consumers. In July 2021, at its first-year anniversary of customer deliveries, total P7 deliveries reach 40,612 since the launch. The P7’s Navigation Guided Pilot (NGP) highway solutions continuously increase appeal to a wider customer base, underpinning the Company’s commitment to technology innovation,” said XPEV while announcing its July deliveries.

XPEV looks like a good electric vehicle stock to buy

XPEV has a median target price of $50.01 which is a premium of almost 17% over current prices. Xpeng stock trades at an NTM (next-12 months) enterprise value-to-sales multiple of 10.56x which looks reasonable considering the strong growth outlook. XPEV looks like a good electric vehicle stock to play the growth in the Chinese EV industry.

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3. NIO (NYSE: NIO)

NIO looks like another Chinese electric vehicle stock worth considering in August. The company is targeting the premium EV market in China and is also entering Europe beginning with Norway. The company has the strategic backing of the Chinese government which bailed it out last year when it was battling a survival crisis.

NIO also provides battery swapping services which help lower the initial price for its vehicles. The Chinese electric vehicle maker delivered 7,931 EVs in July which was below June and the company’s deliveries were below that of Li Auto and Xpeng Motors.

NIO is a bet on the premium electric vehicle market

Meanwhile, NIO’s premium product positioning makes it an electric vehicle stock worth looking at. Earlier this year, Citi had upgraded the stock from a neutral to buy. “We upgrade NIO to Buy/1H from Neutral/2H on: 1) potential sector upgrade (we lift our 2021E/25E China new energy vehicle passenger vehicle sales forecast to 2.52/7.84mn units); 2) accelerating orders; 3) Upcoming catalysts,” said Citi in its release.

While NIO stock could be volatile in the short term, it looks like a good electric vehicle stock to buy for the long term. That said, like other Chinese companies listed on the US exchanges, it finds itself at a crossroads amid the US-China spat which has been further aggravated by China’s tech crackdown which has resulted in massive losses for US investors.

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4. Ford Motors (NYSE: F)

When investors think of electric vehicle stocks, they tend to overlook mainstream automakers. Meanwhile, legacy automakers have seen a rerating this year and are outperforming the markets by a wide margin. Ford’s second-quarter earnings released last month had shattered estimates and it posted a surprise profit.

Ford is also a play on the electric vehicle industry

The company also raised its guidance and said that it expects pre-tax profits between $9-$10 billion in 2021. Notably, the company had lowered the guidance during the first-quarter earnings call as it warned of bottlenecks from the chip shortage situation. The company had then forecast that it would lose half of its second-quarter production due to chip shortage. Meanwhile, the situation did not turn out to be as dire as it had expected.

“Ford did better than expected, leveraging strong demand to optimize revenue and profits through lower incentives and a favorable mix of vehicles, which generated companywide adjusted earnings before interest and taxes of $1.1 billion,” the company said in its release.

Ford also said that their Mustang Mach-E is the second largest selling electric SUV in the country. It has received 120,000 preorders for its F-150 Lightning, the electric pickup that it launched earlier this year. The company also said that three fourth of these bookings have come from customers who are new to Ford.

While Ford is not a pure-play electric vehicle stock, the company is investing heavily in electric vehicles and autonomous technology. The stock trades at depressed multiples which are way below that of pureplay electric vehicle companies.

Overall, Ford looks a good and cheap way to play the pivot towards electric vehicles.

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5. General Motors (NYSE: GM)

General Motors is another legacy automaker that is a play on the electric vehicle industry. It is the first Detroit automaker to commit itself to a zero-emission future and intends to stop selling ICE (internal combustion engine) cars by 2035. The company released its earnings earlier this week. The stock fell despite posting better than expected earnings and raising its 2021 guidance.

Deutsche Bank sees the fall in GM stock after the earnings release as a buying opportunity. “We believe the run up to GM’s [Capital Market Days] scheduled for Oct 6-7 could serve as a positive catalyst for the stock, prompting investors to refocus on the company’s strong positioning, product, technology and strategy in Autos 2.0,” said Deutsche Bank’s Emmanuel Rosner.

He added, “While 2Q results and 2021 guide came in soft, we think 2Q was impacted by one-time warranty charges that will reverse and management set an easy bar for 2H assuming lower volume sequentially as a result of chip shortage.”

GM looks a good electric vehicle stock to buy

GM is investing heavily in electric vehicles and looks like a good way to play the story. Like Ford, it also trades at low valuations. The company has several best-selling models and their electric versions are expected to give it a foothold in the electric vehicle industry. Unlike some of the startup EV companies that are struggling with execution, General Motors has decades of production experience as well as a service network. Post-sales service is something which has been troublesome even for Tesla as was exemplified by a protesting customer at the Shanghai Auto Show earlier this year.

GM should continue to see rerating as its electric vehicle plans unfold. Both Ford and GM are very much in the electric vehicle race and would give a tough fight to pure-play EV companies.

Looking at the technicals, GM has found support at the 200-day SMA but is facing resistance at the 100-day and 50-day SMA. If the stock can rise above the 100-day and 200-day SMA, it would signal a further uptrend in the stock.

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