Electric vehicle (EV) stocks surged off their pandemic lows, delivering exceptional gains for investors. But after the sector topped out in late 2021, many stocks crashed as the industry faced supply chain disruptions and investors fled speculative growth stocks in favor of value and safety. But with the risk-on trade seemingly coming back into vogue in 2023, investors are once again on the hunt for the best EV stocks to buy.
Recent headlines have been positive, contributing to bullish momentum. As noted by InsideEVs, “Electrification of cars in the United States significantly accelerated in early 2023, according to the latest reports.”
Tesla (NASDAQ:TSLA) delivered a record 440,808 EVs in the first quarter, exceeding estimates. Volkswagen’s (OTCMKTS:VWAGY) Audi just reported another strong quarter of EV sales, with a 49% year-over-year increase. BYD (OTCMKTS:BYDDY) saw EV sales double in March, and General Motors’ (NYSE:GM) EV sales exceeded 20,000 for the first time in Q1.
With the U.S. aiming to have half of all vehicle sales be electric by 2030, this rapid growth is set to continue. Below are the three best EV stocks to buy to take advantage of this trend. While none of them actually manufacture electric vehicles, all are poised to ride the EV trend higher, perhaps to triple-digit percentage gains.
|IDRV||iShares Self-Driving EV and Tech ETF||$36.58|
Lithium Americas (LAC)
When it comes to electric vehicle production, lithium is essential, as it is a key component in EV batteries. Lithium demand far outweighs supply, a dynamic that is highly beneficial to Lithium Americas (NYSE:LAC). As the developer of North America’s largest known lithium source, the Thacker Pass mine, LAC is one of the best EV stocks to buy.
The world is likely to see lithium shortages by 2025, according to the International Energy Agency, driven by the push to electrify transportation. An article posted by the World Economic Forum estimated that enough lithium was mined in 2021 to make around 11.4 million EV batteries. The IEA said global EV sales exceeded 10 million in 2022, rising more than 50%.
Lithium Americas just started construction at its Thacker Pass lithium project in Nevada after clearing regulatory hurdles. As I mentioned above, Thacker Pass is the biggest known lithium source in North America, and it is wholly owned by Lithium Americas. What’s more, the company just received a $650 million investment from General Motors to accelerate the development of the project. It is expected to deliver its first production in the second half of 2026, at which point the profits should start rolling in.
Just as there is no EV revolution without lithium, there is no mass adoption of electric vehicles without robust networks of charging stations. This makes ChargePoint (NYSE:CHPT) another one of the top EV stocks to buy.
Governments around the world are racing to build out EV charging infrastructure. In the United States, the Biden Administration aims to have 500,000 EV chargers across the country by 2030. To that end, the Infrastructure Investment and Jobs Act, enacted in November 2021, earmarked $7.5 billion to accomplish this goal.
JPMorgan analyst Bill Peterson recently reiterated his “overweight” rating on CHPT stock, saying it is “among a select few charging companies that can grow into profitability and thrive in the coming years.” As reported on The Fly: “The firm calls ChargePoint its preferred name in the electric vehicle charging space, and continues to see upside in shares for ‘patient investors.’”
iShares Self-Driving EV and Tech ETF (IDRV)
Finally, for those looking to diversify in their hunt for the best EV stocks to buy, there is the iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV).
The exchange-traded fund reduces single-company risk by holding a basket of 59 EV-related stocks. Its holdings include EV manufacturers, battery makers, lithium miners and charging station companies, so it offers diversification across the EV sector. Among its top holdings are BYD, Li Auto (NASDAQ:LI), Samsung, Aptiv (NYSE:APTV) and Tesla.
It has an expense ratio of 0.47% and has returned an average of 24.2% a year over the past three years, significantly outperforming the broader market. A move back to the fund’s all-time high of $57.71, made in November 2021, would deliver a gain of 58%. And that could be just the beginning as investors start to pour back into the sector.
So, if you still can’t decide which are the best EV stocks to buy, IDRV may be perfect for you.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.