Best Auto Stocks to Buy

Best Auto Stocks To Buy: It wasn’t long ago that the American automotive industry was in a tailspin.

From 2008 through 2014, the U.S. Department of the Treasury spent $80.7 billion of funds from the Troubled Asset Relief Program for an auto industry bailout.

We’re now in a new decade, market, and automotive environment, leading many investors to wonder which are the best auto stocks.

This was the moment it was made clear to automakers that the public’s need for fuel efficient transportation is no longer a pipe dream.

In the chaos, an upstart clean energy company from Palo Alto, California was able to upend Detroit’s stranglehold on the American auto market. Throughout the 2010s, Tesla led the charge to an all-electric future that alleviates our reliance on fossil fuels.

Here’s everything you need to know about the top auto investments of the 2020s, starting with the market disruptor.

Tesla Stock Is A Wild Rollercoaster

As legacy automakers were criticized for flying private jets to their D.C. hearings, consumers welcomed Tesla’s progressive plans. The company became an instant media darling, making it relatively easy to gain market share in an EV market that wasn’t being serviced.

It soon acquired Solar City and started building Gigafactories to create a sustainable future. Its focus on innovation includes self-driving features like Autopilot and a network of fast-charge stations across the country.

Tesla was one of the highest-performing stocks of 2019, outperforming much of the S&P 500. As of 2020, the company sell four all-electric vehicles (Model S, Model 3, Model X, and Model Y), the Powerwall, Powerpack, and Megapack batteries, solar panels, and solar roof tiles. It is a vertically integrated company whose co-founder and CEO Elon Musk is somewhat of a celebrity.

At its peak in late February 2020, Tesla reached a $166 billion market capitalization, more than both Ford and GM combined. The company has a lot going for it moving forward, including the impeding release of its Cybertruck, which already has over half of a million preorders.

Despite all its hype, however, Tesla does have obstacles to overcome. The vehicles have been hacked on several occasions, the company has faced a variety of litigation and legislation, and critics argue the brand consistently overpromises and under-delivers. This leaves some analysts looking at the competition’s strides into Tesla’s lane.

GM Stock Is Slow and Steady

It’s not just cars – General Motors is one of the largest corporations in the U.S. by revenue. Its brands include Chevrolet, Buick, Cadillac, and GMC, and these vehicles are steering heavily toward Tesla.

After emerging from Chapter 11 Bankruptcy, the company started creating more fuel-efficient electric hybrids and implementing more tech inside the car, like Super Cruise.

This self-driving technology was developed by Cruise Automation, which GM purchased in 2016 for $1.1 billion. Honda is also invested in the venture, with a promise to infuse another $2 billion over 12 years.

While the legacy automaker is taking strides toward updating its vehicle offerings for future generations, labor disputes and other market issues are taking its toll.

GM’s leadership has a rosy outlook for the future, pointing out how the United Auto Worker’s union strike is in its rearview and the company completed yet another restructuring started in late 2018. It’s still struggling to find relevancy in today’s market, especially in China, where it’s weathering steep sales drops.

Not to be overshadowed by Tesla, GM is launching its first electric pickup truck alongside it. Both are expected by Fall 2021, although it remains to be seen if either can meet the production schedules in the wake of the COVID-19 pandemic.

In addition, there are more competitors in the autonomous vehicle space, including Uber and Waymo, which is owned by Alphabet. Even Apple is testing the waters. These well-funded companies will give GM a run for its money and may partner with its competitors.

Ford Stock Has History On Its Side

Ford is an iconic American brand that was founded over a century ago, and its fleet vehicles include the police interceptor you’ve seen people try (and fail) to outrun.

The company’s trucks are revered in the industry for their performance and durability. In a world where imported cars are more popular, Ford Trucks stand strong.

Still, the company opened the 2020s with the lowest stock prices since the 2008 financial crisis, and that means it’s either a great deal or reaching critical mortality levels.

Still, it does have plans – like GM and Tesla, Ford is focused heavily in autonomous driving and electric vehicles. In 2020, it’s relaunching the iconic Bronco SUV, with an electric version coming soon after.

Ford also backed Lyft in the self-driving vehicle sector. While it’s unlikely that individual consumers will own fully autonomous vehicles, it’s certainly possible to envision a future using them as public transportation and delivery vehicles.

The company’s Sync platform is viewed by many analysts as outperforming smart platforms from luxury competitors like BMW. This tech-focused innovation can bring the brand back from the dead, making 2020 a great time to be bullish on Ford.

Best Automotive Stocks: The Bottom Line

With the global market is continuing to bottom out from previous record highs, many analysts believe it’s a great time to be bullish on auto stocks. Each of these three American automakers has investments in electric, autonomous vehicles, putting them at the forefront of a technological revolution.

The only real question is whether they’re able to stand against competition.

International brands, like Tata Motors, Honda, and BMW are all looking to expand their holds in any market these automakers compete in. Global trends are changing, and it’s not just car companies involved anymore.

Both established and startup tech companies are leveraging advanced engineering to continue innovating and competing on the roads. This market is anyone’s game, and any investment can be a good one right now.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.