3 Stocks That Could Be The Next Tesla

Elon Musk’s Tesla has had an extraordinary run since the start of 2020. In January of that year, the company’s stock traded under $90 per share. Now it’s over $1,000 per share. Total returns for the past five years top 1,500 percent, and shares are up more than 36 percent for the last 12 months.

The media showers Tesla with admiration, and Tesla stock gets plenty of coverage. Every move CEO Elon Musk makes is reported, and headlines are rarely discouraging. Examples include “Why Tesla’s stock is still defying gravity” and one analyst’s assertion that Tesla is “The Stock of the Decade.”

There is plenty to suggest that Tesla stock will go up even more. After all, there is a growing demand for electric vehicles, and Tesla is leading the way in technologies of the future like self-driving cars and Mobility on Demand (MoD). The company reported record earnings for the most recent quarter, and there is talk of another stock split.

However, those who don’t own Tesla stock already have been cautious about opening a position. Many believe the company’s valuation is inflated, particularly given its price-to-earnings ratio of approximately 135 as of mid-April 2022.

The good news is that there are a variety of alternatives to Tesla stock – options that offer exposure to the electric vehicle market. Better yet, these companies are just beginning their journey, and they are growing rapidly. Investors who buy now can go along for the ride.

Is ChargePoint Stock A Buy?

There is a “chicken and egg” quality to the delay in widespread adoption of electric vehicles. Creating infrastructure for charging EVs isn’t appealing until there are enough users on the road to make the investment profitable. On the other hand, consumers are disinclined to buy EVs until they can be sure of finding a charging station when and where they need one.

ChargePoint has taken a leap of faith in building a comprehensive network of charging stations despite the fact that EV infrastructure can’t turn a profit – yet. It is the largest independent charging network in the market, and it has a presence in 14 countries.

ChargePoint’s fiscal 2022 revenue growth totaled 65 percent year-over-year, and the company’s management is optimistic for fiscal 2023. Guidance calls for revenue growth of 96 percent, which – if accurate – makes ChargePoint stock a buy.

Will Nio Stock Go Up?

It’s been a tough year for Chinese EV maker Nio. Since the start of 2022, share prices have dropped nearly 50 percent. However, most analysts agree that the issue isn’t with Nio specifically – instead, it is a host of factors impacting Chinese stocks in general.

First, Chinese regulators are taking a hard look at tech companies, which has caused some disruption to businesses such as Nio. Second, US regulators are concerned with the failure of Chinese companies to comply with certain accounting standards. This matters because if the issue is pressed, there is a possibility that Chinese stocks will be delisted from US exchanges.

Nonetheless, Nio’s impressive growth – and the likelihood that the growth trend will continue – has convinced many analysts that the reward potential outweighs the risks. Among other promising developments, Nio reported that deliveries grew by 34 percent in January, and it has three new electric vehicle models launching later this year.

Why Did Rivian Stock Go Down?

Rivian just became available for public trading in November 2021, but the company attracted an impressive list of investors before it was listed on the Nasdaq. Some of Rivian’s backers include Ford Motor Company, billionaire George Soros, and Amazon.

However, despite the fanfare surrounding its launch, Rivian stock has gone down by almost 75 percent. For the most part, it appears that the declining stock price is related to the company’s struggles with inflation, as well as the pain of supply chain disruptions.

In many cases, a sharp drop in stock price is a bad sign, but a majority of analysts agree that Rivian is the exception. The first Rivian electric pickup trucks were delivered to consumers in December 2021, and interest in the brand is growing. Rivian’s technology can meet or exceed offerings by its competitors, and response to the direct-to-consumer sales model has been overwhelmingly positive.

Investors willing to assume the risk that comes along with an emerging company may benefit from buying Rivian stock at its current rock-bottom price.

What Does Lucid Group Do?

Lucid is another relative newcomer to the public exchanges. The company started trading through a merger with a special-purpose acquisition company (SPAC) in July 2021.

It is entirely focused on developing, manufacturing, and distributing high-end electric vehicles. To date, it has introduced a sedan called Air, and it expects to launch its Gravity SUV in short order.

Some analysts believe that Lucid stock will double in the next year – perhaps sooner. Given that share prices are down more than 50 percent year-to-date, those who are comfortable with the volatility inherent in startup investment should consider Lucid stock a buy.

Is Proterra A Profitable Company?

Proterra was founded in 2004, but it didn’t begin public trading until June 2021. It, too, elected to skip a traditional IPO in favor of merging with a SPAC, though the move did nothing to boost share prices.

So far, Proterra’s stock price is down, due in part to the fact that Proterra is not a profitable company. Nonetheless, there are reasons to consider Proterra as a strong contender for those interested in gaining exposure to the EV space.

Proterra designs and builds commercial electric vehicles along with the electric charging systems required to keep them on the road. Its flagship line, the Catalyst series of transit buses, is intended to create clean options for public transportation.

One analyst suggests that the rate of Proterra’s revenue growth is going to increase substantially over the next two years. The company boosted revenue by 24.7 percent in 2021, and it may grow revenue as much as 73 percent in 2022. By 2023, revenue growth could go as high as 95 percent.

Bonus: Can General Motors Compete In The Electric Vehicle Market?

Startups and newcomers to the public marketplace aren’t the only choices for investors who want to add electric vehicle stock to their portfolios. General Motors may be a better choice for value investors who aren’t comfortable with volatility. Unlike the startups, GM shares don’t trade at high sales and earnings multiples, and the company reported income of $1.7 billion for the fourth quarter of 2021.

GM is investing in EVs, and it appears that the move could be a resounding success. The company will devote at least $35 billion to EV research and development through 2025, and it is hard at work on its own electric vehicle offerings. GM is an active participant in the emerging connected and autonomous vehicle industry, which puts it squarely on the list of promising EV stocks.

Nikola: One EV Stock To Avoid… For Now

Investors searching this list for Nikola, another big name in the electric vehicle industry, may be puzzled to find it missing. After all, the company’s founders clearly intended to be the next Tesla – a fact made obvious by choice of name.

Nikola’s goal is to lead the market in commercial electric vehicles and related energy technology. It began trading publicly in June 2020, and share prices skyrocketed before dropping sharply. The stock has never recovered, and to date, it is still trading at 20 percent below its price at launch.

Nikola presents interesting possibilities, but it is facing significant challenges that make it especially risky. Nikola stock might recover, but for now, it is not a smart buy.

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