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If you dabble in stock investing, you might have noticed a few names jumping up the rank of fastest-growing share prices. Tesla, Nio, Lucid, and more electric vehicle manufacturers are enjoying a massive increase in their share prices this year. Analysts are throwing around terms like “disruptive business model” and “the future of the industry” as these companies soar in market value.
Is it time for the average investor to take notice?
So, why are shares of companies that make electric vehicles trading for so much money right now? The simple answer is that analysts think EVs are going to get more popular as time goes on. In 2020 and 2021, sales of electric cars took a sizable chunk out of conventional vehicle sales.
Conventional automakers have taken notice of this trend. Ford and General Motors have both announced ambitious plans to release a slew of new electric vehicles. Ford’s EV bet is the F-150 Lightning, an all-electric version of its popular mid-size pickup truck. GM, meanwhile, is taking a swing with plans to introduce 30 EVs by 2025.
EVs have momentum on their side, according to analysts. Lawmakers in the EU and beyond are pushing for laws to ensure new vehicles are more sustainable, pushing manufacturers into electric drivetrains to keep up. Customer demand for EVs is also growing, as young shoppers begin to forego traditional engines in favor of batteries.
The only electric automaker making money right now, however, is Tesla. While newcomers like Nio and Rivian have investor support, they aren’t well-established enough to turn a profit right now. Tesla, meanwhile, has finally hit its stride and is making consistent deliveries of its cars.
Shareholders are excited about the future, but does that mean every EV stock is likely to be profitable? That’s hard to say right now. Tesla will likely stay popular, thanks to positive word-of-mouth and brand recognition. Newcomers might struggle to keep up, though. Companies like Rivian and Lucid have already proven they can create impressive-looking concept cars. Now, they need to prove to investors that they can operate profitable businesses.
Electric automakers aren’t just fighting each other, either. Juggernauts like Ford and GM are throwing their considerable weight behind huge EV rollout plans. Savvy investors will need to stay nimble when selecting automotive stocks. EVs are undeniably the future of automobiles. The question now is who stands to profit the most from that future.
