After its record selloff on Tuesday, Tesla stock bounced back on Wednesday amid a broader rebound in EV stocks. The tear Tesla has been on this year has been good for other EV stocks as well. Investors who want a piece of Tesla but don’t want to pay such a high valuation for it might want to consider some of these other EV plays.
The new kid on the block this year has been Nikola, which makes electric and hydrogen-fuel-cell-powered trucks. Nikola stock pulled back on Wednesday after taking off on Tuesday due to the company’s new partnership with General Motors.
Nikola had been looking for a partner to manufacture its Badger pickup truck, and it found that partner in GM. The Badger isn’t expected to enter production until 2022, but Nikola has also been selling its semi trucks, the Nikola One, Nikola Two, and Nikola Tre. The company also struck a deal to deliver 2,500 of its Nikola Refuse trucks to garbage collection firm Republic Services.
Nikola is still in the very early stages, so it is a highly speculative play, but Tesla was too for years before it made a profit.
China’s BYD has been around a lot longer than Nikola. In fact, Warren Buffett’s Berkshire Hathaway has been a backer of the Chinese automaker for years. BYD Auto was formed after BYD Company acquired Tsinchuan Automobile Company in 2002.
It should be noted that the company isn’t a pure-play EV stock because it does make other types of vehicles, including some with petrol engines. However, it has made a name for itself in the world of electric vehicles. In fact, Bloomberg described the Chinese automaker as the largest electric car maker in the world in 2019.
Among the electric vehicles made by BYD are the BYD e1, e2, e3, e5 and e6. The company also makes a mid-size sports sedan called the Han and a compact sedan called the Qin. Other electric vehicles from BYD include the S2, Song, Song Max, Tang and Yuan. The company also makes electric buses, vans and trucks.
Nio is another Chinese electric vehicle maker. The company advertises its battery technology as “battery as a service.” Nio leases its batteries to car owners, slashing about $10,000 off the cost of its vehicles while raking in $100 to $150 per month each on vehicles with leased batteries, forming a recurring revenue stream. The company makes the ec6, es6 and the es8.
One thing we should point out is the fact that Nio has quite a bit of debt with a debt-to-equity ratio of 9.3. Further, investors have been extremely optimistic about the EV maker, just as they have been about most of the companies on this list. That means its valuation could be a problem for some investors, especially when combined with the debt problem.
Non-automaker stocks in the EV market
There are plenty of ways to play the EV market without investing in the EV makers themselves, which have entered a bit of a bubble. One such way is to invest in Blink Charging, which operates a network of charging stations for electric vehicles in the U.S., the Dominican Republic, Israel, and Greece. The company continues to expand into other international markets.
The rest of the EV stocks on this list aren’t pure-play names, but that can be a good thing because they benefit from the growing trend toward increased technology in all vehicles rather than just electric ones. Aptiv, Infineon and Lear Corporation are three companies that will benefit from this ongoing shift.
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