Amidst the current pause in the electric vehicle (EV) industry’s rapid acceleration, it’s a moment that glimmers with potential. Despite the recent headwinds and industry slowdown in 2023 and the continuing whispers that the once-thriving EV market is losing its sparkle, the trajectory for EV sales still points upward.
The growth rate may not mirror the astronomical figures of the 2021-2022 boom, but major automakers are unwavering in their belief of a future steered by EVs. This persistence marks a moment ripe for investment in undervalued gems in the EV sector.
Toyota Motor (M)
Toyota Motor (NYSE:TM) may seem like an unconventional choice in the EV market given Chairman Akio Toyoda’s cautious “multi-pathway” strategy rather than a full-on EV commitment. Initially met with skepticism, Toyoda’s diversified approach now aligns harmoniously with the current industry landscape.
This prudent roadmap has paid dividends, with TM stock climbing over 70% last year. The automaker sets its sights on selling 1.5 million electric vehicles annually by 2026. With a stronghold in hybrids and a keen interest in hydrogen fuel-cell technology, Toyota promises sustained growth for its investors. Its robust financial showing in 2023 echoes this commitment, posting an impressive 23% revenue growth and a staggering 55% increase in EBITDA.
Li Auto (LI)
Li Auto (NASDAQ:LI) shines as a standout in the Chinese EV market, despite a more than 19% dip in its stock price this year. The company’s stellar delivery performance and triple-digit revenue growth over the past year have not aligned with its stock valuation.
March’s delivery data unveiled a remarkable 39% year-over-year surge, with a total of 28,984 EVs hitting the roads. This strong performance extends to Q1, with deliveries soaring nearly 53% compared to the previous year. The cumulative delivery figures approach a noteworthy milestone of 700,000 units, applauded by Chairman and CEO Xiang Li as a symbol of the company’s dedication to excellence and user-centric value.
Ending the previous year with a substantial cash reserve of $14.6 billion and boasting a Q4 free cash flow of $2 billion, Li Auto touts remarkable financial fortitude. This war chest ensures ongoing investment in innovation and expansive retail endeavors.
BYD (BYDDY)
The Rise of BYD in the EV Market
From Underdog to Top Dog
BYD (OTCMKTS:BYDDY) has emerged as a key player in the global Electric Vehicle (EV) market, surpassing industry pioneer Tesla (NASDAQ:TSLA) last year. This meteoric rise from an underdog to a top dog showcases BYD’s innovative capabilities and strategic acumen.
Record-Breaking Sales Performance
In a significant milestone, BYD outshone Tesla in the fourth quarter of last year by selling 526,409 units, eclipsing Tesla’s sales figure of 484,507. Additionally, the company closed the year with an impressive 80% boost in profits, underscoring its exceptional performance amidst a surge in sales.
Sustained Momentum and Growth
Building on its success, BYD has maintained its momentum this year as well. In March, total vehicle and EV sales surged by 41% and 28%, respectively. In the first quarter, overall vehicle sales climbed by 14% to 624,398 units, while EV sales witnessed a solid 13% uptick to 300,114 units. Although there was a noticeable decline in sales volume from the previous quarter, BYD remained a formidable force in the industry.
Stock Valuation and Outlook
Despite its remarkable performance and dominance in the EV market, BYD’s stock continues to trade at less than 0.7 times forward sales estimates. This valuation metric indicates that there may be further potential for growth and value appreciation for investors interested in the company.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
