2 Best EV Stocks That Are Not Tesla

The beginning of the end of the internal combustion engine is approaching, paving the way for electric vehicles. Manufacturers like Volvo already offer an electric version of every car model, and by 2030, all of the company’s vehicles will be electric.

This trend is being seen around the globe as countries discuss the upcoming internal combustion engine ban. This transition will present plenty of opportunities for EV stock investors. But can any compete with Tesla, which had nearly 70% of the total EV market share in the United States? Here are two strong contenders:

Lucid Group

Lucid Group (NASDAQ: LCID) was founded in 2007 and is headquartered in Newark, California. This EV manufacturer focuses on luxury, innovation, and sustainability to challenge top tier alternatives, like the Porsche Taycan and the Tesla Model S.

Lucid’s CEO and CTO Peter Rawlinson was once Tesla’s chief vehicle engineer. Just as Tesla originally targeted a higher-end market, so too does Lucid attract a wealthier buyer for its debut vehicle: the Air sedan, which comes in four options — Pure, Touring, Grand Touring, and Dream Edition. To emphasize the clientele targeted, you need look no further than the base prices of those four models, which are $87,400, $107,400, and $154,000, and $169,000, respectively.

One of the primary reasons Lucid Air has a higher price tag than Tesla is that it has the longest range EV in the world. On a single charge, the Air can travel up to 520 miles. It’s got lots of other tailwinds in its favor too, including:

• Lucid provides batteries for the Formula E racing series.
• The Lucid Air was awarded MotorTrend’s coveted Car of the Year award for 2022. It is the first time in the award’s history that a company has won with its first offering.
• The company has attracted consumers, boasting around 25,000 reservations for its Air model. This order amount is worth a potential $2.4 billion. 

There is a bear case to consider before diving in however, including:

• Concerns surrounding possible supply chain issues, especially with Lucid’s target of 20,000 cars for 2022.
• Lucid hasn’t turned a profit – not a big surprise given its still very much in the investment phase – and has reported rising debt levels.
• Stiff competition, including Rivian, NIO and auto giants like Ford and Volkswagon.

Li Auto

Founded in Beijing in 2015, Li Auto (NASDAQ: LI) went public in 2020. This EV company designs and manufactures luxury “smart” electric SUVs. Production began in November 2019 and sales have been on the rise ever since.

Like other stocks in the EV market, Li had a rough start to 2022. However, the company has announced significant sales growth, reporting strong figures for the first quarter of 2022. Li Auto delivered 31,716 vehicles in Q1 2022, representing a 152.1% year-over-year increase. Total revenue was RMB9.56 billion (US$1.51 billion), representing an increase of 167.5% from RMB3.58 billion in the first quarter of 2021.

Other reasons to consider shares of LI include:

• Its debut model, Li ONE, is a six-seat, premium electric SUV, which, unlike most plug-ins, can be charged using fast chargers. It is also a hybrid EV and allows refueling without a charger. This fueling option is helping to drive Li’s impressive growth.
• The company has announced several growth plans, including constructing a new manufacturing facility to double its annual production capacity. Li Auto also plans to expand its product line by developing new vehicles to attract a broader customer base.

When considering the bear case:

• LI Auto has not yet shown investors that it can be consistently profitable. 
• The market has many competitors in the U.S. and China.

Are Shares of LCID and LI a Buy?

Both Lucid Group and Li Auto will likely benefit from the strong demand growth for EVs over the long run. Those who buy in now could see significant returns on their investments.

There are higher than average risks associated with both because the market has a short history and competition is fierce. The odds are, however, that LCID and LI are positioned for growth and already have a foothold in this exciting market.

If you’re interested in the EV market and plan to hold your shares for the next 5-10 years, now may be the time to buy-in. At the very least, you’ll want to add these two stocks to your watchlist.