There's no denying that most electric vehicle (EV) stocks have been performing mediocrely lately — the movement simply hasn't had the momentum that was expected just a few years ago. In fact, sales trends and commentary suggest that consumers are losing interest in EVs, citing concerns about range and charging. And those concerns aren't invalid.
This doesn’t mean EV-related companies are bankrupt, however. They still have a very bright future ahead of them. Bloomberg predicts that EV sales will grow at an average annual rate of 21% over the next four years, reaching annualized sales of 30 million cars on the way to 73 million vehicles in 2040. The recent slump is largely the result of euphoria fading before the industry clears the last of its commercialization hurdles.
With this as a backdrop, here is a rundown of three underrated Electric Vehicle Stocks This could go parabolic at some point in the near future. It is no coincidence that all three companies are developing solutions that will enable electric vehicles to meet their initial expectations.
1. Quantum landscape
If you're familiar with EV technology, you probably know that the lithium batteries they require are a liability. They degrade over time and need to be replaced every few years. Those replacement batteries aren't cheap, costing between $5,000 and $20,000 each. They're also difficult and expensive to recycle (and not all parts of these lithium batteries can be reused).
But what if the biggest drawbacks of electric vehicle batteries could be overcome? Quantum landscape (NYSE: QS).
In simpler terms, QuantumScape makes better lithium batteries. Using proprietary technology, it has designed a ceramic solid-state lithium battery that not only requires no anodes, but maintains 95% efficiency (in terms of energy storage capacity) for much longer than typical electric vehicle batteries in use today. Perhaps most notably, QuantumScape’s solid-state batteries offer significantly longer range on a single charge.
A little digging into QuantumScape raises a red flag: it hasn't reported revenue yet. But dig deeper and it's coming. The company only started delivering prototype batteries for EV makers to begin experimenting with in March of this year, and these prototypes aren't yet the final version of the QSE-5 battery it intends to mass-produce once the technology is finalized.
Interest in your batteries is Although it is consolidating, in July VolkswagenBattery company PowerCo has signed a deal that allows the carmaker to manufacture electric vehicle batteries based on QuantumScape's impressive technology. Other carmakers are also likely to be interested in this proprietary technology, as it has the potential to make their electric vehicles more marketable also.
The fact is that QuantumScape's first earnings are just around the corner. That's the kind of milestone that could light a fire under any stock.
2. Plug in the power supply
While a better lithium-based battery could certainly give the electric vehicle industry a much-needed boost, that's not the only way to power a car (aside from the current conventional combustion engine, which creates pollution). Hydrogen fuel cells can also generate direct electric current that turns an electric motor. In fact, a company called Power plug (NASDAQ:PLUG) The idea has already been shown to work in cars.
The science is pretty simple. The cathode and anode of a fuel cell chemically split a hydrogen molecule into positively and negatively charged protons and electrons, essentially becoming a battery in itself. And the only output of this process is heat and water.
The biggest hurdle for this idea so far has undoubtedly been the world's lack of understanding of it. Almost everyone knows how combustion engines work, which are already proven, and battery-powered electric vehicles are fairly straightforward. But using hydrogen to create electricity? That's a bit of a gamble. There's also the not-so-small problem that raw hydrogen isn't readily available everywhere that vehicles are driven.
But, as always, time is the key to smart ideas. A few dozen consumer hydrogen refueling stations are already up and running (most in California), plus many more for bus and delivery truck fleet operators.
So far, Plug Power has focused on everything except passenger vehicles. Large trucks and buses, industrial robotics and aerial drones are the sectors where it is having the biggest impact. It also provides stationary fuel cell systems that can power buildings, data centers and factories in an emergency, or even permanently now that hydrogen is available, and in some cases more economical than more conventional methods of acquiring electricity.
Wherever the growth of this technology awaits, Plug Power is ready.
As for investors, they should know that this company's earnings have been inconsistent. The company is also routinely unprofitable, with losses increasing rather than decreasing. However, Plug Power may be at a fiscal turning point. Analysts are forecasting a sharp reversal of this year's earnings lull, putting the company on a sustained path to profitability. As is the case with QuantumScape, simply being on the right fiscal path could be enough to revive the stock after its three-year hiatus.
This might help: According to the latest analysis, the analyst consensus target price of $4.06 per share is almost double Plug Power's current stock price.
3. Nikola
And if you're looking for practical commercial uses of hydrogen fuel cells as a power source for conventional vehicles, look no further. Nikola (NASDAQ: NKLA).
You won’t be driving a Nikola vehicle anytime soon. In fact, you probably won’t be driving one at all. The company’s production is limited to Class 8 trucks—you know them better as “big rigs” (the tractor portion of a tractor-trailer). While the company makes a rechargeable truck powered exclusively by battery power, after problems with these battery-powered haulers forced a widespread recall, it’s becoming increasingly clear to the company (as well as its customers) that fuel cell-powered electric vehicles are actually the more cost-effective and reliable option. To that end, Nikola delivered 72 of these tractors in the second quarter of this year, up 80% from the first quarter figure.
However, the technology lends itself to this type of heavy industrial use.
While hydrogen fuel cells are a proven means of generating clean electricity, they are not yet entirely practical for the mass market, which of course requires a large refueling infrastructure (for perspective, there are nearly 200,000 gas stations in the US alone).
However, Class 8 truck fleet operators don’t necessarily need such a wide network of refueling options. They often manage their own, allowing their drivers to fuel up at warehouses or fulfillment centers rather than getting stuck in traffic. Nikola is also supporting the paradigm shift in this aspect of the business, launching a company called Hyla earlier this year to offer refueling solutions for its hydrogen-powered Class 8 platforms.
Like Plug Power and QuantumScape, Nikola is currently unprofitable. Founder Trevor Milton also had legal troubles, but is no longer involved with the company.
But let's look forward rather than back. This company's revenue is projected to grow by more than 200% this year and then repeat the feat next year as fleet owners clamor for their long-awaited solution. This will, at the very least, propel the company towards profitability.
However, this is just the tip of the iceberg of their capabilities. Around a quarter of a million of these large trucks are sold each year in the United States alone. More and more zero-emission vehicles are being produced that meet increasingly stringent emissions standards.
Should you invest $1,000 in Nikola right now?
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in Volkswagen and recommends it. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a Disclosure Policy.
3 electric vehicle (EV) stocks that could soar Originally published by The Motley Fool
