Feb 29, 2024
The automotive industry is notoriously challenging, so much so that even a behemoth with a market capitalization in the trillions of dollars has reportedly opted to abandon its ambitions in the sector.
Apple (NASDAQ:AAPL) is shutting down its electric vehicle (EV) project, according to Bloomberg, citing sources familiar with the decision. It would mark the conclusion of a decade-long endeavor.
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The news caught the eye of Tesla (NASDAQ:TSLA) CEO Elon Musk, who reacted on X (formerly known as Twitter) with a saluting emoji followed by a cigarette emoji.
In a subsequent post, Musk remarked: “The natural state of a car company is dead.”
That said, the abrupt end to Apple’s EV project could spell good news for the existing players in the market. Here’s a look at two EV companies that Wall Street finds particularly attractive — plus a Warren Buffett EV investment that’s beating Tesla in one key metric.
Tesla
When people think of EV stocks, Tesla is usually the first one to come to mind.
In 2023, the company achieved a significant milestone by delivering 1,808,581 EVs, which represents a 38% increase from 2022.
In the U.S., Tesla’s dominance in the EV market is particularly evident. Data from Kelly Blue Book indicates that 55% of the EVs purchased by Americans in 2023 were Tesla products, highlighting the brand's strong foothold and consumer preference in the domestic market.
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However, as one of the market's most dynamic mega-cap names, Tesla's shares have experienced considerable volatility. They doubled in value in 2023 but have seen a decline of 18% so far in 2024.
Wedbush analyst Dan Ives sees a revival on the horizon. The analyst has placed a price target of $315 on Tesla, implying a potential upside north of 50%.
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Ford
Given that Ford's (NYSE:F) best seller is the F-Series of pickup trucks, the company isn’t considered a pure-play EV stock.
But the automaker has made significant strides in electrifying its lineup.
In November 2019, Ford unveiled the Mustang Mach-E, a five-door electric compact SUV. This model hit the market in December 2020 and clinched the 2021 North American SUV of the Year Award. Moreover, Ford launched the all-electric F-150 Lightning pickup in April 2022, marking another significant step in its EV journey.
In its latest earnings report, Ford highlighted: “Sales volumes of the F-150 Lightning pickup and Mustang Mach-E SUV both were up year-over-year and respectively the top-selling electric pickup and No. 3 most popular EV of any type in the U.S. for 2023.”
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Morgan Stanley analyst Adam Jonas has estimated a price target of $16 on Ford — around 30% above where the stock sits today.
BYD
Chinese EV manufacturer BYD has been a part of investing legend Warren Buffett's portfolio for more than a decade.
In 2008, Berkshire Hathaway acquired 225 million shares of BYD for $232 million, a move that proved to be highly lucrative. By the end of 2020, as stated in Berkshire’s shareholder letter, their stake was valued at approximately $5.9 billion.
Although Buffett later began reducing his stake in BYD, an October 2023 stock exchange filing reported on by Reuters revealed that Berkshire still held a sizable 7.98% stake in the company.
In the fourth quarter of 2023, BYD’s EV sales reached 526,409 vehicles, overtaking Tesla's deliveries of 484,507 EVs, according to Reuters, and displacing it as the top EV manufacturer globally. The Chinese company's success has been attributed to various factors, including its broad lineup with inexpensive models, price cuts, its battery-manufacturing capability, and the Chinese government's support of the country's EV sector.
BYD's shares are not listed in the U.S., but they are traded over-the-counter, so American investors who want to buy the stock would need to choose a broker that supports trading them.
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
