3 contrarian EV stocks to buy to 10X your investment

Electric vehicle stocks are not doing well in 2024, with most of them being down by double digits. Tesla (TSLA) has dropped by 11% this year while other American and Chinese names like Lucid, Faraday Future, Mullen Automotive, and Nio have also slipped.

The industry is facing multiple headwinds. Demand has fallen, with most buyers opting for hybrid vehicles from the likes of Toyota and Ford. 

Competition has risen, with Chinese companies pumping thousands of new vehicles each day. The big risk is that China will use the same strategy it used to dominate the steel and solar panel industry in the EV sector. 

Most EV companies have now moved to slash prices to remain competitive, a strategy that has cost them their margins. 

On the positive side, most EV stocks have now become so cheap with a favourable risk/reward ratio. Here are some of the top EV stocks to buy in 2024.

Rivian | RIVN

Rivian is an American company that manufactures four vehicle brands that are incredibly popular in the US. Its R1S is a SUV that starts at under $80,000 while the R1T is a pickup truck that starts at $69,900. 

R2 is an upcoming mid-size SUV that will start selling at $45,000 in 2026 while the R3 is a midsize pickup truck. 

Rivian has been growing steadily over the years. It delivered slightly over 50,000 vehicles in 2023 and has guided to delivering 57,000 vehicles in 2023. These are good numbers for a company that started delivering its vehicles a few years ago.

Rivian is a good EV stock because of its positioning in the EV industry, where it sells standard SUVs and pickup trucks. Tesla’s SUV - the cybertruck - is a bit controversial while Ford’s and General Motor’s vehicles have struggled in the past few years.

Analysts believe that Rivian’s business will continue growing in the future. The estimate is that its annual revenue will rise to $4.84 billion this year and $6.49 billion in 2025. They also expect that it will start to manage its costs well, bringing its loss per share from $4.03 in 2024 to $2.59 in 2025. 

Technically, there are signs that the Rivian stock has bottomed as it has jumped above the 50-day and 200-day moving averages recently and a golden cross may happen. If this happens, the stock could rise from the current $16 to the key resistance point at $28.10, its highest point in June 2023.

Rivian stock chart | Source: TradingView

Nio | NIO

Nio is another EV stock to buy. It is a Chinese EV company with a market cap of over $9 billion. Over the years, Nio has become one of the worst-performing EV companies as its stock has plunged by over 66% in the past 12 months. 

Nio’s stock performance has happened even as its top-line numbers have improved. Its annual revenue has jumped from over $1.12 billion in 2019 to $7.83 billion in 2023.

Nio’s vehicle deliveries have continued growing. Its most recent results showed that its deliveries rose by 98.1% in July to 21,209. Its deliveries rose by 143.9% in the second quarter to 57,373 and the company has pledged to continue with the momentum. 

Nio’s key challenge is that its bottom line has not done well in the past few years as its annual losses have jumped from $1.64 billion in 2020 to over $2.9 billion in the trailing twelve months. This loss-making will continue for a while but the management sees the trend improving. 

Nio also has over $5.3 billion in cash and short-term investments, meaning that it will likely not need to raise money soon. Technically, as shown below, Nio stock has gotten a bit oversold and signs of bottoming are emerging.

Nio stock chart | Source: TradingView

Toyota | TM 

Toyota Motor Corporation is not an EV company. In fact, among the biggest automakers, it has become one of the slowest ones to embrace the EV craze.

Nonetheless, Toyota made it in this list for two main reasons. First, it is the most dominant player in the hybrid vehicle industry. Hybrid vehicles combine the concepts of EVs and those of Internal Combustion Engine (ICE). 

Recent data shows that hybrid vehicles are growing at a faster pace than pure battery electric vehicles (BEV) in some countries. If hybrids are the future, then Toyota will likely continue to benefit from this trend.

Second, Toyota has become a leading player in the battery manufacturing industry. It recently made a breakthrough in the solid-state battery industry. These batteries will be fast to charge and have longer ranges.

Toyota expects to start manufacturing and using these batteries in its vehicles in 2027. If this timeline is correct, the company can be a dominant player in the ICE, hybrid, and BEV vehicles in the future.

The key technical risk for Toyota is that its stock is nearing a death cross, where the 200-day and 50-day moving averages cross each other. It has also invalidated a double-bottom pattern and is approaching the 50% Fibonacci Retracement point. This price action means that the stock could have some weakness in the near term.

Toyota stock chart | Source: TradingView