With Tesla leading the way since 2008, electric cars are now becoming more mainstream. As an investor with an eye on the EV space, you are likely evaluating which stocks will yield the highest returns. Many companies finished 2021 strong, and continue to outperform the market. While some are still in the startup phase and have yet to turn a profit, other giants of the industry are now throwing their hats in the ring. If you are looking to invest in electric vehicles, these are the trends and 2022 EV stocks you should pay attention to.
Increasing Demand Boosts 2022 EV Stocks
There are changing attitudes and increasing demands for electrification in the automotive industry. And, political support for electric vehicles has helped the market to grow, despite disruptions in the supply chain and chip shortages.
EV sales surged in Europe and China last year with more than 5 million units sold worldwide. This was a 66% increase from 2020. And millions of units have already been booked for the coming year as well. Market research and industry experts estimate that by 2030, 48% of all vehicles sold will be electric. Many companies have committed to net-zero emissions goals, further increasing the demand for EVs for transportation, delivery, and corporate use. The increased demand will benefit many different types of companies, affecting the valuation and potential gains for 2022 EV stocks.
EV Companies in an Emerging Market
Another factor affecting the industry is new players that are emerging in the market. The sector will become more competitive, especially as traditional car manufacturers enter the game. However, there is unlimited potential and still many ways to carve out market share from gaining a technological edge, offering unique features, and providing convenient services.
Based on current performance and pre-orders for more units, the entire sector is poised for significant growth by 2030. But savvy investors know that there will also be a great deal of consolidation as well. Therefore, you must try to determine which companies will become leaders and which will be acquisitions. When you look at leading companies, some are better prepared for the future of EV than others.
2022 EV Stocks to Watch
Everyone in the EV sector suffered damages last year. But, they seem to be on the rebound. While the industry is still facing chip constraints, in-house production and greater output seem to offer some relief. Unfortunately, companies are still dealing with supply limitations for lithium and other materials. And, some people fear that Chinese EV stocks could be delisted from all U.S. exchanges. Even if this happens, there is still earning potential in the meantime. If you are trying to gain more exposure to the EV market, here are 5 EV stocks to watch.
Car Manufacturers
1. Tesla (TSLA)
Despite all the options, you can’t overlook Tesla Inc. since it has pioneered EV technology. Furthermore, it remains a popular stock option with hedge funds. Tesla has been an industry leader with a 51.2% return in 2021, and an increased valuation of 15,797% over the last decade. In addition to vehicles, they have also expanded and specialized in solar products, battery storage, and clean energy. While many would expect to see the gains plateau over time, localized manufacturing and their autonomous program offer meaningful growth opportunities for the future.
2. General Motors (GM)
This multinational American manufacturer has been delivering reliable vehicles for over a century. And, they will be introducing 30 new EVs globally by 2025. GM is expanding operations and investing $35 billion into EV projects and autonomous technology. It is also revamping its production and becoming more innovative and software-enabled. With the resources and distribution network already in place, their new offering will have rippling effects in the EV market.
3. XPeng Motors (XPEV)
XPeng was the best performing Chinese EV stock last year. It continues to show positive returns and has shown huge growth in deliveries. With a greater variety in new products, it seems that XPeng is poised to break out in a big way. They already have four electric vehicle options and unveiled their newest model last November which is launching more in 2022. Although the company is relatively small next to some of its competitors, its vehicles offer the latest tech. Its EVs contain NVidia chips, lidar tech, and a semi-autonomous driving system. Since many other manufacturers are offering all these features yet, it puts them ahead of the competition.
4. Rivian Automotive (RIVN)
With deliveries beginning soon, and 71,000 vehicles already pre-ordered, Rivian Automotive, Inc. is set to make huge profits this year. They also have a backlog for an additional 100,000 delivery vans through their exclusive contract with Amazon.com. The plant in Illinois has an annual capacity to produce 200,000 vehicles. However, the addition of the new Georgia facility will double their capacity and hopefully boost returns even more. As delivery accelerates, its stock valuation will likely increase as well. Since Rivian Automotive also produces batteries in-house, they have decreased their reliance on supply chains and will build their own charging stations across North America. The possibility for expansion and corporate partnerships make it an attraction stock option.
5. BYD (BYDDY)
BYD Co. is a Shenzhen-based company that is a leader in the Chinese market and 2022 EV stocks. It currently controls 18% of the market share. Since it manufactures its own chips, this allowed for accelerated expansion last year. It is also a major producer of EV batteries and supplies other automakers. Its top-selling models are fully electric, generating $30.2 billion in revenue. Not only did its sales triple in 2021, but they also tripled again in December. If BYD Co. can break into the European and Australian markets, they will establish themselves as one of the top global EV producers.
EV Related Products and Services
EVgo
Experts not only expect EV manufacturers, but companies supporting their service and maintenance to have high returns as well. For example, EVs will rely on charging points. EVgo is ready to provide fast and convenient charging options across the country. In addition to offering faster charging than its competitors, it also uses 100% renewable energy. The company already has 310,000 accounts and aims to triple it over the next 5 years. Their acquisition of the e-mobility software company Recargo also promises to increase their market share with their app to locate public charging stations, provide payment, and share their reviews.
Magna
While Magna is already a supplier for the Chevy Bolt, they will become a bigger player since they produce critical parts for other manufacturers. It already produces the e-drive gearboxes for XPeng and Nio. Starting in 2022, they will be manufacturing the battery enclosures for GM Hummer’s new electric truck. It will also be making the Fisker Ocean SUV which is scheduled to release next year. Their inclusion at all levels of production makes them another EV stock to watch.
While no one can be certain which stocks will perform best or what factors will affect valuation, these companies are well-positioned to have high returns in 2022.
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.
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