3 Electric Vehicle (EV) Stocks That Could Go Parabolic

There’s no denying that most electric vehicle (EV) stocks have underperformed recently — the movement simply hasn’t caught on as expected just a few years ago. Indeed, sales trends and feedback suggest that consumers are losing interest in electric vehicles, citing concerns about range and charging. And those worries are not invalid.

However, this does not mean that companies related to electric vehicles are a blast. There is still a very bright future ahead. Bloomberg projects that electric vehicle sales will grow at an average annual rate of 21% over the next four years, reaching annual sales of 30 million cars on their way to 73 million vehicles in 2040. The recent headwind is largely only the result of waning euphoria before the industry overcomes the last hurdles to commercialization.

With that as a backdrop, here’s a list of three undervalued EV stocks that could go parabolic at some point in the foreseeable future. It is no coincidence that all three companies are developing solutions that will allow electric vehicles to live up to their initial expectations.

1. QuantumScape

If you’re familiar with electric vehicle technology, then you probably know that the lithium-based batteries they require are a stumbling block. They degrade over time and need to be replaced every few years. Those replacement batteries aren’t cheap, with prices ranging from $5,000 to $20,000 apiece. They are also difficult and expensive to recycle (and not every part of these lithium batteries can be reused).

But what if, however, the biggest drawbacks of EV batteries were overcome? Come in QuantumScape (QS 2.24%).

In the simplest terms, QuantumScape makes better lithium-based batteries. Using proprietary technology, he designed a solid-state lithium ceramic battery that not only requires no anodes, but remains 95% efficient (in terms of energy storage capacity) much longer than typical batteries for electric vehicles currently in use. . Perhaps most notably, QuantumScape’s solid-state batteries offer significantly longer battery life on a single charge.

A bit of due diligence on QuantumScape raises a red flag. Meaning he hasn’t reported any income yet. Dig deeper, though. It’s coming. The company began shipping prototype batteries for electric vehicle manufacturers to start switching in March this year, and these prototypes are not yet the final version of the QSE-5 battery that it plans to mass-produce once the technology is finalized .

Interest in its batteries it is getting stronger though. In July VolkswagenPowerCo’s battery company has struck a deal that allows the automaker to produce EV batteries based on QuantumScape’s impressive technology. Other automakers are also likely to look at this proprietary technology, as it has the potential to make their electric vehicles more marketable as well.

The point is that QuantumScape’s first revenue is on the horizon. This is the kind of milestone that could light a fire under any stock.

2. Connect the power

While a better lithium-based battery could certainly give the EV industry a much-needed boost, it’s not the only way to power an automobile (besides the current, polluting, conventional combustion engine). Hydrogen fuel cells can generate continuous electric current that also spins an electric motor. Actually, a company called Power socket (PLUG -1.91%) has already proven that the idea works in automobiles.

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 way out of this process is heat and water.

The biggest obstacle to this idea to date has undoubtedly been the world’s lack of understanding of it. Most everyone knows how well-proven combustion engines work, and battery-powered electric vehicles are pretty simple. But using hydrogen to create electricity? It’s a bit of a leap. There’s also the not-so-small issue of raw hydrogen not being readily available wherever vehicles are driven.

However, as is always the case, time takes care of smart ideas. Several dozen consumer-oriented hydrogen fueling stations are now in operation (mostly in California), plus many private ones for bus and delivery truck fleet operators.

So far, Plug Power has focused on everything but passenger vehicles. Large trucks and buses, industrial robotics and aerial drones are where it has the biggest impact. It also offers stationary fuel cell systems that can power buildings, data centers and factories in a pinch, or even permanently now that hydrogen is available – and in some cases cheaper than the usual methods of procuring 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. Also, the company is usually unprofitable, with losses increasing rather than decreasing. Plug Power may be at a fiscal turning point, though. Analysts are calling for a strong reversal of this year’s breakeven line, putting the company on a sustained path to profitability. As with QuantumScape, simply being on the right fiscal trajectory could be enough to reignite the stock after a three-year hiatus.

This might help: After our most recent look, the analyst consensus price target of $4.06 per share is nearly double Plug Power’s current stock price.

3. Nicholas

And if you’re looking for practical and commercial uses of hydrogen fuel cells as a power source for conventional vehicles, look no further than Nicholas (NKLA -0.78%).

You won’t be driving a Nikola anytime soon. In fact, you probably won’t drive one at all. The company’s production is limited to class 8 trucks; you know them better as “big rigs” (the tractor part of a tractor-semi-trailer). While the company is making an all-battery-powered rechargeable truck, following problems with these battery-powered haulers that forced a wide recall, it’s becoming increasingly clear to the company — as well as its customers — that electric vehicles powered by fuel cells 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 Q1 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 still not very practical for the mass market, which of course require a lot of refueling infrastructure. (For perspective, there are nearly 200,000 gas stations in the US alone.)

However, operators of Class 8 truck fleets do not necessarily need such an available network of refueling options. They often manage themselves, allowing drivers to fuel up at depots or dispatch centers instead of getting stuck in traffic. Nikola is championing the paradigm shift for this business purpose as well, launching a business called Hyla earlier this year to provide refueling solutions for its hydrogen-powered Class 8 rigs.

Like Plug Power and QuantumScape, Nikola is currently unprofitable. Founder Trevor Milton brought legal issues to the table, but is no longer involved with the company.

Look forward rather than backward, though. This company’s top line is projected to grow more than 200% this year and then repeat the feat next year as fleet owners demand the long-awaited solution. This will at least drive the company towards profitability.

However, that will only scratch the surface of his opportunity. About a quarter of a million of these large trucks are sold each year in the US alone. More and more of them are zero-emission vehicles that meet ever-increasing emission standards.