A Roaring Return to the Electric Vehicle Market in 2023

EV stocks are on the rise this year. Tesla's comeback after a dismal year in 2022 has been accompanied by a rebound in ChargePoint Holdings and Rivian Automotive. In the first half of 2023, the iShares Self-Driving EV and Tech ETF, which lost nearly 38% last year, has gained nearly 23%.

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Due to a price war ignited by Tesla, the competition in the field of electric vehicles is heating up. Tesla CEO Elon Musk has announced plans to cut the price of its new electric vehicles in the U.S. by as much as 20% at the beginning of the year, although Tesla recently raised the price of its Model Y models by 2% to 3%. There was a drop in prices in Europe and China as well.

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“There is a vast number of people out there that would like to buy a Tesla car, but cannot afford to do so due to financial constraints. Thus, these price changes make a difference for the average consumer," Musk said in a conference call with analysts following the company's fourth-quarter earnings report on Jan. 26. Additionally, he told the audience that Tesla has so far seen its strongest year-to-date order volume ever.

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After Tesla lowers the price of its Model S, Ford retaliated by lowering the cost of its Mustang Mach-E. General Motors, however, is still sitting out GM's price war for the time being. Similarly, Rivian has not cut its prices yet either, but recently announced it would lay off 6% of its workforce to save money to continue operating.

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It appears as though the demand for electric vehicles in the U.S. will increase from 5% of total vehicle sales last year, according to Edmunds, to about 10% in the next few years. In comparison to the previous year, that was almost double the level of the previous year. Similarly, Goldman Sachs is also bullish about the future of electric vehicles (EVs) and the companies involved in them.

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Goldman analysts wrote in a report last week that technological innovation and EV ecosystem growth are expected through 2030, and profit pools in the automobile industry will be transformed.

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It was with this in mind that Trade Algo searched for stocks involved in the electric vehicle industry that were well-liked by analysts, with a majority of them rating them as a buy, according to FactSet, and therefore, we chose these stocks for our study. Based on FactSet's analysis of analyst price targets, it appears that the stock will gain at least 10% in price over the next 12 months. To identify them, here is a list of their names:

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Innoviz Technologies

Analysts believe that Innoviz Technologies, a company that makes sensors for autonomous-driving systems, is the best. There are some 83% of the six analysts who cover the stock rate it a buy. Aside from that, it also has an upside of 82% compared to the average analyst price target for the stock. It was announced in August that the Israeli firm had won a contract from Volkswagen for the supply of sensors and related software. The company has gained nearly 33% so far this year.

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ChargePoint Holdings

Analysts are also very favorable when it comes to ChargePoint Holdings, with 70% rating the stock as a buy among those who cover the company. Both Cowen and JPMorgan named the maker of EV charging stations as the company that will have the best idea for 2023. Although ChargePoint lost 50% last year, it is up over 30% so far in 2023 and has another 70% upside to the average analyst price target even without factoring in the loss of 50% last year.

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Rivian Automotive

Rivian Automotive has a whopping 90 percent upside to its average analyst price target, making it a very attractive investment. The stock price of the EV maker has risen by 8% so far this year, after plummeting by 82% in 2022. It has been reported that 54% of the analysts covering the stock rate as a buy.

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RJ Scaringe, the CEO of Rivian, wrote in an email to employees last week that the company must improve its operating efficiency with the layoffs it announced last week. Aside from ramping up production of its R1 trucks, Rivian is also building delivery vans for Amazon, which it builds for the e-commerce giant. In addition, it is currently developing the smaller, upcoming R2 platform for its next generation of vehicles.

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General Motors

GM is rated a buy by 54% of analysts covering the Cadillac maker, with an upside of nearly 15% compared to its average analyst price target. The Detroit automaker has recently reported earnings and revenue that exceeded Wall Street's expectations for the fourth quarter. Mary Barra, the CEO of Tesla, described the year 2023 as the company's "breakthrough year" for its EV business in a letter to investors. The company has also confirmed that it plans to produce 400,000 EVs in North America between the first half of next year and the end of 2022. Notably, Tesla is not included in this list of companies. In spite of the fact that a majority of analysts covering the stock rate as a buy, the average price target implies a downside of 1% from its current price.