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10 EV Stocks to Buy as Tesla’s (TSLA) Market Share Declines

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·9 min read
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In this article, we discuss 10 EV stocks to buy as Tesla’s market share declines. If you want to see more stocks in this list, click 5 EV Stocks to Buy as Tesla's Market Share Declines

Elon Musk’s Tesla, Inc. (NASDAQ:TSLA) has decidedly been the market leader in the electric vehicles space over the years. However, in a report dated June 30, analyst John Murphy from the Bank of America forecasted Tesla’s market share to drop from 70% to only 11% over the coming four years. John Murphy leads the Automotive Equity Research for BoFA, and he expects about 40% of the cars to be electrified by 2026, with General Motors, as well as Korean and European automobile manufacturers heading the sector. According to the analyst, GM and Ford will see a 15% increase in market share. 

Tesla Has its CEO to Blame

According to Murphy, Tesla, Inc. (NASDAQ:TSLA)’s success was mainly attributed to the fact that it had essentially no competition in the last decade. However, the market is now filled with alternative suppliers that have good products and promising delivery mechanisms. Elon Musk has admitted that Tesla, Inc. (NASDAQ:TSLA) cannot meet consumer demand, as is reiterated by the delay in Cybertruck, which missed its 2021 launch and may not be released until 2023. The analyst believes that the delays in Tesla’s new product launches can be lucrative opportunities for rivals and new entrants to gain market share. 

Murphy also pointed out Musk’s “hubris”, where the Tesla CEO believed that no competitors would ever catch up to the legacy of his business and he failed to move fast enough to scale operations quickly and possibly raise higher financing. The analyst observed that Tesla, Inc. (NASDAQ:TSLA)’s fanbase and Elon Musk’s followers may not be enough to trump competitors in the market, as people can clearly observe Tesla’s shortcomings and the positive traits of competitive vehicles. He also pointed out Musk’s split focus on the Twitter buyout and his overall distracted persona as one of the reasons he is not fully committed and invested in the auto industry. Murphy believes Tesla’s North America sales will be hit the hardest. 

As Tesla potentially stands to lose its footing in the EV space, there are several competitors who could take up the mantle and gain market share. These companies could get a notable boost in the coming years. Some of the EV stocks to consider as Tesla’s market share declines include Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Toyota Motor Corporation (NYSE:TM). 

Elon Musk
Elon Musk

Our Methodology 

We selected EV stocks that have strong market presence and display robust business fundamentals. These companies have recently received optimistic analyst ratings and are surrounded by strong hedge fund sentiment. The Q1 2022 database of 900+ elite funds tracked by Insider Monkey was used to gauge the popularity of these stocks in the hedge fund universe.  

10. Arcimoto, Inc. (NASDAQ:FUV)

 

Number of Hedge Fund Holders: 4

Arcimoto, Inc. (NASDAQ:FUV) is an Oregon-based electric vehicle company that designs and manufactures Fun Utility Vehicles, or FUVs. These are three-wheeled electric vehicles with two seats. On June 15, Arcimoto, Inc. (NASDAQ:FUV) reported that it partnered with FreedomRoad Financial to offer vehicle financing to customers who want to purchase electric vehicles. 

On June 21, Dawson James analyst James McIlree told investors that Arcimoto, Inc. (NASDAQ:FUV) is now producing six vehicles daily, up from four in the prior month, and the company is on track for 12 vehicles per day by the end of 2022. Arcimoto, Inc. (NASDAQ:FUV) aims to deliver 1,000 vehicles this year. However, the analyst believes the company's "most exigent challenge" is funding its estimated operating losses and capital expenditures required over the next two years. The analyst cited financial risks and the possibility of lowered consensus estimates. In the beginning of June, Alliance Global Partners analyst Jeffrey Campbell maintained a Buy rating on the stock but lowered the price target to $11 from $18 after the company's Q1 report.

According to Insider Monkey’s Q1 data, 4 hedge funds reported bullish positions in Arcimoto, Inc. (NASDAQ:FUV), up from 1 fund in the earlier quarter. Daniel S. Och’s Sculptor Capital is a prominent position holder in the company, with 82,500 shares worth $545,000. 

Like Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Toyota Motor Corporation (NYSE:TM), Arcimoto, Inc. (NASDAQ:FUV) is one of the EV stocks positioned to gain as Tesla loses market share. 

9. Toyota Motor Corporation (NYSE:TM)

 

Number of Hedge Fund Holders: 9

Toyota Motor Corporation (NYSE:TM) is a Japanese multinational automaker that specializes in fuel efficient hybrid electric vehicles and other automobiles. The company reported on July 1 that it is launching the Urban Cruiser Hyryder SUV in India, effectively competing with Hyundai and Kia Motors in the Indian electrified vehicles space. Additionally, Toyota’s North America division aims to be carbon neutral by 2025, which is why it is partnering with Redwood Materials to explore a series of end-of-life battery solutions for Toyota's proposed battery ecosystem.

JPMorgan analyst Akira Kishimoto upgraded Toyota Motor Corporation (NYSE:TM) on May 31 to Overweight from Neutral with a 2,600 yen price target. 

According to Insider Monkey’s database, 9 hedge funds reported long positions in Toyota Motor Corporation (NYSE:TM) at the end of Q1 2022, with combined stakes worth $952.8 million. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 5.13 million shares worth $925.6 million.

Here is what Baron Fund has to say about Toyota Motor Corporation (NYSE:TM) in its Q1 2022 investor letter:

“Toyota’s (NYSE:TM) “kaizen” manufacturing philosophy is based on improving manufacturing by using “just in time” processes to eliminate waste and reduce inventory carrying costs. Clearly the company does not contemplate disruptive change that will dramatically lower costs and improve quality.”

8. Workhorse Group Inc. (NASDAQ:WKHS)

 

Number of Hedge Fund Holders: 11

Workhorse Group Inc. (NASDAQ:WKHS) is an Ohio-based company that operates in the transportation, automotive, and aerospace industries. The company manufactures commercial electric vehicles, delivery drones, and telematics software systems. On May 16, DA Davidson analyst Michael Shlisky maintained a Neutral rating on Workhorse Group Inc. (NASDAQ:WKHS) and lowered the price target on the stock to $3 from $5. The company seems to have a plan to turn things around and had even previously reported purchase orders for the W750, though Workhorse Group Inc. (NASDAQ:WKHS) is decidedly producing more vehicles than ever in the second half of 2022, which might be challenging, the analyst told investors. He added that Workhorse Group Inc. (NASDAQ:WKHS) also has possible revenue upside compared to his model from its Aviation division.

Among the hedge funds tracked by Insider Monkey, 11 funds reported long positions in Workhorse Group Inc. (NASDAQ:WKHS) at the end of March 2022, up from 9 funds in the prior quarter. D E Shaw is the largest stakeholder of the company, with 1.85 million shares worth about $9.3 million. 

7. Lightning eMotors, Inc. (NYSE:ZEV)

 

Number of Hedge Fund Holders: 15

Lightning eMotors, Inc. (NYSE:ZEV) manufactures and sells battery electric and fuel cell electric vehicles, as well as charging infrastructure solutions. Despite weak quarterly results in May, analysts predict significant revenue growth in FY2022. On May 26, Northland analyst Abhishek Sinha assumed coverage of Lightning eMotors, Inc. (NYSE:ZEV) with an Outperform rating and a $6.50 price target. The analyst sees "a compelling entry point for investors looking for exposure to a small cap electric vehicle manufacturer" as Lightning eMotors, Inc. (NYSE:ZEV) has been "unjustifiably penalized in the recent SPAC carnage amid the overall equities rout". According to the analyst, Lightning eMotors, Inc. (NYSE:ZEV) should come out much stronger, riding the wave of the global electric vehicle shift. 

Among the hedge funds tracked by Insider Monkey, Lightning eMotors, Inc. (NYSE:ZEV) was part of 15 public stock portfolios at the end of March 2022, up from 7 funds in the earlier quarter. The total stakes owned in Q1 2022 increased to $10.5 million from $7.5 million in Q4 2021. 

6. Nikola Corporation (NASDAQ:NKLA)

 

Number of Hedge Fund Holders: 16

Nikola Corporation (NASDAQ:NKLA) develops battery hydrogen-electric and electric semi-trucks, runs hydrogen fueling stations, and offers BEV charging infrastructure. Nikola Corporation (NASDAQ:NKLA) trucks qualify for the New York Truck Voucher Incentive Program, which allows discount vouchers for purchasing or leasing electric trucks in an effort to fast-forward the transition to carbon neutral transportation. As it qualifies for both California and New York's incentive programs, Nikola Corporation (NASDAQ:NKLA) is set to make an impact on two core markets with significant commercial traffic volume. 

According to Insider Monkey’s data, Nikola Corporation (NASDAQ:NKLA) was part of 16 hedge fund portfolios at the end of Q1 2022, up from 13 funds in the prior quarter. Jeff Ubben’s Inclusive Capital is the biggest position holder in the company, with more than 8 million shares worth $86.4 million. 

In addition to Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), and Toyota Motor Corporation (NYSE:TM), elite hedge funds are piling into Nikola Corporation (NASDAQ:NKLA) for exposure to the EV space.  

Here is what Bireme Capital has to say about Nikola Corporation (NASDAQ:NKLA) in its Q4 2020 investor letter:

“Nikola Corporation (NKLA) is a poor-man’s facsimile of Tesla. Even the name is a blatant ripoff: both are named aer the inventor Nikola Tesla. NKLA is a pre-revenue company founded in 2014 that has yet to bring a product to market, despite the promotion of a dizzying array of concepts:

Nikola Badger: pickup with both fuel-cell and electric variants

Nikola One: fuel-cell commercial semi-truck

Nikola Two: fuel-cell commercial semi-truck

Nikola Tre: electric commercial semi-truck

Nikola NZT: electric four-wheel drive utility vehicle

Nikola Reckless: electric military grade o-highway vehicle

Nikola WAV: electric watersports vehicle

As far as we can tell from their latest investor communications, only the Nikola Tre Commercial semi truck is still in development.

As far as we can tell from their latest investor communications, only the Nikola Tre Commercial semi truck is still in development. NKLA’s history is full of deception and vaporware. They showed a video of the Nikola One in motion; they later admitted that it didn’t work and was just rolling down a hill. NKA’s founder Trevor Milton resigned in disgrace aer Hindenburg Research published a report calling NKLA an “intricate fraud.” NKLA is currently under investigation by both the SEC and DoJ. Partnerships with GM, Republic Services and BP have been canceled. Nevertheless, the company sports an $8bn market cap, because of “electric vehicles.” Though pretenders are particularly ubiquitous in the bubbly EV industry, pretenders are to be found in many other industries as well.”

 

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Disclosure: None. 10 EV Stocks to Buy as Tesla's Market Share Declines is originally published on Insider Monkey.