In this article we discuss the top 10 car company stocks to invest in. You can skip our discussion of the automotive industry outlook and some highlights of Lucid Motors CEO's recent interview and go directly to Top 5 Car Company Stocks To Invest In.
Car company stocks took a beating in 2020 amid falling auto sales in the U.S. and abroad following the coronavirus crisis. However, analysts believe that industry is ripe for investment in 2021 as consumer spending begins to come back to normal levels. The automotive sector is also undergoing key changes that will make the industry grow faster. Riding this tide of change are innovative, futuristic car companies that are posing a serious challenge to big players like Ford and General Motors. One such promising company is luxury EV maker Lucid Motors, which plans to merge with special purpose acquisition company Churchill Capital Corp IV (CCIV) to go public. Lucid Motors is reportedly valued at a whopping $57 billion. Earlier this week, Lucid's CEO Peter Rawlinson gave an interview to CNBC and talked about the upcoming trends in the car industry and his company’s plans for the future.
"The great news is that, Lucid is a tech company, and we're bringing the world's best technology to the market this year here in the U.S."
Why Is Lucid Motors Valued at $57 Billion?
Peter Rawlinson, who previously worked as chief engineer for Tesla Model S project, said that the $60 billion market valuation of his company is a "reflection of our technology". He thinks that the huge valuation has been validated and endorsed through the due diligence that Churchill Capital has undertaken.
"I'm very confident we've got a world-class tech. What we need to do now is humbly and diligently execute and get this into production, and that is what will truly drive the value."
Lucid Motors is looking to generate as much as $2.885 billion in EBITDA by 2026. Asked about what gives them the confidence to ramp up their production and sales to achieve that kind of target, Rawlinson stated:
"We got an ambitious yet real realizable plan. We've shown that we can execute. If you look at the factory we built today, we did that in record time. The first greenfield purpose-built, EV factory in North America. The team I've got... I surrounded myself with consumer professionals, and we've got the expertise, we've got the track record of delivery. What's really important now, particularly over the next few months, is to get our first product into production."
Peter Rawlinson said that his company has a huge differential to stand out.
"It's a huge differential. We have a charging speed where we can put 300 miles in the car in around 20 minutes, and we're doing that with ultra-high voltage, over 900 volts charging through our partnership with Electrify America. This is next-generation technology, and we are doing that with our Wonderbox Boost Charger. We've got two-way charging on board so we can actually go 'vehicle to grid'. You can also run your house off the car."
A Lucid vehicle has 32 comprehensive sensor suites onboard, which makes it probably one of the safest cars on the road that can attract a lot of people to choose to buy this car. Here is what Rawlinson stated about some of Lucid's advanced safety features.
"To the best of my knowledge, it's the most comprehensive and beautifully integrated sensor suite for autonomous driving and ADAS (Advanced driver-assistance systems). Over 14 cameras, 32 sensors, and we fuse long and short-range surround radar, plus a 120-degree solid-state lidar in the nose."
Despite the pandemic, the sales of electric vehicles surged 43% last year and continue to increase. Roughly 26.9 million electric vehicles are projected to be sold by 2030.
Three months ago we published the list of 10 best auto stocks to buy using Insider Monkey's hedge fund sentiment data. Since then there have been several changes in this space. General Motors announced its plans towards an all-electric future; China's search giant Baidu is setting up an EV venture with Geely; and even Apple is not-so-secretly working on an electric vehicle. We didn't include Apple in our rankings because only a tiny percentage of its market value is attributable to the automotive industry. We also didn't include Alphabet Inc (GOOGL) for the same reason even though its Waymo unit is a major player in the autonomous driving space. On the other hand, more than half of Baidu's market cap can be attributed to its EV exposure.
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In September 2020, Moody’s changed its outlook for the global automotive industry to Stable from Negative, citing a recovery and an expected jump in sales in 2021. Moody's analysts in their report project light vehicle sales to fall 19% in 2020 to about 73 million, but rebound to 80 million in 2021.
With this industry outlook in mind, let's start our list of top 10 car company stocks to invest in.
10. Ferrari N.V. (NYSE: RACE)
Number of Hedge Funds: 29
Value of Hedge Fund Holdings: $1.5 billion
Italian luxury sports car company Ferrari’s shares are up 20% over the last 12 months. The company’s CEO John Elkann recently surprised the Wall Street by announcing plans to make Ferrari carbon-neutral by 2030. However, the executive ruled out the possibility an of all-electric Ferrari. Recently, Ferrari disclosed a multi-year partnership agreement with the Swiss luxury watchmaking brand Richard Mille.
As of the end of the fourth quarter, 29 hedge funds in Insider Monkey’s database of 887 funds held stakes in Ferrari, compared to 31 funds in the third quarter. Nicolai Tangen's Ako Capital is the biggest stakeholder in the company, with 1.4 million shares, worth $335 million.
9. XPeng Inc. (NYSE: XPEV)
Number of Hedge Funds: 30
Value of Hedge Fund Holdings: $820 million
XPeng Inc. is a premier Chinese electric vehicle company that currently has a $27 billion market capitalization. Its well-known XPeng P7 electric car has some of the most sturdy and well-engineered hardware features, including a 360-degree dual camera and a radar fusion perception system.
According to our database, the number of XPeng’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 30 hedge funds that hold a position in XPeng Inc by the end of December 2020, compared to the 26 funds in the third quarter. The biggest stakeholder of the company is Coatue Management, with 10.3 million shares, worth $444 million, followed by D.E. Shaw that holds 2.6 million shares, worth $114 million.
8. Li Auto Inc. (NASDAQ: LI)
Number of Hedge Funds: 31
Value of Hedge Fund Holdings: $497 million
Ranking 8th on our list of top 10 car company stocks to invest in is Li Auto Incorporated. It is the first EV company to successfully commercialize extended-range energy cars in China. In January 2021, Li Auto delivered more than 5000 units of their first-ever model, the Li ONE, which resulted in a 355.8% YoY increase in their vehicle sales.
With a $108 million stake invested in Li Auto Inc., Josh Resnick's Jericho Capital Asset Management currently owns 3.7 million shares of the company. Our database shows that 31 hedge funds held stakes in Li Auto Inc. as of the end of the fourth quarter, versus the 26 funds in the third quarter.
7. PACCAR Inc (NASDAQ: PCAR)
Number of Hedge Funds: 34
Value of Hedge Fund Holdings: $418 million
Ranking 7th on our list of top 10 car company stocks to invest in is PACCAR Inc, a medium- and heavy-duty truck manufacturer that is among the largest truck companies in the world. Last January, PCAR introduced their own electric vehicle charging stations that are compatible with Paccar Inc.'s Kenworth Truck Co., Peterbilt Motors Co., and DAF electric trucks. PACCAR currently has a $32.3 billion market capitalization and it settled at $93.33 per share at the closing of February 23, 2021.
As of the end of the fourth quarter, the number of hedge funds in Insider Monkey’s database that held stakes in PACCAR Inc remained unchanged. There are 34 hedge funds that hold stakes in the company. Millennium Management, with 1.075 million shares, is the biggest stakeholder of PACCAR.
6. NIO Limited (NYSE: NIO)
Number of Hedge Funds: 34
Value of Hedge Fund Holdings: $2.6 billion
Often called the "Tesla of China," NIO Limited is currently making waves in the electric vehicle market. The company was able to deliver $628 million in revenue and sold 12,000+ units in the third quarter of 2020. In 2020, the company saw a double-digit YoY growth in earnings for 8 consecutive months.
As of the end of the fourth quarter, 34 hedge funds in Insider Monkey’s database of 887 funds held stakes in NIO Limited, compared to 35 funds in the third quarter. D.E. Shaw is the biggest stakeholder in the company, with 15.4 million shares, worth $751 million.
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Disclosure: None. Top 10 Car Company Stocks to Invest In is originally published on Insider Monkey.