Electric vehicle (EV) stocks have been on a bumpy ride recently. But as Tesla’s (NASDAQ: TSLA) journey proves, there’s huge upside potential for companies that get it right. If you want your portfolio to benefit, you’ll need to separate potential winners from the growing list of failed EV ventures.
Looking ahead to 2030, there’s one EV stock in particular that I love.
One thing EV investors must know
If you want broad exposure to the electric vehicle industry, you can always buy a diversified EV ETF. But there are several problems with this approach. The biggest is the huge variation in what the sector’s individual players have to offer. Tesla, for instance, is much more than an electric vehicle company. It has business segments focused on distributed solar, utility-scale battery storage, autonomous driving software, and charging infrastructure. Companies like Lucid Group, meanwhile, are pure plays on electric vehicles, with futures entirely dependent on their ability to design, manufacture, market, and sell EVs to customers.
This industry is also capital intensive, and there’s huge variation in these companies’ access to capital. As a more mature competitor, Tesla is generating earnings and operating cash flow. Its $775 billion market cap, meanwhile, allows it to sell shares and tap debt markets much more efficiently than its smaller competitors can. Again, consider Lucid, with its market cap of just $9 billion. It is losing money on the bottom line and is bleeding billions of dollars every year from an operating cash flow perspective.
With all of this in mind, it’s important to know what you’re betting on when investing in an EV stock. You must know exactly what the company needs to succeed in the years to come, as well as how well it is financially equipped to stay afloat in an industry where companies typically generate billions of dollars in losses for years before realizing any profits — if they make it out of the red at all.
This EV stock is your best long-term bet
For the combination of high growth potential and reliable access to long-term capital, few EV…
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