A brief primer on what’s going on in the stock market with electric car companies.

We all know that investment in the U.S. stock market can be a risky business. But investment in electric vehicles (EV’s) of late has been turning into a  win-win situation for some EV enthusiasts eager to support the growth of this critical industry, and also to potentially turn a profit. Here we take a look at investment trends in transportation electrification.

Indeed, many investors in electric vehicle securities have seen their portfolios rise in value this year, at least on paper. Nissan stock rose 7% on the recent introduction of its EV sport utility vehicle. Tesla stock soared over 87% in the month following the company’s June reveal that it will announce new battery technology in September. Shares in Workhorse, an electric van maker, have tripled since the company reported an order for its C-Series electric delivery trucks from the California Air Resources Board, and Rivian, an electric pick-up truck manufacturer, raised $2.5 billion in July, despite the fact that it has yet to produce a vehicle.

All of this in the middle of a pandemic? What’s going on?

Stocks in EV companies have been strong despite deep pandemic-related losses in the overall auto market. The KraneShares Electric Vehicle and Future Mobility ETF (NYSEARCA:KARS) is up nearly 30% for 2020, versus a 5% gain for the S&P 500. It is clear that investors are betting on EVs as the predominant form of transportation.

Certainly, improvements in the vehicles themselves is one reason for the trend. With the introduction of longer range vehicles at the 300 to 400 range, many Americans are finally realizing that electric vehicles could work for them. As battery tech improves, charging infrastructure expands, consumer demand rises, production capacity by automotive companies increases, and then prices fall. Of course, government incentives to reduce carbon emissions accelerate the process.

With China as the largest EV market, Europe second, and the U.S. third, Deloitte's latest outlook shows EV sales rising from two million units in 2018, to four million in 2020, 12 million in 2025, and 21 million by 2030. 

Remember the parts

Seth Goldstein, chair of the Electric Vehicle Committee at UK financial services company Morningstar, has urged would-be investors to look at companies that produce EV components, including computer chips, lithium for batteries, and other parts needed for electrification.

“I see a lot of good long-term opportunities owning high-quality companies throughout the entire EV supply chain,” Goldstein told USA TODAY earlier this year.

What investors are considering

According to Luke Lango of Investor Place, the five best electric car stocks to buy for the next 10 years, as of July 10 are:

Tesla (NASDAQ:TSLA)

Ranked #1 out of 27 other stocks in the auto manufacturing industry, Tesla has reported that it built 82,272 vehicles in the last quarter, outpacing analysts’ prediction of production of fewer than 70,000 vehicles. The company is expected to deliver an annual total of 500,000 vehicles by the end of the year.

Nio (NYSE:NIO)

This China-based e-SUV firm saw its stock price hit an all-time high in July. It delivered a total of 10,331 vehicles in the last quarter, an increase of 179% year over year. 

Nikola Motors (NASDAQ:NKLA

Founded in 2016, Nikola is focused on building electric and fuel cell powered trucks. In June, the company set a reservation date for its new electric truck, Badger, sending its stock on a one-day 104% gain. 

Arcimoto (NASDAQ:FUV)

Production began in 2019 in Eugene, Oregon on Acrimoto’s Fun Utility Vehicle (FUV), a tandem two-seat, three-wheeled EV. The company is now delivering vehicles to early customers.

Kandi Technologies (NASDAQ:KNDI)

Chinese EV maker Kandi saw its stock soar on July 29 after Kandi America, the company’s U.S. subsidiary, announced it will launch two of its vehicles in the U.S. in August. 

And most importantly…

Remember, when contemplating investment in the stock market, don’t take anyone’s word for it. Do your own research too. There were many years when investors bailed on these companies because of their volatility. Things in this market change quickly every day (even since we wrote this article, no doubt). Bottom line, we’re just here to point to some of the latest investment news in the EV industry.

This article should not be considered advice to participate in EV stocks by the Electric Auto Association.