Top 4 EV Stocks to Soar in 2022 Even if Chip Crunch Lingers
Zacks Investment Research | Dec 29, 2021 09:28PM ET
In first-half 2020, the auto industry suffered a massive blow due to coronavirus-led factory closures, low footfall at dealerships and economic uncertainty. Nonetheless, in the latter half of 2020 and early 2021, pent-up demand and preference for personal mobility amid the socially-distant milieu resulted in a faster-than-expected rebound of vehicle sales. But just when things started looking up for the auto market, another speed bump in the form of a shortage in the supply of semiconductors engulfed the industry. The global chip crisis and tight inventory levels have been hurting vehicle sales volumes since mid-2021. Discouragingly, IHS Markit expects chip deficit to persist through 2022.
Yet, one trend that held strong even in the face of chip famine was the rising sales of green vehicles. Per the U.S. Energy Information Administration (“EIA”), global EV registrations surged 41% in 2020. Per BloombergNEF, global EV sales are expected to skyrocket 168% in 2021 from 2019 levels.
A host of factors such as pollution issues, technical superiority and stricter fuel-emission standards have turned the fortunes in favor of electric vehicles (EVs). The demand for electric cars is off the charts. With e-mobility trends becoming hotter with each passing day, auto giants have been accelerating their EV game. Even microchip shortfall and industry challenges are not holding back automakers to invest heavily in EV technology and development. In fact, companies are prioritizing resources to manufacture EV models over the low-margin traditional vehicles. Pure-play EV players are fast filing IPOs to capitalize on the rising electrification trends. While EV makers are getting all charged up, countries, states, and cities are also stepping up their clean energy and e-mobility targets.
The race to EV supremacy is only going to get fiercer in the upcoming years. EIA expects EVs to account for 30% of all light-duty vehicle sales by 2050, up from a mere 0.7% in 2020. Per a Deloitte Report, the EV market is estimated to reach 31.1 million units by 2030 from 2.5 million units in 2020, witnessing a CAGR of 29% during the forecast period.
While the overall auto industry outlook for 2022 may appear uncertain amid chip woes, EV sales will be a growth pole for the industry, with various new models set to hit the market next year. To capitalize on this e-mobility frenzy, we highlight four stocks (two EV pure plays and two legacy automakers) that are set to soar in 2022.
Tesla (NASDAQ:TSLA) F : Another legacy automaker that is hitting all the right notes toward an electrified future is Ford. Shares of Ford have surged more than 135% year to date and the stock is expected to keep its winning streak alive in 2022 as well on the back of promising fundamentals. While Mustang Mach-E has already become a hit among consumers and is boosting the company’s sales, the much-awaited electric version of the hot-selling pickup F-150 is set to further fuel Ford’s prospects. Early this month, Ford confirmed that it had 200,000 reservations for its all-electric F-150 Lightning pickup, whose deliveries are expected to commence next year. Ford’s efforts to boost its battery technology, proprietary software and hardware stack named Blue Oval Intelligence and joint venture deals with SK innovation offer growth visibility.
Currently hovering around 52-week highs, Ford is set to fly higher next year. So, retain this Zacks Rank #3 stock in your portfolio to reap handsome rewards. The Zacks Consensus Estimate for F’s 2022 earnings and sales implies year-over-year growth of 2% and 13%, respectively.
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