In this article, we will be taking a look at the 11 best small cap electric vehicle stocks to invest in. To skip our detailed analysis of the EV industry, you can go directly to see the 5 Best Small Cap Electric Vehicle Stocks to Invest In.
EV Demand in 2024
Ever since electric vehicles (EVs) joined the automobile industry, debates about their utility and efficiency in comparison to conventional vehicles have been taking place. It is argued that EVs are abundantly more friendly to an environment that is already suffering at the hands of carbon emissions and pollution and that they are exceptionally efficient in terms of energy consumption. Governments across the world are attempting to promote electric vehicles among their citizens by offering public funding to EV manufacturers, subsidies and tax credits to consumers, and so much more that can make the ownership of an EV a possibility for the average person. However, there is some discourse surrounding EVs today that indicates that the exorbitant prices of these innovative and exciting vehicles are discouraging most people from buying and owning EVs.
While demand for EVs may thus seem to be dwindling, this is reportedly not the case for every EV manufacturer out there. For instance, on January 2, Daniel Ives, an analyst at Wedbush Securities, joined CNBC's "Squawk on the Street" to discuss the rising demand for one stellar EV manufacturer's vehicles relative to competitors in the EV sector. Here are some of his comments:
"Demand is actually strengthening for Tesla. It continues to be, maybe, EV demand softens, but not Tesla demand. And that's the important thing going into 2024."
On being asked why Tesla, Inc. (NASDAQ:TSLA) is continuing to see higher demand in 2024, particularly in China in the face of Chinese EV competitors, and whether it can continue to retain its market share, Ives said the following:
"BYD has done a phenomenal job. I do think if you look in the driver's seat, it's Tesla and BYD, gaining some net share from Nio and others. In China, especially if you look at the last few quarters, there were fears that this price war is going to continue. It actually hasn't. See now, you're seeing price stabilization. That's very important, because now, the Goldilocks scenario: margins upticking, demand upticking. That's why in our opinion you see a trillion dollar market cap for Tesla over the next year, despite many of the haters continuing to hate."
Momentum of EV Sales
Despite the above, it cannot be categorically said that Tesla, Inc. (NASDAQ:TSLA) will be the only EV stock worth keeping an eye on in 2024. Some of the other best EV stocks, such as NIO Inc. (NYSE:NIO) and Rivian Automotive Inc. (NASDAQ:RIVN), should also be studied carefully as the year progresses since some professionals in the EV space believe that EV sales will continue to rise this year. On February 8, Le Thi Thu Thuy, the Chairwoman of Vietnam's VinFast, joined CNBC to discuss this. Here is what she had to say:
"Things might change today, but we believe that the momentum is there, the whole world is still moving from internal combustion engine vehicles to EVs... so we believe that this momentum will continue to stay there. I think for us, this year and the next year, the Vietnam market is very, very important. But gradually, next year, when we start expanding into other markets, the North American market, ASEAN markets, I think the numbers will increase more significantly."
Provided that the sales of electric vehicles continue to rise in 2024, manufacturers of these vehicles can be expected to rake in some profits. Many investors in the EV space are continuing to bet primarily on Tesla, Inc. (NASDAQ:TSLA) as the most renowned name in the sector. However, this does not mean that there is a shortage of small-cap electric vehicle stocks in the market. On the contrary, there are a number of attractive small-cap options in the EV space, many of which could well be on their way to becoming some of the best EV stocks the market has ever seen. Considering how many of these smaller and cheaper stocks are often overlooked by investors, we have decided to compile a list of some of the best small-cap electric vehicle stocks out there today. Some of these names are considered by some to be a few of the best cheap EV stocks to buy.
A row of electric cars being charged simultaneously at a public charging station.
We screened for small cap electric vehicle stocks by using a stock screener to identify electric vehicle stocks with a market capitalization below $2 billion as of February 11. Then we shortlisted the 11 best stocks by consulting Insider Monkey's hedge fund data for the third quarter. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11. Mullen Automotive Inc. (NASDAQ:MULN)
Number of Hedge Fund Holders: 3
Market Capitalization: $41.02 million
Mullen Automotive Inc. (NASDAQ:MULN) is an electric vehicle manufacturer based in Brea, California. The company produces passenger electric vehicles and commercial vehicles with solid-state polymer battery technology.
Three hedge funds held stakes in Mullen Automotive Inc. (NASDAQ:MULN) at the end of the third quarter. Their total stake value in the company was approximately $76,000.
Like Tesla, Inc. (NASDAQ:TSLA), NIO Inc. (NYSE:NIO), and Rivian Automotive Inc. (NASDAQ:RIVN), Mullen Automotive Inc. (NASDAQ:MULN) is one of the best EV stocks to buy now.
10. NWTN Inc. (NASDAQ:NWTN)
Number of Hedge Fund Holders: 4
Market Capitalization: $1.9 billion
We saw four hedge funds long NWTN Inc. (NASDAQ:NWTN) in the third quarter, with a total stake value of $1.6 million.
NWTN Inc. (NASDAQ:NWTN) is a smart passenger vehicle company based in Dubai, United Arab Emirates. The company provides passenger-centric mobility and green energy solutions in the US, UAE, and Mainland China. It develops electric vehicles, such as the Supersport coupe, and smart passenger vehicles, such as the MUSE and ADA models.
9. Workhorse Group, Inc. (NASDAQ:WKHS)
Number of Hedge Fund Holders: 6
Market Capitalization: $64.3 million
Fisher Asset Management was the largest shareholder in Workhorse Group, Inc. (NASDAQ:WKHS) at the end of the third quarter, holding 14,401 shares in the company.
Workhorse Group, Inc. (NASDAQ:WKHS) is an automobile manufacturing company based in Sharonville, Ohio, and is one of the best EV stocks to buy in 2024. It designs, manufactures, and sells zero-emission commercial vehicles in the US. Its vehicles include electric and range-extended medium-duty delivery trucks.
Workhorse Group, Inc. (NASDAQ:WKHS) was spotted in the 13F holdings of six hedge funds in the third quarter. Their total stake value in the company was approximately $478,000.
8. Niu Technologies (NASDAQ:NIU)
Number of Hedge Fund Holders: 6
Market Capitalization: $130.4 million
Six hedge funds held stakes in Niu Technologies (NASDAQ:NIU) in the third quarter, with a total stake value of $7.01 million.
At the end of the third quarter, Polunin Capital was the most prominent shareholder in Niu Technologies (NASDAQ:NIU), holding 1.1 million shares in the company.
Niu Technologies (NASDAQ:NIU) is a motorcycle manufacturing company based in Beijing, China. The company designs, manufactures, and sells smart electric scooters in China. It offers the RQi, NQi, MQi, SQi, UQi, and Gova series electric scooters and motorcycles.
7. Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE)
Number of Hedge Fund Holders: 7
Market Capitalization: $11.2 million
Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE) designs, develops, manufactures, engineers, sells, and distributes electric vehicles in the US. The company is based in Los Angeles, California, and can be considered one of the top EV stocks to invest in this year.
There were seven hedge funds long Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE) in the third quarter. Their total stake value in the company was $50,000.
Weiss Asset Management was the largest shareholder in Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE) at the end of the third quarter, holding 750,000 shares in the company.
“There is no doubt we are facing a different environment for shorting than in previous years. In late 2020 and early 2021 we discussed what we saw as the greatest retail mania in living memory, arguably even more extreme than the dot-com bubble.
We described finding good short candidates at the time as like “shooting fish in a barrel”. It really was easy, until the fish started shooting back. Risk management and not stock identification was the name-of-the-game.
Over the last two years, this mania has dissipated to a significant extent.
For example, we finally covered our short in Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE). Faraday Future, like Nikola, was another hyped electric vehicle company. A running Bronte joke is that this bubble will continue until the name of every giant of 19th Century science has their name besmirched. Faraday Future was the sort of rubbery company we would once have happily shorted at $300-400 million in market cap. At the height of the bubble Faraday Future (a SPACi of course) had a market cap over $5 billion. It has now fallen to a market cap of $25m with a share price down over 99.9% from peak.”
6. Zapp Electric Vehicles Group Limited (NASDAQ:ZAPP)
Number of Hedge Fund Holders: 10
Market Capitalization: $15.3 million
Zapp Electric Vehicles Group Limited (NASDAQ:ZAPP) is another electric motorcycle manufacturing company on our list of the best small cap electric vehicle stocks. The company is based in Bangkok, Thailand. It offers electric two-wheelers to its customers.
At the end of the third quarter, 10 hedge funds were long Zapp Electric Vehicles Group Limited (NASDAQ:ZAPP), with a total stake value of $67,000.
Like Tesla, Inc. (NASDAQ:TSLA), NIO Inc. (NYSE:NIO), and Rivian Automotive Inc. (NASDAQ:RIVN), Zapp Electric Vehicles Group Limited (NASDAQ:ZAPP) is a top EV stock to invest in.
Click to continue reading and see the 5 Best Small Cap Electric Vehicle Stocks to Invest In.
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Disclosure: None. 11 Best Small Cap Electric Vehicle Stocks to Invest In is originally published by Insider Monkey.