Maybe it was at a big family dinner or a get-together among friends. Or maybe you’ve seen it online. The likelihood is fairly strong that if you’re talking about investing, you’ve heard someone bring up electric vehicle (EV) stocks. Better yet, maybe you’re the one introducing it into conversations.
As people press the pedal to the metal in discussing EV stocks, potential investors are wondering what’s the source of the interest. After all, it wasn’t so long ago that discussions about EV stocks primarily centered on only Tesla (NASDAQ:TSLA). Apparently, those days have quickly faded into the rearview mirror.
Drivers are charged up about going electric
Savvy investors are always on the lookout for the next great investment opportunity. Take the explosive rise in e-commerce, for example. After seeing a greater number of packages arriving on neighbors’ porches, some investors likely considered whether investing in cardboard companies was a lucrative opportunity. Similarly, seeing a greater number of EVs on the road has led investors to take EV stocks more seriously.
Some might remember not so long ago when spotting a Prius on the road was a novelty, but times have changed. In 2011, for instance, there were a combined 284,264 hybrid EVs and plug-in EVs sold in the U.S., while in 2019 there were 727,390 sold here.
But it’s not only seeing the charged-up cars on the road that is driving investors to discuss EV stocks; there’s the growing visibility of charging infrastructure. From 2014 to 2020, the number of U.S. charging stations tripled from 10,712 to 31,738. More impressive was the rise in the number of charging ports (think pumps at a gas station), which rose from 5,070 in 2011 to 106,814 in 2020.
Another factor leading EV stocks to land on the lips of investors these days: The number of investment opportunities in the sector has grown considerably. With numerous special purpose acquisition companies helping to bring private EV companies public over the past year, investors now have a wide variety of options for exposure to the growing electrification of our highways and byways.
Besides Tesla, if they’re interested in luxury EVs, investors can now hitch a ride with Lucid Group (NASDAQ:LCID) after it debuted on the public market in July. Maybe they’re more interested in going for a ride with an electric SUV maker, in which case Fisker (NYSE:FSR) is a viable option. For others who are looking to change lanes altogether and go with a company helping to electrify fleet vehicles, there are also options. Hylion (NYSE:HYLN), for instance, manufacturers electrified powertrain systems for heavy-duty trucks.
And there’s more opportunity coming down the pike. Last week, Rivian, an electric pickup truck manufacturer that’s backed by Ford and Amazon, filed to go public.
D.C. is powering interest in EVs
Lastly, President Biden’s infrastructure bill is also contributing to investors’ interest in EV stocks. While the comprehensive legislation provides funding for things such as bridge upgrades and water pipe repairs, it also places considerable focus on funding to support the rise in EVs on America’s roadways.
For example, the legislation includes $7.5 billion to expand the EV charging infrastructure. According to the White House, the bill provides “funding for deployment of EV chargers along highway corridors to facilitate long-distance travel and within communities to provide convenient charging where people live, work, and shop.”
The proposed multibillion-dollar commitment to building out the EV charging infrastructure might lead investors to not only consider EV manufacturers but also companies that provide the charging stations, such as Blink Charging (NASDAQ:BLNK) and ChargePoint Holdings (NYSE:CHPT). Plus, some investors who fear the risks of investing in a single EV manufacturer may find it more appealing to pick up shares of EV charging stocks, since they will likely benefit from the growing adoption of EVs writ large.
It’s no wonder investors’ interest for EVs has been electrified
With the growing sight of EVs in traffic, the rise in investment options, and the momentum building behind the infrastructure bill, it’s not all that surprising that investors are so focused on EV stocks.
It’s important to remember, though, that there are still plenty of risks associated with investments in EV makers. Just because drivers are more interested in sitting behind the wheel of an EV doesn’t mean that the manufacturers (or the charging infrastructure companies) will be generating strong profits — if any at all. Consequently, investors should dig deeper into their potential investments before parking one of these stocks in their portfolios.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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