Title: Top 3 Electric Vehicle Stocks Poised for Success in 2025
This year hasn't been a stellar one for shareholders in most electric vehicle (EV) stocks. While the S&P 500 has seen growth since the end of 2023, the S&P Kensho Electric Vehicles Index has taken a hit for the same time period. Tesla is one of the few exceptions, but its surge can be attributed largely to a comeback from weakness in 2022 and 2023.
Blame the industry's transition for that, if you will. With many people still harboring doubts about the practicality of EVs, manufacturers have been forced to adjust to the new norm. Simultaneously, fierce competition and the need to become more operationally efficient have become the order of the day.
But don't write off the electric vehicle movement just yet. Technology market research outfit Gartner predicts that over 85 million EVs will travel the world's roads by the end of next year, marking a 35% increase from the current 64 million on the roads. Most of this growth will stem from demand for standard BEVs (battery-electric vehicles), as opposed to hybrids.
This continued expansion translates into opportunity for investors. Here's a closer look at three EV stocks that could see significant growth in 2025 by simply riding this tailwind.
BYD Company
While Tesla may have held the title of the world's biggest electric vehicle name at one point, China's BYD Company has since taken over. That's largely due to the high demand for high-quality EVs outside of the United States, where Tesla primarily operates. The Chinese market, which BYD serves, is the single largest market for these cars, and BYD leads this market.
The stock's performance this year has been robust, up 35% year to date, although it still trails its 2021 highs. This bullishness could easily continue and carry shares to new highs in 2025 for one simple reason: The recovery of China's struggling economy.
Not everyone sees it this way, however. The Chinese economy has struggled this year, with the ripples of heavy-handed pandemic lockdown measures still lingering. The nation's real estate market remains a particular sore spot.
But there are green shoots starting to sprout. For instance, China's retail sales have grown in every month since late last year, and accelerated to a pace of 4.8% in October. Clearly, people are finding a little extra cash in this environment.
The country's industrial output also surged 5.3% year over year in October, driven by exports. Goldman Sachs expects China's economy to grow at a healthy 4.5% next year. That's not as robust as this year's 4.9% growth, but it's still forward progress that most other nations can only envy.
This bodes well for BYD's future, as it facilitates continued demand for electric vehicles in China. The analyst community believes the company's top line is set to grow more than 20% next year, with earnings likely to keep pace.
QuantumScape
You may have never heard of QuantumScape. The company doesn't make EVs, and it's not even in the top 10 of the world's biggest electric vehicle companies. But it's worth a looking in as one of the EV stocks that could see significant growth in 2025.
The company is developing batteries that could help EVs overcome their biggest hurdles. While the batteries found in most modern EVs are effective enough, QuantumScape makes them better. How much better? Based on initial testing, a conventional lithium battery pack that could take an EV 350 miles could achieve up to 500 miles' worth of range if it were a solid-state pack from QuantumScape.
QuantumScape's solid-state batteries are also expected to be able to power EVs for up to 300,000 miles, compared to the 100,000-mile warranties on most lithium batteries currently found in EVs. While this new technology may cost more upfront, these advantages could address two of the biggest concerns preventing would-be EV owners from taking the plunge.
But what makes 2025 such a promising year for QuantumScape? It could be the year the company finally produces its first commercial EV revenue. While QuantumScape has been working on its tech for years, electric vehicle manufacturers have only started testing it in actual EVs in the past few months.
For example, in July, Volkswagen inked a deal that could potentially call for as many as one million of QuantumScape's batteries per year. It's just one deal in a market with plenty of competitors, but this solid-state battery solution is superior to traditional lithium-ion battery technology.
Straits Research predicts that the global solid-state battery market is poised to grow at an annualized rate of 36.4% through 2024, with most of that growth driven by usage in EVs. While there may be many competitors in the lithium battery market, this technology offers significant advantages, making it a promising investment opportunity for the future.
Toyota Motor
Finally, add Toyota Motor to your list of EV stocks that could see significant growth in 2025. At first blush, Toyota may not seem like an EV name, but that's due in large part to the fact that only about one-third of its production is electric vehicles.
But don't mistake this for a passive approach. Toyota is taking a measured, thoughtful approach to the EV market, rather than rushing in to take a commanding lead. It recognized well before most other EV makers did that hybrid electric vehicles are a palatable solution for people who might otherwise balk at vehicles that require regular charging -- especially when charging infrastructure may not be readily available everywhere a car owner drives.
This wise approach hasn't helped the stock much lately. Shares are down 30% from their March peak, and they've fallen all the way back to their late-2021 price. Investors are understandably concerned about the global economy and its impact on automotive sales.
But the sellers may have overshot their target, dragging Toyota shares well below analysts' consensus target of $212.81. Newcomers will have a prime opportunity to step in while the forward-looking dividend yield stands at a respectable 3%. Even the slightest of bullish nudges for the global economy could put this stock in a whole new light come 2025, prompting a sweeping reversal of investors' current pessimism.
And there's arguably no car company on the planet with a better, more marketable reputation for quality than Toyota. When Toyota is ready to turn up the heat on this business, it could become an EV monster.
[1] Data from Enrichment Insights
[2] Data from Enrichment Insights
[3] Data from Enrichment Insights
Based on the provided text, here are two sentences that contain the words 'money', 'investing', and 'finance':
Investors looking for opportunities in the electric vehicle sector might consider BYD Company, as analysts predict its top line will grow more than 20% next year with earnings likely to keep pace.
For those with a risk tolerance and an interest in alternative energy, QuantumScape could be an intriguing investment option, as the company's solid-state batteries have the potential to significantly improve EV range and longevity.
These sentences suggest that investors might consider investing in two specific electric vehicle companies, BYD and QuantumScape, due to their expected growth and potential for innovation, respectively.
