Best EV stocks to buy the dip in: TSLA, RIVN, XPEV

Electric Vehicle (EV) stocks have been in a strong freefall in the past few years. Some, like Lordstown Motors and Arrival, have collapsed while others like Fisker and Faraday Future are on their deathbed.

In my estimation, all EV companies have lost over a trillion dollars in valuation. Tesla’s market cap has collapsed from a peak of $1.6 trillion to $554 billion today. Other companies like Rivian, Lucid Group, and VinFast have shed billions in value.

The industry is going through major headwinds and it is unclear whether most companies will recover. However, a look at the boom and bust cycles means that some companies could rebound in the long term. Here are some of the top EV stocks to buy the dip in.

Tesla

Tesla (NASDAQ: TSLA) stock price has been in a remarkable bear market after peaking at $412 in 2021. Its problems are clear. Competition has risen as China continues to flood the market with cheap vehicles.

Further, its margins have continued to narrow while BYD has overtaken it in China. Still, if a boom cycle moves back, there is a likelihood that Tesla will be one of the top companies to bounce back.

It has a well-known brand around the world and has constantly reduced the cost of manufacturing. Tesla has the biggest charger network in the US and has the healthiest balance sheet in the industry.

Tesla ended the last quarter with over $29 billion in cash and short-term investments and less than $2.9 billion in long-term debt. This means that it has the cash it needs to weather the current storm in the EV industry.

Rivian

Rivian (NASDAQ: RIVN) is another potential EV stock to buy the dip in. The stock has plunged by more than 93% from its highest level on record and is now loitering near its lowest level on record.

Rivian has struggled substantially this year as signs emerge that the EV industry is slowing. Still, the company has several advantages. First, it is in the utility industry through its deal with Amazon. It recently opened the arrangement in a move that will see it deliver vehicles to other retailers.

Further, Rivian has a commanding share of the electric pickup industry. This is notable since most Americans prefer buying pickup and SUVs instead of sedans. Also, there are signs that EV trucks by competing companies like Ford and General Motors are not gaining market share.

This leaves Rivian as the leading pickup manufacturer in the US. It also has a solid balance sheet with over $9.3 billion in cash.

Xpeng

Xpeng (NASDAQ: XPEV) is another EV company to buy the dip in. Like other companies, Xpeng stock price has crashed by over 32% this year but it has jumped by 7.3% in the past 12 months. 

Xpeng is doing well, as evidenced by this week’s financial results. Its revenue surged by 153% YoY to $1.8 billion as it delivered 60,158 vehicles. It now expects that its deliveries for the quarter will rise to between 21,000 and 22,500 vehicles this quarter. 

The case for Xpeng is that it is growing its market share in China and abroad. It is also relatively undervalued and is seeing strong revenue growth.

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