Believe it or not, the world of electric vehicles is not just about being eco-friendly; it’s about dominance. Electric vehicles have shown they can outperform their fossil fuel counterparts in more ways than one. One such area where the victory is unmistakable is the realm of acceleration, where EVs leave their fossil fuel competitors eating dust.
What’s the secret sauce behind this success? It all comes down to pricing. The average ticket for an electric vehicle stands tall at over $55,000, while a new gasoline-powered car would set you back just under $45,000. Higher prices are synonymous with higher margins, creating a lucrative business landscape. Despite the narrowing price gap between EVs and gas guzzlers, the significant margin difference persists, providing a substantial edge to EV stocks.
Let’s delve deeper into the standout performers in the realm of electric vehicles.
Tesla (TSLA)
Among the shadows of the electric vehicle industry looms a giant – Tesla (NASDAQ:TSLA). While Tesla faces mounting pressure to slash its vehicle prices and up the ante in competition, it remains a beacon of hope for investors. Despite the industry seeing a sluggish 2023, Tesla managed to grow its revenues by over 51% in 2022. In the subsequent year, the growth rate slowed to under 19%, painting a paradoxical picture of strength in comparison to competitors such as Ford or General Motors.
However, the numbers speak volumes. With gross margins surpassing 18%, Tesla finds itself in the esteemed company of Toyota. When evaluated against the backdrop of the turbulent EV market, Tesla’s performance against gasoline vehicle manufacturers cements its superior position.
BYD (BYDDY)
Another name making waves in the electric vehicle market is BYD (OTCMKTS:BYDDY). With margins exceeding 20%, surpassing even Tesla, and the title of the largest EV producer worldwide, BYD is on a winning streak. In 2023, the company flexed its muscles by churning out over three million vehicles, outshining Tesla for the second consecutive year.
Despite the prevailing stigma surrounding EV stocks, BYD stands tall with strong internal economics and unparalleled production output. Undervalued and poised for a bright future, BYD shines as a prime candidate for investors looking to ride the electric wave.
ON Semiconductor (ON)
Stepping into the fray of competitive chip companies is ON Semiconductor (NASDAQ:ON). With margins outshining around 81% of publicly listed chipmakers, ON Semiconductor’s success story unravels. The chip giant has found its niche in the electric vehicle industry, leveraging its technological prowess in chip manufacturing. The company’s foray into applying this expertise in the realm of AI could potentially elevate its margins, as demand for AI chips surges.
Beyond the optimistic landscape, ON Semiconductor stock holds substantial potential above its current valuation. Positioned as a frontrunner in the semiconductor market, the company’s trajectory points to even greater heights ahead.