A year ago, undervalued electric vehicle stocks would have been an oxymoron. The sector was flying high on hope, hype and a ferocious appetite for growth stocks. This year has been a different story, as investors fled to safety and supply chain snags tripped up many in the industry. But there are some bullish signs emerging for the market in general and the sector in particular. And with many of the top EV stocks down around 20% to 60% this year, investors have a chance to pick up the best and most undervalued electric vehicle stocks at a significant discount.

The recent bullishness in stocks may be a signal that investors have finally realized the economy is sounder than many believe and will not implode. Meanwhile, signs that inflation is easing could lead the Federal Reserve to slow the pace of its interest-rate hikes.

On a sector level, sales and delivery data and production guidance from many of the EV companies on today’s list should put to rest any concerns about demand and production issues.

Here are seven undervalued electric vehicle stocks to buy for a rebound as sentiment in the sector turns positive.

Proterra (PTRA)

Proterra (NASDAQ:PTRA), a maker of electric buses, is down 37.5% in 2022. However, shares are up nearly 9% over the past week following news that the Biden administration is nearly doubling the amount of money available to states to buy electric school buses to around $1 billion.

As the government looks to keep pace with high demand, it’s anticipated that another $1 billion will be used to subsidize the purchase of electric school buses in the federal budget for the fiscal year that started on Oct. 1. In the previous fiscal year, the Environmental Protection Agency said it received 2,000 applications seeking more than 12,000 mostly electric buses. Those requests totaled almost $4 billion.

The high level of demand from states and the federal government’s willingness to spend on electric buses bodes well for Proterra. Since the company delivered its first electric bus 12 years ago, it has sold more than 1,300 buses to transit agencies across the United States and Canada.

Yet, the company remains small with a market capitalization of less than $1.3 billion. The opportunity here could be huge for investors who buy PTRA stock now.

Tesla (TSLA)

Not long ago, the valuation of Tesla (NASDAQ:TSLA) stock was truly stratospheric. This, combined with technological glitches and the EV maker’s relatively low cash balance, had me bearish on the stock. I’ve since changed my tune.

Demand for its EVs continues to surge in the U.S. and China. The company generated an impressive $53.8 billion in revenue and $6.5 billion in operating income last year. And while the automaker still experiences the occasional technical problem, Elon Musk’s 800-pound EV gorilla has simply become too big to fail.

Moreover, after TSLA stock’s 32% year-to-date decline, shares now trade for a much more reasonable 45 times forward earnings.

Prominent investment manager Brad Gerstner is another Tesla-bear-turned-bull. As I wrote recently, Gerstner believes Tesla’s brand will emulate Apple’s (NASDAQ:AAPL) “whose iPhones generate a majority of the smartphone sector’s profits, even though they represent a much smaller portion of the space’s sales volumes.”

Third-quarter data showed demand remains strong, with Tesla delivering a record 343,000 vehicles. And it is on track to deliver 1.5 million EVs in 2022.

Finally, longtime Tesla bull Cathie Wood bought a significant amount of the stock on recent weakness.

BYD Company (BYDDF)

BYD Company (OTCMKTS:BYDDF) isn’t just the biggest Chinese EV maker, it’s the biggest EV maker in the world. Despite a tough macro environment in China, BYD continues to report strong sales data.

The EV maker sold a record number of vehicles in September, surpassing 200,000 vehicles sold in a month for the first time. Sales were up 15% on a sequential basis and 183% year over year. In the third quarter, sales nearly tripled from a year ago to 538,704 vehicles. Moreover, the company disclosed that its backlog now stands at a staggering 700,000 EVs.

The Chinese EV maker is looking to build on its foothold in Europe, entering a long-term partnership with German car rental company Sixt. Under the agreement, Sixt will purchase around 100,000 of BYD’s electric vehicles through 2028.

Meanwhile, Tesla has agreed to buy EV batteries made by BYD. This should validate BYD’s batteries in the eyes of many Western automakers, greatly boosting this part of its business over the longer term.

After falling 21% year to date, BYDDF stock is trading at 35 times forward earnings, while its price-sales ratio of 1.9 is extremely attractive.

Rivian (RIVN)

Rivian (NASDAQ:RIVN) has disappointed investors since its much-hyped initial public offering in late 2021, when it debuted with a market cap surpassing that of both Ford and General Motors. Since then, it’s been mostly downhill for shares of the maker of electric SUVs and pickup trucks. Chalk it up to reduced forecasts and bad timing, but the selling now appears overdone.

On Oct. 3, Rivian reiterated its 2022 production guidance, saying it still expects to produce 25,000 EVs in 2022. This came on the back of a solid third quarter in which the company produced 7,363 pickups and SUVs, up 67% over Q3, and delivered 6,584 vehicles.

Rivian stated previously that it expects to increase annual production to 150,000 next year, which should be possible if it can continue to overcome macro hurdles facing the EV industry.

Analysts and investors appear to once again be warming to the company and its stock. For instance, Morgan Stanley recently noted that Rivian is well capitalized, saying it could potentially make it through the end of next year without requiring additional cash. The bank rates RIVN stock “overweight” with a $60 price target. That implies upside of 66% from current levels.

Li Auto (LI)

Next up on our list of undervalued electric vehicle stocks to buy is Li Auto (NASDAQ:LI). The Chinese EV maker saw a 62.5% year-over-year jump in September deliveries to 11,531 vehicles. This marked a 152% jump from August, with the company beginning deliveries of its Li L9 model on Aug. 30.

The company’s margins are improving, with its gross margin coming in at 21.5% in the second quarter, up from 18.9% in the second quarter of 2021. This bodes well for the automaker’s profitability going forward.

In August, research firm CLSA initiated coverage of LI stock with a “buy” rating. The firm says the Li ONE is popular in China’s family SUV market and that the L9 should be as well.

Given Li Auto’s firm foothold in the upscale Chinese auto market, I believe its current $22.9 billion market capitalization greatly understates the automaker’s long-term potential.

Ford Motor (F)

Ford Motor (NYSE:F) has become a major player in the EV market. In September, its EV sales nearly tripled from a year ago to almost 4,700 vehicles. The company noted that sales of its Mustang Mach-E were up 47% year over year last month, while 8,760 of the hotly anticipated  F-150 Lightning pickup trucks have sold since their launch in June.

Additionally, Ford reported it has 197,000 orders for its 2023 model-year vehicles, up 244% compared with orders for this year’s models.

Strength in the company’s EV sales last month helped offset weakness in traditional vehicle sales, with overall sales declining almost 9% year over year. This should continue to be the case as Ford expects up to half of its vehicle production to be electric by 2030.

Ford’s forward price-earnings ratio of 5.3 makes it a tad pricey for a traditional automaker. But it also may just make it one of the most undervalued electric vehicle stocks out there.

General Motors (GM)

General Motors (NYSE:GM) is another traditional automaker with big EV goals.

The company said it sold a record 14,709 of its Chevrolet Bolt EVs and electric SUVs in the third quarter. As a result, it plans to up production of these vehicles by nearly 60% in 2023 to 70,000 units.

GM also saw a pick-up in Q3 sales of its Cadillac Lyriq SUV and Hummer pickup truck. And its much-anticipated electric Chevrolet Silverado is expected to launch next year.

As with Ford, GM stock’s low forward P/E ratio of just 5.6 makes it one of the most undervalued electric vehicle stocks to buy.

On the date of publication, Larry Ramer owned shares of RIVN stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.