Electric vehicle stocks have witnessed a deep correction in the last few quarters, but the best EV stocks to buy will recover from the factors that held them back. Factors include overvaluation, supply chain concerns, inflation, and a potentially weak macroeconomic environment in 2023.

Intensifying competition has also impacted valuations, but it is the nature of markets to overreact. Be it a euphoric rally or a deep correction.

EVs are likely to represent more than 60% of vehicles sold globally by 2030. To put things into perspective, Global EV penetration is expected to increase from 14.7% in 2022 to 44.8% by 2030.

Competition is a concern, but the addressable market is significant. Further, investors should focus on EV stocks to buy that represent companies with meaningful investments in research and innovation. It’s the innovation factor that will help quality EV companies to maintain or grow their market share.

Li Auto (LI)

Li Auto (NASDAQ:LI) stock has outperformed Chinese EV stocks such as Nio (NYSE:NIO) and XPeng (NYSE:XPEV). The resilience is on the back of strong financial performance coupled with an attractive portfolio of EV models.

For Q3 2022, Li Auto delivered 26,524 vehicles. For the same period, the company reported revenue of $1.3 billion. Even with headwinds related to raw material price inflation, Li reported a positive operating cash flow of $71.4 million.

I believe that the company’s vehicle deliveries are poised to accelerate through 2023. One reason is the launch of multiple models (Li L8 and Li L7). With commercial deliveries, new models will boost growth and cash flow upside.

Li Auto closed Q3 2022 with a solid cash position of $7.85 billion. This provides the company with ample financial flexibility for aggressive retail expansion in China. At the same time, the company has been boosting its research and development expense, which provides an innovation edge.

Polestar Automotive (PSNY)

Polestar Automotive (NASDAQ:PSNY) had a strong listing at $13 in June 2022. However, the stock has been in a correction mode even with positive business developments. At current levels of $5.7, PSNY stock looks undervalued and is among the EV stocks to buy for robust returns.

Polestar achieved its vehicle delivery target for 2022 with global volumes of 51,500 cars. On a year-on-year basis, deliveries surged by 80%. The company also has optimistic guidance for 2023 with an expected delivery volume of 80,000 cars.

Of course, operating level losses have increased and that seems to be a concern. However, I believe that with operating leverage, Polestar is positioned to narrow losses through the year. It’s also worth mentioning that the company is fully financed for 2023.

In terms of growth catalysts, the company expects to launch Polestar 4 and 5 in 2023 and 2024 respectively. Furthermore, Polestar 6 is due for launch in 2026. With an attractive pipeline, deliveries growth is likely to remain strong. Also, deliveries growth will be supported by expanding global presence.

Tesla (TSLA)

Tesla (NASDAQ:TSLA) stock has been in a deep correction mode with a downside of 61% in the last 12 months. At a forward price-earnings ratio of 30.3, the stock looks attractive.

Recently, Tesla announced price cuts as competition intensifies and that is likely to have a positive impact on deliveries. As a matter of fact, the markets have reacted positively and TSLA stock is higher by nearly 20% year to date.

If global EV adoption continues to increase, Tesla remains attractive for the coming years. The company has an attractive pipeline of models that includes Cybertruck and Roadster. Additionally, Tesla Semi will contribute to growth.

I also like the fact that Tesla reported cash and equivalents of $19 billion for Q3 2022. Further, for the first nine months of 2022, the company reported an operating cash flow of $11.4 billion. The long-term cash flow potential is significant with Tesla having ambitious plans to sell 20 million EVs annually by 2030.

Lucid Group (LCID)

Lucid Group (NASDAQ:LCID) stock has been battered with a downside of almost 80% in the last 12 months. The stock however seems undervalued and some exposure can be considered at current levels.

For 2022, the company exceeded its guidance with a production of 7,180 vehicles. However, the guidance had been revised on the downside earlier in 2022. It remains to be seen if deliveries accelerate in the current year.

I am optimistic due to two factors. First, the company has raised funds recently and seems to be fully financed for the next 18-24 months.

Second, the company has signed an agreement with Panasonic (OTCMKTS:PCRFY) to supply of lithium-ion batteries for its EV line-up. As supply chain concerns ease on a relative basis in the coming quarters, production is likely to be higher.

In terms of bookings, Lucid already has 34,000 reservations as of November 2022. Additionally, the Saudi government has committed to purchase 100,000 EVs from the company through 2030. Lucid is already setting up a factory in Saudi, which is the first step toward international expansion.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.