Stocks to buy

As the urgency of climate change rises, the automotive industry is actively addressing carbon emissions by embracing electric vehicles (EVs). With the growing demand for eco-friendly transportation, investors are seeking the best EV stocks for high returns that can capitalize on the shift in the automotive industry.

Of course, not all EV stocks are created equal. Some are all hype and have little substance. That said, I do think there are plenty of companies offering significant upside worth buying here.

Below are three of my top high-potential EV stocks that have been overlooked by investors. While shares are down between 15% and 65% over the past 12 months, I wouldn’t rule out a rally.

Nio (NIO)

Source: Robert Way / Shutterstock.com

 Chinese electric vehicle manufacturer Nio (NYSE:NIO) stands out as a remarkable growth stock that emerged during the Nasdaq bear market decline. Despite facing production challenges in the past, Nio has been steadily overcoming obstacles and is poised for continued success.

Nio’s growth narrative revolves around its extensive network of battery-swapping stations and continuous innovation. Year after year, Nio introduces new models or enhances its lineup of electric vehicles. It launched the ET7 and ET5 sedans last year. Notably, these models boast impressive long-range capabilities, with the highest battery pack option easily exceeding the range of Tesla’s (NASDAQ:TSLA) flagship Model 3 sedan.

With plans to expand product offerings and double sales in 2023, the company is poised for further growth. Overcoming operational challenges, Nio has experienced remarkable expansion as a Chinese EV manufacturer. While shares are down 62% over the past year, NIO looks like one of the top EV stocks for a rally this year. It’s certainly due for one. 

Fisker (FSR)

Source: Ringo Chiu / Shutterstock.com

Fisker (NYSE:FSR) has generated significant anticipation among investors with exciting updates on its upcoming Fisker Ocean Extreme. The California-based EV manufacturer recently confirmed that U.S. deliveries of the electric SUV will commence on June 19.

Fisker, like many other EV startups, faces skepticism in a competitive market. Some analysts predict an upcoming shakeout, with weaker companies bowing out due to tough competition and limited funds. For its part, Fisker reported a $120.6 million loss in Q1 and revised its production target to 32,000-36,000 vehicles for the year, down from an estimate of up to 42,400 units previously.

Management appears to have an adaptable approach to production. The company is exploring partnerships to scale up faster, which is a smart move.

The success of the company’s production strategy is yet to be determined, so caution is advised for those considering investing in Fisker. But with FSR down 35% over the past year and trading at less than $6 a share, a small bet here could pay off big. 

BYD Co. (BYDDF)

Source: T. Schneider / Shutterstock

BYD Co. (OTCMKTS:BYDDF) is the leading EV manufacturer in China and the world, outpacing even Tesla in terms of EV sales when you factor in its long-range plug-in hybrid vehicles.

Beyond vehicle production, BYD also manufactures EV batteries and stands to benefit from the surging demand for them in the growing global EV market. Recently, The Wall Street Journal reported that BYD has plans to significantly expand production of battery-electric commercial vehicles, providing another substantial avenue for growth.

BYD achieved remarkable growth in the first quarter, delivering 552,076 new-energy vehicles, up nearly 93% year over year. Net profit surged 411% from a year ago for another record-breaking quarter. With ambitious plans to sell 4 million plug-in EVs in 2023, BYD has the potential to reshape the EV industry. 

BYD has emerged as a dominant force in the Chinese EV market, surpassing its regional competitors. Moreover, its ambitions extend beyond China, as it aims to expand its presence in Asia, Europe and the United States. And the support of influential investors like Warren Buffett certainly doesn’t hurt. BYD stock is poised for continued acceleration following an 18% decline over the past 12 months.

On the date of publication, Chris MacDonald did not have (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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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