The electric vehicle (EV) space is sporting reasonable valuations, thanks to the correction witnessed amid the current geopolitical and macroeconomic turbulences. After peaking at $57.71 on Nov. 22, 2021, the iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV) has pulled back notably toward its lowest level in about 1-1/2 half years.
Apparently, there is a mismatch between valuations and the outlook for EVs. There is no denying of the fact that the present is tense for the industry. Components are in short supply and the Covid lockdowns in China hasn’t helped matters any further. The demand picture isn’t very encouraging as well, as inflation and a rising rate environment have set tongues wagging about demand destruction.
For those willing to look past the current noises, the rewards could be disproportionate. The largest automotive markets of the world, namely the European Union, U.S. and China will look to greatly expand EV capacity by 2035, management consultancy firm McKinsey estimates. If full-electrification target for the year is hit, just imagine the kind of potential opportunity before EV makers.
The Electric Vehicle Stock to Buy: XPeng (XPEV)
XPeng (NYSE:XPEV) has been an outperformer through 2021 even as its bigger rival Nio floundered. The company has been nimble enough to adapt to changing consumer preferences and lap up new technology and markets.
The Guangzhou-headquartered company rushed in to capture most of the post-pandemic demand in China in 2021 by launching a new family sedan, named P5. It also unveiled an upgraded version of its G3 SUV. Overall, it delivered 98,155 vehicles in 2021. The product slate for 2022 includes the G9 SUV, a vehicle developed for both Chinese and international markets.
XPeng entered Norway ahead of peer Nio, marking its maiden overseas foray. It now has a presence in Sweden and the Netherlands. Like Nio, XPeng could be in for a strong bounce back when external risks mitigate.
Since the start of the year, the stock has lost about 53%. Analysts, on average, expect the stock to double to $48.31.
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