Polestar

2 EV Stocks Under $10 With Big Potential / Polestar & NIO

Kitai

May 28, 2023 — 5 min read

IMAGE: Polestar

2 EV Stocks Under $10 With Big Potential

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Electric vehicles have been receiving a lot of attention, thanks to the combination of social, cultural, and political trends switching transports from gasoline-powered cars to zero-emission ones.

Polestar $PSNY

Polestar, a Swedish electric vehicle producer, went public through a SPAC transaction last June and is presently listed on the NASDAQ. Focusing on high-performance premium EV's.

Polestar stock has the potential to recover sooner rather than later.

The current price per share sits at $3.30, and its market cap is $7B. Can a buyer make their money back within 10 years by acquiring shares now, as it is currently undervalued. Last year they earned $2.5B from delivering 51,000 electric vehicles in 2022, and this year they plan on selling 60K - 70K to reach a revenue of $3 - 3.5B. For 2024 I predict that Polestar will manufacture more than 100,000 cars, thus increasing revenues up to $4B - 5B over the next two years. If my estimations are correct Polestar yearly generated revenue could exceed $7B - 9B in only 2 years. The company's market cap of $7.0B as of May 26 2023.

The company has the potential to exceed its current market capitalisation of $7B, for many that's a golden opportunity.

The company experienced a successful previous year, delivering a record amount of 51,000 vehicles that demonstrated a notable nearly 80% surge on a year-on-year basis. Those positive numbers have carried on in the first quarter this year with 12,076 vehicles shipped--a 26% increase compared to the same period in 2020.

Revenues were up 20.7%, their $546.02 million was less than expected; Looking ahead, they anticipate selling between 60,000 and 70,000 vehicles in 2023.

Polestar has an advantage over other EV OEMs because it can take advantage of Volvo and Geely's resources. This involves making use of their existing factories to accelerate output, as well as their experience in the manufacturing sector to eliminate any problems. This could save the company from spending money on capital expenditure and labor in constructing its own production lines, which could help keep its ongoing costs down and lead to stronger gross margins.

Polestars long-term success is assured. This all comes down to the fact that Volvo has been a reliable company for many decades. If one can trust in Volvo, surely one can trust in Polestar, knowing that the company is in great hands.

$NIO

In the first quarter of 2023, Cathie Wood opted to part ways with Chinese EV company NIO Inc. (NYSE:NIO). ARK Investment Management sold a total of 336,347 shares of the stock during this period. Since then, this stock has dropped by 45% which could explain why Wood was no longer interested in holding it. Yet, she remains highly optimistic about Tesla Inc.

Cathie Wood has given up on NIO for now, but does that mean that the entire market should give up NIO? I doubt that, Cathie Wood recently gave up on Nvidia, and this was unfortunate timing for Cathie woods investment firm, after their departure, the Nvidia stock skyrocket by whopping 25%+.

NIO deliveries were up 22% for the first four months of 2023, compared to the previous year. However, this wasn't enough progress for them to gain traction in the extremely competitive Chinese EV market.

NIO has a remarkable momentum, with deliveries expanding yearly from 11,348 in 2018 to 122,486 in 2022. Their annual revenue also saw an impressive compound annual growth rate (CAGR) of 74% over the same timespan.

NIO benefits are clear. It has established itself as a leading player in the Chinese EV market, given customers confidence with its battery subscription model, and provided an extensive system of charging stations and interchangeable batteries.

NIO confronts heightened rivalry in both China and the international EV markets, which is further complicated by their reliance on Chinese customers and fluctuating government regulations. Additionally, the company must guarantee profitability while contending with intensifying competition and decreased subsidies.

NIO has its sights set on the premium electric vehicle market in China, with more expensive EVs than those provided by Tesla. The ET5 takes on the Model 3 and upcoming models will vie for attention with the Model Y.

In addition to Nio, XPeng, Li Auto are startups trying to compete with Tesla in China, while BYD is working its way up in both affordable luxury and premium segments.

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