There are a few places in the markets today that remain exciting, even during all this volatility. One of those areas is the electronic vehicle (EV) market. EV stock has done well almost across the board, and that includes pretty much any stock that has to do with EVs. You can see this clearly when looking at companies such as Tesla Motors and NIO.
Both of these companies have been on a tear as of late. Tesla is up 225% year to date, and NIO is up 242% as of writing. Both have strong potential among EV stock companies to continue to see huge explosions. But there are a few things that have to happen first.
The breakdown
First of all, vehicle delivery numbers need to increase dramatically. NIO delivered a record number of cars during the second quarter of 2020, hitting 10,331 vehicles. That’s a dramatic increase from last quarter and should continue to increase as the company now has a partnership with China. Tesla, meanwhile, delivered 90,650 cars during the second quarter, which caused the EV stock to soar. But each company still needs to up its game. While that’s a dramatic increase for both companies, other major car brands are in the millions for each quarter.
This leads to the next problem. The pandemic needs to end. If COVID-19 remains, EV stock will remain low, as the car makers cannot build as many cars and cannot expand as hoped. The companies also cannot ship to other countries, as the United States remains banned from entry for a number of countries.
Finally, EV stock companies need one thing: more lithium. Lithium powers the batteries used by EVs. Again, the pandemic has brought lithium mining to a halt, but once the pandemic subsides, there should be a huge boost in production to make up for lost time.
The Canadian EV stock
While there aren’t any EV stock companies in Canada, there are those that you can still take advantage of during the EV boom. That would be a company such as Lithium Americas (TSX:LAC)(NYSE:LAC). The company is a Canadian lithium producer; it mainly operating projects from its Cauchari-Olaroz in Argentina and Thacker Pass in Nevada.
The Argentina project ceased production for about a month after the outbreak, but as of April 20 it was back on a limited basis. Its Reno, Nevada project also ceased operations for now after producing 10,500 kilograms of lithium. The company had a net loss of $14 million for the first quarter of 2020.
It’s likely that the lithium producer will have another tough quarter thanks to the pandemic. But that’s what makes this an ideal buying opportunity. If the company manages to announce any good news, such as full-scale production, share prices should soar for this EV stock. Share trade as of writing at $8.25 per share, which is still up 83% since January, despite the bad news. Clearly, investors are still convinced this stock has huge future potential.
I would agree and think as EV stock companies really take off, Lithium Americas could eventually hit triple digits. It could take a while, making the company the perfect buy-and-hold stock in today’s market. Meanwhile, it could easily reach all-time highs near $14 per share in the next year.
