Tesla (NASDAQ: TSLA) has created game-changing returns for shareholders, rising over 1,900% in the last 10 years. Valued at US$700 billion by market cap, Tesla is the largest electric vehicle (EV) company in the world. However, in the last two years, macro headwinds such as inflation and interest rate hikes have negatively impacted consumer spending, resulting in lower sales for Tesla.
In fact, Tesla has reduced its vehicle prices several times to boost consumer demand, resulting in the erosion of its bottom line. While Tesla’s vehicle deliveries rose by 38% to 1.81 million in 2023, analysts expect its sales to grow by just 9% year over year to US$88.8 billion. Wall Street also expects adjusted earnings to narrow from US$4.07 per share in 2022 to US$2.87 per share in 2023.
In addition to a sluggish macro environment, Tesla is wrestling with competition from new and legacy automobile manufacturers, including Byd, Ford, Nio, and General Motors.
While Tesla’s revenue growth is decelerating, here are two Canadian EV stocks that are growing at a faster pace.
Image source: Getty Images
NFI Group stock
Valued at a market cap of $1.64 billion, NFI Group (TSX: NFI) manufactures and sells buses in North America, the U.K., Europe and Asia Pacific. In the third quarter (Q3) of 2023, NFI experienced new order growth and improvements in vehicle deliveries and profit margins. Its aftermarket business delivered the third consecutive quarter of record-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in the September quarter.
NFI emphasized customer demand remains robust as it ended Q3 with an order backlog of $6.6 billion. Around 36% of the backlog, or $2.4 billion, is tied to zero-emission buses and coaches.
As NFI continues to ramp up its production, it should benefit from economies of scale and higher profit margins. For instance, analysts expect NFI to increase sales from $2.8 billion in 2022 to $4.6 billion in 2024. Its profit margins are forecast to improve from a loss per share of $2.85 to earnings per share of $0.35 in this period.
NFI recently completed its refinancing plan, generating gross proceeds of $444 million, and extended the maturity of senior credit facilities to April 2026. It ended Q3 with $170 million in total liquidity, up from $88 million in the previous quarter.
Lion Electric stock
Another battery-powered bus manufacturer is Lion Electric (TSX: LEV), which is valued at $563 million by market cap. In Q3 of 2023, Lion Electric almost doubled sales to US$80.3 million, up from US$41 million in the year-ago period.
The rapid expansion of sales enabled Lion Electric to report a gross profit of US$5.4 million in Q3 compared to a gross loss of US$3.8 million last year. Lion Electric delivered 245 vehicles in Q3, up from 156 delivered in the year-ago period. It also narrowed the EBITDA loss from US$15.1 million to US$3.9 million in the last 12 months.
Lion Electric ended Q3 with an order book of 2,232 battery-powered medium and heavy-duty urban vehicles, representing a total order value of US$525 million. Further, its order book includes 129 charging stations, representing a combined total order value of US$4 million.
Analysts expect Lion Electric to increase sales from $190 million in 2022 to $663 million in 2024. Bay Street remains bullish and expects the TSX stock to surge 60% in the next 12 months.
