Source: Roschetzky Photography / Shutterstock.com
Creating a niche in any market is not easy, but it is especially difficult to do in an established industry. There was a time when only niche customer segments or early technology adopters bought electric vehicles (EVs) but soon EV makers were introducing low-end models that were accessible to a larger audience. Electric vehicle sales skyrocketed in 2021 surpassing all expectations. 2022 was a different story, the industry suffered due to supply chain issues, but is picking pace again. There are many EV niche market growth opportunities and we could see the industry make solid moves in the second half of the year.
The auto industry is repositioning for its transition to EVs and some of the biggest players in the sector are making impressive moves with their lesser known models. These EV niche market leaders, many of whom already have a stronghold in the traditional auto industry, are navigating their way through the electric vehicle sector. Let’s take a look at three of the EV niche market leaders that are dominating the market.
I have had a love for Ferrari (NYSE:RACE) since before it announced its plans to enter the EV market. There is nothing to not like about this company. It is known for making some of the greatest cars in the world and it went public a few years back. Ferrari is already a solid business and the demand always outstrips supply. It is a part of the high-end lifestyle and despite a volatile market in 2022, the company set a new sales record. RACE stock is up 36% year-to-date. However, it is not too late to get on board because I am certain that this is one of the EV niche market leaders that is only going to move upwards.
The company reported stellar earnings in the first quarter and a strong demand has pushed the waiting list for new cars to 2025. The company is embracing fully electric as well as hybrid model sports cars with plans to have them make up 40% of its total sales by the end of this decade. Additionally, the company plans to launch 15 new models by 2026.
Ferrari’s future looks bright which is why it landed on my list of the top EV niche market stock picks. It expects to see earnings grow by a compound annual growth rate of 9% by 2030. Ferrari will enter the EV sector in 2025 and this is when I expect it will show accelerated growth. The company is already ruling the combustion engine auto industry and it could be an EV leader very soon too. Make no mistake, RACE is one of the EV niche market winners, and it will continue to perform no matter the economic situation.
Ford (NYSE:F) hasn’t had it easy despite being a well-known automaker and having made strong strides in the EV industry. It is a solid brand with many loyal customers. The company makes the F-Series pickup which is the best-selling vehicle in the United States. Ford reported quarterly results where it broke out the EV business from the rest of the company. While the company as a whole reported a quarterly net income of $1.8 billion its EV division showed a loss of $722 million. F stock is trading well below its 52-week high of $16. The stock will not rebound anytime soon and investors will need a lot of patience to see it soar.
Ford aims to increase EV production to 600,000 by the end of this year. While that may seem like an ambitious target, if the company does manage to achieve it, we will see the losses decline. The company is set to benefit from the Inflation Reduction Act and it could help the company and its battery partners accumulate about $7 billion in tax credits.
Ford plans to expand its global presence and will use the Chinese operations as the export hub to build affordable EVs and commercial vehicles for Mexico, Australia and South America. The company sold 69,595 F-Series trucks in April, as compared to 51,517 a year ago. Even if the company continues to see growing competition, it can lean on its F-Series pickup to continue to generate revenue.
Although F stock may not reach as high as its competitors, it is one of the best EV niche market stocks because it does have the potential to grow with time.
BYD ( )
BYD (OTCMKTS:BYDDY) is a Chinese EV automaker that is making its presence felt in the industry. It has already delivered more cars than Tesla (NASDAQ:TSLA) and continues to report record delivery numbers. This shows that there is growing demand for its cars and the demand is not limited to China. BYD is one of the best EV niche market leaders today.
Backed by Warren Buffet, there is no stopping the growth of BYD since it operates in the largest auto market in the world. While a lot of EV makers are focused on getting a foothold in China, BYD has seen the number of vehicles sold outside China on the rise. The company is still in the growth stage and has the potential to continue to report record delivery numbers.
The company saw plug-in EV sales hit 209,467 units which is an 82% rise year-over-year for their full battery EVs and a 199% rise for their plug-in hybrid models. Already described as the next Tesla, BYD will soon open a manufacturing unit in Vietnam which will help increase its sales.
For the first quarter, the company reported a profit of $597 million, which is a 400% rise on a year-over-year basis. The company is in a very strong position. It has a price advantage over Tesla, and last month they unveiled two new EVs. BYDDY stock is up 18% year-to-date. The stock has shown over 300% growth in the past five years.
On the date of publication, Vandita Jadeja did not hold (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.