The electric vehicle (EV) industry has been one of the top performers this year. And the one share that gets the most attention is California-headquartered Tesla (NASDAQ: TSLA). With a market cap of $280bn, it’s the most valuable automotive company in the world. Year-to-date, Tesla stock is up around 260%, hovering at $1,500. Founder Elon Musk’s fortune has now surpassed that of Warren Buffett’s.
On July 22, the company reported Q2 earnings. Therefore today, I’ll take a closer look at the potential of EV shares for long-term UK investors.
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Tesla stock: four straight quarters of profit
The most recent earnings report marked four consecutive profitable quarters for the electric carmaker. It reported $104m in profit for the April to June quarter. It would be important to remember that due to lockdowns, its Fremont, California manufacturing plant was closed down for about half of that period.
Tesla stock is now eligible to join the S&P 500, the index of top companies in the US. If it were to become part of the coveted index soon, the company would be among the top 20 most valuable companies.
In that case, many funds that track the index would have to add Tesla stock into their holdings, a move that would likely support the share price in the coming months.
Musk has recently confirmed the company is “very close” to achieving Level 5 autonomous driving technology. He gave a video message at the opening of Shanghai’s annual World Artificial Intelligence Conference (WAIC). Tesla’s founder referred to the capability to navigate roads without any driver input and said: “I’m extremely confident that Level 5 or essentially complete autonomy will happen, and I think will happen very quickly”.
Industry analysts currently debate whether the technology will be ready that fast. Yet when Musk speaks so boldly about the future of EV automation, investors in Tesla stock listen and add to their long positions.
Other US-based EV manufacturers to consider
In the past few months, other EV manufacturers have also been attracting Wall Street’s attention. Oregon-based Arcimoto (NASDAQ: FUV) may excite your interest if you’re looking for a cheap share that could become the ‘next Tesla stock’. FUV shares currently have a price tag of $5.88. After going public in September 2017, Arcimoto has built its production facility. Since September 2019, it has been producing and selling the Fun Utility Vehicle.
Texas-based Ayro (NASDAQ: AYRO) started trading on the NASDAQ composite on May 29 following a merger with DropCar, which was already listed on the exchange. The group creates sustainable electric solutions for last-mile delivery, fleet management, and closed campus transport such as golf courses, universities, or airports. These light-duty vehicles are typically classified as low-speed electric vehicles (LSEVs). They serve a niche, yet growing, market.
Ayro shares opened at $4.10, but by June 4, were down to $2.15. Yet investors’ risk appetite in EV shares helped push the shares to a high of $8.18 on July 6. Now they’re around $4.80.
Foolish takeaway on Tesla stock
Do you believe that the new decade will see increased investor appetite in electric vehicles? Then you may want to research the suitability of EV shares like Tesla, as well as FUV or AYRO. Once you’re ready to hit the ‘buy’ button, you should typically be able to buy these US-based stocks through your broker.