Top 10 Automotive Stocks: These Auto Companies Are Successfully Tapping Into the Fast-Growing Auto Industry
The automotive sector is one of the most fascinating industries to invest in right now because it’s undergoing monumental transitions. These companies are betting on future automotive innovations and many have great long-term potential for investors.
The first transition is the shift from internal combustion engines to electric vehicles (EVs). By 2035, research firm IHS Markit estimates that up to 50% of new car sales in the United States will come from the sale of EVs.
Automakers across the globe have seen the writing on the wall and are quickly shifting gears to release a slew of EV models for everything from SUVs to sports cars.
And throughout the auto industry, there’s also been an incremental move towards automation. Semi-autonomous features like automatic brake assist and lane-keep assist are available on even low-end new cars and the rise of EVs will make implementing more autonomous features easier than ever in the coming years.
Of course, many companies, from automakers to dealers, are benefiting from the auto industry right now. So buckle up and get ready to kick your automotive investing knowledge into high gear with this list of top automotive stocks!
Top 10 Automotive Stocks
Here are the top 10 automotive stocks in the industry right now.
- Tesla, Inc.
- General Motors
- Ford Motor Company
- Volkswagen AG
- Toyota Motor Corporation
- CarMax, Inc.
- Carvana Co.
- Ferrari N.V.
- Stellantis N.V.
- NIO Inc.
Tesla, Inc. (Nasdaq: TSLA)
Price: $687.2 (as of close Jul 30, 2021)
There’s no doubt that Tesla deserves a spot on this list after the company’s share price has skyrocketed more than 1,400% over the past five years.
Tesla has proved its mettle over the past few years as the company boosted its vehicle deliveries to more than 500,000 at the end of 2020—grabbing nearly 80% of the U.S. EV market share.
The company’s sometimes controversial CEO and co-founder, Elon Musk, has defied an entire industry, creating a successful EV company when it was a seemingly impossible feat. That tenacity is at the heart of Tesla and that—along with the company’s sleek and powerful vehicles—will help propel Tesla forward for years to come.
General Motors (NYSE: GM)
As it’s one of the oldest automakers in the United States, you might think that General Motors is running on fumes when it comes to innovation. But don’t underestimate this automotive stalwart.
GM has committed to eliminating diesel and gas-powered cars, vans, and SUVs from its vehicle lineup by 2035. Think about that for just a moment. One of the oldest car brands in the country will sell mostly electric vehicles in less than 15 years!
GM isn’t just talking big, the company has pledged to spend $35 billion by 2025 to achieve its EV ambitions.
The company has also invested heavily in autonomous vehicles (AVs) with GM’s subsidiary, Cruise. Cruise is an AV company that has already developed a self-driving system for vehicles and is one of the top autonomous vehicle companies, right up there with Waymo from Alphabet (Nasdaq: GOOG) (Nasdaq: GOOGL).
Ford Motor Company (NYSE: F)
Like GM, Ford is also making big investments in autonomous and zero-emission vehicles. The company owns 42% of an AV company called Argo AI—Volkswagen also owns 42%—and Argo is creating the hardware and software to offer a complete AV package for automakers.
Ford says that it will launch a commercial autonomous vehicle business as soon as 2022.
Like GM, Ford is also pursuing EVs and aims for 40% of its auto sales to be all-electric by 2040. To get there, the company has committed to spending $30 billion by 2025.
Ford already took a massive leap of EV faith with its Mach-E all-electric Mustang crossover SUV that it launched in mid-2021 and with its F-150 Lightning electric pickup truck that will go on sale in the spring of 2022.
Volkswagen AG (OTC: VWAGY)
Volkswagen is one of the largest automakers in the world, selling vehicles under its namesake brand, as well as through the Porsche, Audi, Bentley, and Lamborghini brands. As mentioned above, Volkswagen owns 42% of Argo AI, which gives the company a firm position in the AV space.
Not to be outdone by GM and Ford’s moves, Volkswagen is shifting its attention to the EV market as well and says that 70% of its European sales will be electric by 2030. And in the United States and China, half of all vehicle sales will come from EVs by that time.
The company is spending $19 billion over the next few years to expand its EV and AV footprint, with the goal of releasing autonomous vehicle tech in most vehicles by 2030.
While Toyota took the top spot at the No. 1 car seller in 2020, Volkswagen was just a few hundred thousand vehicles behind the Japanese automaker, with 9.3 million sales worldwide.
Toyota Motor Corporation (NYSE: TM)
Toyota is the world’s largest automaker by sales in 2020, reaching 9.5 million units sold. Those sales figures were pummeled by pandemic-related circumstances in 2020, but even with the slowdown, Toyota managed to outpace its rivals.
While Toyota is the leading carmaker in the world, the company is playing catch-up in the autonomous driving space. In mid-2021 the company purchased Lyft’s self-driving division for $550 million to help boost its self-driving ambitions.
And while Toyota was a long-time leader in hybrid technology, the company was initially slow in adopting an electric vehicle strategy. That appears to have changed recently after the company said it will release 15 battery-electric vehicles (BEVs) by 2025.
CarMax, Inc. (NYSE: KMX)
If you’re not interested in automakers but still want to benefit from the automotive industry, then used car retailer CarMax might be the stock for you. Why invest in the used car biz? Because CarMax has seen steady growth over the past few years and its share price has outpaced the broader market by more than 40% over the past five years.
Used car sales have surged recently as the coronavirus pandemic shut down vehicle factories and caused a global semiconductor shortage.
The company rose to the challenges of lockdowns and social distancing by boosting its online services, including rolling out a nationwide instant-approval service to make it easier for people to sell their cars to CarMax.
The company is seeing the benefits of its efforts and in the first three months of fiscal 2022, CarMax’s revenue skyrocketed 138%.
And there should be more where that came from. Management is targeting $33 billion in revenue and 2 million unit sales by fiscal 2026—nearly doubling its vehicle sales from fiscal 2021.
Carvana Co. (NYSE: CVNA)
Another company that’s fully tapped into the used car market is Carvana. Consumers can buy a used car and sell theirs to Carvana, all from the company’s app and website.
Making it even more painless for consumers is the fact that the company’s customers can opt to have their new vehicle delivered to them and have their old one picked up.
It’s no surprise that this service has been a massive hit with consumers. Buying a car without interacting with a car salesperson? Yes, please! The company expanded into 120 new markets in 2020, reaching 74% of the U.S. population. And by the end of 2021, Carvana’s management expects to be in 300 markets and reach up to 80% of the population—up from just 69% in 2019.
Carvana has been one of the most impressive growth stocks on this list, with the company’s share price gaining a staggering 2,700% over the past five years.
Ferrari N.V. (NYSE: RACE)
Ferrari is a niche, high-end luxury car brand that hardly needs introduction. The company’s long and successful racing history and its head-snapping vehicles (both in speed and looks) have left car enthusiasts and rival automakers jealous for decades.
And investors should note that Ferrari’s impressive share price returns match the company’s racing stature. Over the past five years, Ferrari’s share price has gained more than 4X the S&P 500’s returns, leaving many of its auto rivals in the dust.
Investors will also like that demand for Ferrari’s vehicles continues to mean long waitlists for would-be owners and the vehicle’s eye-popping price tags bring Ferrari above-average margins for the auto industry.
Stellantis N.V. (NYSE: STLA)
Investors looking for a lot of exposure to the automotive industry across many different car brands and global markets may want to consider Stellantis.
The Dutch company was formed in 2021 when Fiat Chrysler Automobiles merged with the French automotive company PSA Group in a $52 billion deal. The result is a company that owns 14 vehicle brands, making it the fourth-largest automaker in the world.
Just so you understand the full scope of Stellantis’s automotive reach, consider that all of the following brands are now under one company: Chrysler, Jeep, Dodge, Ram, Fiat, Alfa Romeo, Maserati, Citroën, Opel, Peugeot, and… you get the idea.
Stellantis just started trading under its new name and ticker symbol in January 2021, but investors may want to keep a close eye on this massive automaker’s plans to release four new EV platforms across its brands in the next few years.
NIO Inc. (NYSE: NIO)
The Chinese electric vehicle maker NIO has been a top growth stock since its Wall Street debut back in 2018. Since then, its share price has surged more than 600%!
What has investors so excited? First, the Chinese car market is experiencing explosive growth and NIO is successfully tapping into it. In the second quarter of 2021, the company delivered nearly 22,000 vehicles, an increase of more than 112% year-over-year.
Second, NIO is a leading EV automaker in the country and its battery swap technology and growing EV charging infrastructure could help the company dominate the space. By the end of 2021, NIO says it will have about 700 battery swap locations across China and has a goal of 4,000 swap stations worldwide by the end of 2025.
Investors are also excited about NIO’s expansion into Europe. NIO will begin selling an electric SUV in Norway in late 2021, marking the Scandinavian country the company’s first auto market outside of China.
Automotive Stock ETFs
If you want exposure to the automotive industry but you don’t feel comfortable tracking down the best auto stocks by yourself, then an automotive exchange-traded fund (ETF) may be the best investing route for you.
ETFs track an index or a specific sector, like automobiles, and can be a great way to passively invest your money.
The First Trust Nasdaq Global Auto Index Fund ETF (CARZ) is one of the only automotive industry ETFs available. Over the past three years, this ETF has just barely outpaced the returns of the S&P 500, so investors should consider its volatility before buying.
Frequently Asked Questions
What is the best automotive stock to buy?
The two best-performing automotive stocks on this list are Carvana and Tesla. Carvana’s share price has skyrocketed about 2,700% over the past five years and Tesla’s stock has jumped more than 1,400%. Additionally, shares of the Chinese EV automaker NIO have surged about 600% since its 2018 IPO.
Are auto stocks a good buy?
Like all publicly traded companies listed on the stock market, some auto stocks are better than others. Investors should look for auto companies that have higher profit margins than their competitors and that are investing in new technologies like electric vehicles. Investors should know that the automotive industry can be cyclical, which means auto stock prices can be volatile, especially when consumers aren’t buying cars.
Why is Tesla stock so high?
Tesla’s stock has experienced meteoric gains of more than 1,400% over the past five years as the company has ramped up vehicle production and deliveries, and as investors have become focused on stocks in the electric vehicle industry.