The electric vehicle market will continue to expand until the end of the decade.
Nio’s sales could increase as it expands domestically and internationally.
QuantumScape’s solid-state batteries could make electric vehicles more energy efficient.
10 stocks we like more than Nio ›
The electric vehicle (EV) market has grown rapidly in recent years, despite the impact of persistent inflation, high interest rates, tariffs and other macroeconomic headwinds that have shaken the global economy. While the North American EV market has cooled somewhat since its initial growth, the Chinese and European markets continue to generate strong tailwinds for the industry as a whole.
According to Grand View Research, the global electric vehicle market could grow at a CAGR of 32.5% between 2025 and 2030 as cheaper, more energy-efficient vehicles come to market. To capitalize on that secular trend, investors should add some promising EV investments to their portfolios. Here are two EV stocks that deserve a chance: child(NYSE: NIO) and Quantum landscape (NYSE: QS).
Image source: Nio.
Nio is a major electric vehicle producer in China. It differentiates itself from its competitors with interchangeable batteries, which can be quickly changed at its Power Swap stations as a faster alternative to traditional chargers. Its eponymous brand sells a wide range of sedans and SUVs. Its newer subbrands, Onvo and Firefly, sell cheaper SUVs and compact cars, respectively.
From 2020 to 2024, its annual deliveries increased more than fivefold, from 43,728 vehicles to 221,970 vehicles, while its annual revenue more than quadrupled. It achieved that explosive growth even as the pandemic, macroeconomic headwinds and a price war rocked China’s electric vehicle market.
Nio’s vehicle margin fell to single digits in 2023 as it faced those challenges. Still, it recovered to double-digit levels over the past two years as it sold a greater mix of Nio’s premium sedans, reduced its production costs and rationalized its other expenses.
From 2024 to 2027, analysts expect Nio’s revenue to grow at a CAGR of 31% as it significantly reduces its net losses. That growth should be driven by its growing sales of Onvo and Firefly vehicles, its domestic market share gains, and its continued expansion in Europe. It could also spin off its capital-intensive battery manufacturing division to streamline its spending.
It’s a bright outlook for a company that trades at less than one times this year’s sales. Its valuation is still affected by tariffs and trade conflicts between the United States and China, but it could attract a stampede of bulls once those headwinds dissipate.
QuantumScape is a leading developer of solid-state lithium-metal batteries, which generate electricity from solid electrolytes instead of the flammable liquid electrolytes used in traditional lithium-ion batteries. That difference gives solid-state batteries better thermal resistance, faster charge times, and greater charging capacities than their lithium-ion counterparts.
However, solid-state batteries are also more difficult and expensive to manufacture. That’s why they have only been mass produced for smaller devices, like pacemakers, rather than electric vehicles.
QuantumScape aims to break that bottleneck with its QSE-5 batteries for electric vehicles, which have an energy density of 844 Wh/L (watt-hours per liter) and can be quickly charged from 10% to 80% in 12 minutes. Most lithium-ion batteries for electric vehicles have an average energy density of 300 to 700 Wh/L with an average fast charging time of 20 minutes to an hour.
QuantumScape’s batteries could make electric vehicles significantly more energy efficient, but the company has not yet commercialized any of its designs. It has carried out numerous road tests with its largest investor, Volkswagen (OTC: VWAP.Y)and recently upgraded its separation process to produce larger volume samples; however, it is not expected to generate significant revenue in 2025.
But from 2026 to 2027, analysts expect QuantumScape’s revenue to rise from $6 million to $57 million when it finally begins licensing its designs to Volkswagen and other major automakers. From 2025 to 2030, Grand View Research expects the solid-state battery market to grow at a CAGR of 56.6%, so QuantumScape still has plenty of room to grow. It remains a volatile and speculative stock that is difficult to value, but it could be worth a try as the electric vehicle market continues to heat up.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.
The Top 2 EV Stocks to Buy in December was originally published by The Motley Fool
