The S&P 500 soared by about 25% in 2024, but investors decided to pump the brakes on many of their electric-vehicle (EV) investments during the year. An outlier among its peers, Tesla (TSLA 8.22%) saw its stock accelerate by about 73%; however, other prominent EV names were left in the dust as they plunged considerably.
But that's not to say the market will completely forsake EV stocks in the new year. In fact, Lucid (LCID 8.58%), Li Auto (LI 3.04%) , and Rivian (RIVN 24.45%) all have the potential to race higher in 2025.
Expansion of its vehicle lineup can move the needle for Lucid
Beginning the year on an inauspicious note, Lucid reported production of 8,428 vehicles for 2023. The news was disheartening for investors, since the company had stated in May 2023 that it had planned on producing more than 10,000 vehicles for the year. Further disappointment came in October, when the company announced a plan to raise about $1.7 billion through the offering of more than 262 million shares of stock, a development that led shares to move in reverse as investors wrestled with the prospect of dilution.
While Lucid stock plunged by about 27% in 2024, the stock can rebound in 2025, for several reasons. For one thing, the company recently began to accept reservations for its new luxury SUV, the Lucid Gravity. This development will give the company's product offerings a needed diversification, as it will be the only other model besides the Lucid Air sedan.
Production of the Gravity is now under way. If the company commences deliveries of the Gravity in 2025 and receives strong customer interest in the SUV, the stock could get a boost. Similarly, Lucid expects to further expand its lineup with a midsize vehicle in 2026. If Lucid remains on schedule with the new model, that could also help the stock recover from its 2024 loss.
Li Auto is a leader among Chinese EV makers
One of the largest EV companies, Li Auto also had a disappointing 2024, plummeting by approximately 35%. From providing uninspiring 2024 sales projections to reporting lower-than-expected first-quarter 2024 financial results, the company gave investors little motivation to hit the gas on buying Li Auto stock.
Despite the dour performance this past year, investors may very well decide to once again hitch a ride with Li Auto stock, for a variety of reasons. For one thing, the company is one of the few China-based EV makers that's profitable. While Nio (NIO 1.76%) and XPeng (XPEV 1.39%) are well-established Chinese brands that have achieved ample success in terms of sales, the two companies lag Li Auto in profit.
LI EPS Diluted (TTM) data by YCharts.
Li Auto expects to have 500 retail stores by the end of 2024, compared with the approximately 400 retail locations it had at the end of 2023. This larger retail presence has the potential to drive sales and profit higher in 2025. Should that happen, it will further distinguish the company from its Chinese peers, and investors who participated in the stock's sell-off in 2024 may very well return.
Another consideration is the company's expansive supercharging network. On the third-quarter 2024 conference call, management noted that the company now has more than 1,000 supercharging stations, including "582 Li Auto supercharging stations along highways, the largest network of its kind in China." Further expansion of this network will make Li Auto a more attractive option to potential customers, possibly leading to increased sales.
A few reasons may have Rivian revving up investors' excitement in the New Year
Concerns about the potential disappearance of the federal tax credit for EVs and a lower 2024 production forecast are only a couple of factors that led investors to sell Rivian stock this past year. But there are some potential catalysts in 2025 that could provide great opportunities for Rivian stock to overcome the potholes that sabotaged its performance in 2024.
Rivian grabbed headlines when it announced the launching of a joint venture with Volkswagen in November that will see the two companies collaborate on the development of future EVs. According to Rivian, the partnership will provide capital that will help it accelerate the production of the R2, the company's more affordable electric truck that's expected to launch in the first half of 2026. The capital will also help with the development of its midsize platform, which will be produced in Georgia in a facility that's still in development. If the company announces headway with the R2 and Georgia facility development, investors are likely to reward the stock, as the company's road to positive free cash flow seems more likely.
Is it time to put the pedal to the metal with an EV investment?
It's been a rocky road that Lucid, Li Auto, and Rivian have traveled over the past year, but that's not to say these stocks should be forsaken. There are still risks involved with investments in Lucid, Li Auto, and Rivian, but those interested in the Chinese EV market should consider Li Auto, while those more focused on the American market should dig deeper into Lucid and Rivian.
