We recently compiled a list of The 8 Best Electric Vehicle Stocks to Buy According to Short SellersIn this article, we’ll look at how Gogoro Inc. (NASDAQ:GGR) stacks up against other electric vehicle stocks.
Although the electric vehicle sector is met with much skepticism, it is growing rapidly, especially in recent years. According to the International Energy Agency (IEA), electric vehicle sales will reach nearly 14 million units in 2023, an increase of 35% over the previous year, with the majority of these sales concentrated in China, Europe and the United States. These three regions accounted for about 95% of global electric car sales, showing their dominance in the market. China leads the way, with more than 8 million new electric car registrations, followed by Europe with nearly 3.2 million and the United States with 1.4 million.
Exploring future scenarios for electric road transport
The IEA’s Global EV Outlook 2024 examines possible pathways to electrify road transport by 2035. The report presents three scenarios: the Stated Policy Scenario (STEPS), the Announced Commitments Scenario (APS) and the Net-Zero Emissions by 2050 (NZE) scenario. STEPS takes into account current policies and market trends, APS assumes that all government commitments will be fully implemented on time, and NZE describes a pathway to net-zero CO2 emissions by 2050.
Projections show that the global electric vehicle fleet could grow significantly by 2035. Under STEPS, the number of electric vehicles is projected to increase from less than 45 million in 2023 to 525 million by 2035. Under APS, this number could reach 585 million, while the NZE scenario projects a more ambitious growth to 790 million electric vehicles by 2035.
The report also discusses the growth of light-duty electric vehicles (LDVs), buses, and two-wheelers/three-wheelers (2-3-wheelers). LDVs, which include passenger cars and light commercial vehicles, are expected to remain the largest segment of the electric vehicle market. Electric buses and two-wheelers/three-wheelers are also expected to witness significant growth, particularly in regions like China and India, where policy support is strong. However, achieving full electrification of these segments will require continued policy support and technological advancements.
Challenges facing the industry
Although the electric vehicle industry is growing rapidly, it faces many challenges in its growth journey as it is still a young market. A recent McKinsey study revealed that 30% of EV owners globally and 46% in the US are considering switching to electric cars. Despite an increase in EV sales by companies, the growth in EV adoption has slowed down in the US. Issues such as lack of charging stations, high costs, and battery range issues are the main reasons for this. On the other hand, countries like Norway, which have good incentives and charging infrastructure, are seeing higher EV adoption and fewer complaints.
Additionally, the demand for metal needed for electric vehicle batteries is expected to increase significantly in the coming years, as discussed in our article on Top 10 Battery Stocks to Buy Now, According to Short SellersThis request could create supply problems. Here is an excerpt from the article:
“According to BP’s Energy Outlook 2024, the transition to a low-carbon energy system will require a substantial increase in the use of critical minerals, such as copper, lithium and nickel, which are essential to support the infrastructure and assets needed for this transition. The rapid expansion of electric vehicles is expected to reach 1.2 billion (current trajectory) to 2.1 billion (Net Zero target) by 2050, the report predicts, significantly increasing demand for batteries and, in turn, demand for minerals such as lithium and nickel.
Copper demand is expected to grow by 75 to 100% by 2050, primarily due to its use in electric vehicles and the expansion of power grids. Lithium demand could increase 8 to 14 times by 2050, primarily due to its use in electric vehicle batteries, which will account for about 80% of total lithium demand by 2050. Finally, nickel demand is expected to increase two to three times by 2050, with most of this growth coming from lithium-ion batteries in electric vehicles.
Despite the challenges, governments around the world are encouraging the production of electric vehicles because of their environmental impacts. For example, the U.S. Department of Energy (DOE) said on July 11 that the Biden administration, through the DOE, has announced $1.7 billion in grants to convert 11 at-risk auto plants in eight states to produce electric vehicles (EVs) and their components.
The initiative is part of President Biden’s broader “Investing in America” initiative, which aims to revive manufacturing communities and protect union jobs. The grants are intended to keep the U.S. auto industry competitive, especially as global competitors invest heavily in electric vehicles. The program, funded by the Inflation Reduction Act, will help retain more than 15,000 union jobs and create nearly 3,000 new positions at selected facilities. These facilities will manufacture a wide range of electric vehicle-related products, from parts for electric motorcycles to batteries for heavy-duty trucks.
Our methodology
For this article, we used stock screening tools and ETFs to identify companies involved in the manufacturing and sale of electric vehicles. We then selected 8 stocks with the lowest short interest and ranked them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock, which was drawn from Insider Monkey’s database of over 900 elite hedge funds.
Why do we care about stocks that hedge funds heavily invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming its benchmark by 150 percentage points (see more details here).
Close-up of a person driving a two-wheeled electric vehicle, against the backdrop of a modern street.
Gogoro Inc. (NASDAQ:GGR)
Short-term interest as a % of shares outstanding: 1.02%
Number of hedge fund holders: 11
One of the best stocks in the electric vehicle sector, Gogoro Inc. (NASDAQ: GGR) is a Taiwan-based company known for its urban transportation with its innovative battery-swapping technology for two-wheeled electric vehicles. The company focuses on electric scooters, mopeds, and motorcycles.
The company first gained attention with the launch of the Gogoro Smartscooter at the 2015 Consumer Electronics Show, which demonstrated its commitment to sustainable and efficient urban mobility solutions. Since then, Gogoro (NASDAQ: GGR) has expanded its offerings and strategic partnerships globally, including collaborations with major automakers such as Hero and Yamaha.
The company has created a unique ecosystem centered around its smart battery and Gogoro network. The network allows users to quickly swap out depleted batteries for fully charged ones at different GoStations, minimizing downtime and making travel more convenient.
The company also operates a ride-hailing service, GoShare, in Taiwan and Japan, and has introduced its battery-swapping technology in several international markets, such as Singapore, India and Israel. Through continued expansions and significant investments, the company continues to advance the future of electric mobility.
During the company’s second-quarter earnings call, Gogoro (NASDAQ: GGR) management highlighted several growth prospects. The company secured significant investments totaling $100 million, including a $50 million equity investment from Gold Sino Assets Limited and a $50 million commitment from Castrol. This capital injection is expected to significantly help it accelerate its international expansion and advance its battery swapping ecosystem.
Additionally, the company ended the quarter with a strong cash position of $197 million, providing a solid foundation for future expansion and innovation.
In the second quarter, 11 hedge funds held stakes worth more than $14 million in Gogoro (NASDAQ:GGR).
GGR global ranks 8th on our list of the best EV stocks to buy according to short sellers. While we recognize GGR’s potential as an investment, our conviction lies in the belief that AI stocks have more promise to deliver higher returns and do so in a shorter time frame. If you’re looking for an AI stock that has more promise than GGR but is trading at less than 5x earnings, check out our report on the the cheapest AI stock.
Read more: A $30 Trillion Opportunity: The 15 Best Humanoid Robot Stocks to Buy, According to Morgan Stanley and Jim Cramer Says NVIDIA “Has Become a Wasteland.”
Disclosure: None. This article was originally published on Insider Monkey.
