2024 has been a challenging year for the EV sector. While the S&P 500 has surged ahead, the S&P Kensho Electric Vehicles Index has lagged behind, reflecting ongoing skepticism about EV adoption and increased competition among manufacturers. Even Tesla, the industry’s most well-known name, has faced challenges despite its recent rally. Yet, the EV market is far from stalling out.
Global EV adoption is on the rise. Gartner predicts there will be over 85 million EVs on the road by the end of 2025, a 35% jump from the current 64 million. Most of this growth will come from battery-operated vehicles (BEVs), not hybrids, as consumer demand continues to shift toward fully electric solutions. For investors, this growth translates into a wealth of opportunities—if you know where to look.
Whether it’s a company dominating EV production, innovating on battery technology, or leveraging a strategic approach to electrification, some names are well-positioned to ride the next wave of industry growth. Here are three EV-related stocks that could see significant upside as the sector picks up steam heading into 2025.
BYD Company (OTC: BYDDY) Dominating the World’s Largest EV Market
BYD Company has taken the crown as the world’s largest EV manufacturer, surpassing even Tesla in unit production. Its dominance stems from its stronghold in China, the world’s biggest EV market. BYD shares have already climbed 35% year-to-date, and the company’s momentum could continue as China’s economy shows signs of recovery.
For U.S. investors, it’s worth noting that BYD shares trade over-the-counter (OTC) under the ticker BYDDY. Unlike stocks listed on major exchanges, OTC stocks are traded through a decentralized network of dealers rather than on a centralized exchange like the NYSE or Nasdaq. This often allows investors to access international companies like BYD more easily. You can typically purchase OTC stocks through most online brokerage accounts.
While China’s economic challenges, including a weak real estate sector, have created headwinds, there are positive signals. Retail sales have grown steadily since late 2023, with October seeing a 4.8% year-over-year increase. Industrial output also rose 5.3%, and Goldman Sachs forecasts 4.5% GDP growth for China in 2025. These indicators point to improving consumer confidence, which bodes well for BYD’s vehicle sales. Analysts expect the company’s revenue to grow by over 20% next year, making BYD a strong play on the global EV boom.
QuantumScape (NYSE: QS) Revolutionizing EV Batteries with Solid-State Technology
QuantumScape isn’t an EV manufacturer but a critical player in the industry’s future. The company is pioneering solid-state battery technology, which promises to address two major EV adoption hurdles: range anxiety and battery lifespan. QuantumScape’s batteries can extend EV range from 350 to 500 miles and last for up to 300,000 miles, significantly outperforming current lithium-ion options.
The year 2025 could be transformative for QuantumScape as it begins generating commercial revenue. Recent agreements, including a deal with Volkswagen for up to one million batteries annually, highlight its potential. The global solid-state battery market is projected to grow at an annualized rate of 36.4% through 2024, driven primarily by EV adoption. For investors willing to bet on game-changing technology, QuantumScape offers a high-risk, high-reward opportunity.
Toyota Motor (NYSE: TM) A Calculated Bet on EVs at a Discount
Toyota has taken a cautious yet thoughtful approach to the EV market, focusing on hybrid electric vehicles (HEVs) as a stepping stone for consumers hesitant to adopt fully electric cars. While only one-third of Toyota’s production is currently electrified, the company’s reputation for quality and reliability positions it well for a larger EV push when the time is right.
Despite its deliberate strategy, Toyota’s stock has struggled, falling 30% from its March peak. This drop has pushed the stock to a trailing 12-month price-to-earnings ratio of just 8.4, with a forward dividend yield of 3%. Analysts see 17% upside potential, with a consensus price target of $212.81. As global economic conditions improve, Toyota’s stock could experience a strong rebound, particularly given its unmatched reputation in the automotive industry.
The EV market’s evolution is creating both challenges and opportunities. BYD’s dominance in China, QuantumScape’s breakthrough battery technology, and Toyota’s strategic patience offer investors three distinct ways to participate in the sector’s growth. Whether you’re seeking exposure to established players or emerging innovators, these picks could position your portfolio for success in 2025 and beyond.
