Do you drive an electric car?
Chances are that the answer is “no.” After all, only 2.1 million new electric vehicles were sold in 2019, amounting to a measly 3.3% of global new car sales.
Basically, if you gathered 100 people into a room and asked each of them if they drive an electric car, statistics say that only about three would say “yes.”
But… let’s say you change the question to: Will your next car be electric?
All the sudden, you’re going to get a lot more “yes” responses.
That’s because while only 3% of the population owns an electric car today, 60% of prospective car buyers want their next car to be electric.
That’s a huge gap.
And it broadly underscores a simple reality…
The global EV market is at a critical inflection point, wherein electric cars will go from niche today, to mainstream over the next few years.
What’s driving this hypergrowth breakout?
A few things.
For starters, laws are changing. More than 200 cities and countries across the world have a “100% clean energy” target for 2030, 2040, or 2050 – while districts on the cutting edge of green tech (like California and New Jersey) are outright banning gas car sales after 2035.
On top of that, EV technology is dramatically improving. The average range of an EV has increased 140% since 2011, with a fully-charged EV now getting as much range as a gas car at 300-plus miles.
Supply is pivoting, too, with every major automaker in the world – from Ford to GM to Bentley – making an all-out blitz into the EV category. The result will be an unprecedented surge in the number of EVs for sale over the next few years.
But, above all else, electric cars are getting cheaper. Average EV prices have dropped 70% since 2010, and are now largely on par with gas cars.
More importantly, economies of scale and technological improvements will unlock further cost reductions over the next few years, and by 2030, EVs will be substantially cheaper than gas cars.
The future here really couldn’t be any clearer.
EVs are on the cusp of fundamentally disrupting the entire multi-trillion-dollar auto market.
And… as you know… Wall Street is forward looking. The stock market tends to move before big disruptions become reality.
That’s why EV stocks are surging like there’s no tomorrow.
In November alone, headline EV names like Tesla (NASDAQ:TSLA) and NIO (NASDAQ:NIO) rose 46% and 65%, respectively.
But even those big gains pale in comparison to the moves some smaller EV stocks staged in November.
Last month, electric pick-up truck maker Lordstown Motors (NASDAQ:RIDE) rose 89% …
British electric van and bus maker Arrival (NASDAQ:CIIC) climbed 119% …
Three-wheel electric vehicle pioneer ElectraMeccanica (NASDAQ:SOLO) soared 169% …
EV charging station operator Blink Charging (NASDAQ:BLNK) surged 225%.
Across the board, EV stocks staged mind-boggling rallies in November.
This is not a head fake. It’s a sign of the times. EVs are on the cusp of taking over the world, and Wall Street has finally noticed.
To be sure, these red-hot stocks have taken a breather in December. Many of them are pulling back by 20% or more.
This is a totally healthy and expected pullback in a sector that had become wildly overbought on the back of triple-digit gains in just a few weeks.
Embrace this weakness.
Don’t rush in right away. Let the dust settle. Let technical support show up. Let the sellers exhaust themselves.
But… once those things happen… be ready to buy the dip.
EVs still represent the future of the multi-trillion-dollar auto market. Many of today’s emerging startups are set to become future titans of the multi-trillion-dollar EV industry. They are $10-plus billion companies in the making.
Yet most feature sub-$1 billion market caps today.
Needless to say, the long-term upside in EV stocks remains compelling.
So… once the coast clears…get bullish, and stay bullish, on these hypergrowth stocks.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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