The world is almost certainly headed for an electrified future within the automotive industry. While a rising tide will lift all boats, as they say, not all electric-vehicle (EV) stocks are created equal, and many start-ups will fail.
Several EV companies are positioned to thrive through 2030. Here are three options for investors to consider: EVgo(NASDAQ: EVGO), QuantumScape(NYSE: QS), and Rivian(NASDAQ: RIVN).
Infrastructure needs
There are two challenges facing the EV industry that's slowing down mass adoption in the U.S. market: the lack of charging infrastructure, and the high price tags of EVs (which is driven largely by high battery costs).
EVgo has been working to help alleviate the first problem and recently posted strong growth. While EVgo lacks the charging-network size of some of its competitors, it recently added to its talented executive team and increased its customer base.
In May, EVgo announced it topped more than 1 million registered customer accounts nationwide, doubling the 500,000 accounts reached in October 2022. This has increased by more than 400% since April 2020. During the first quarter of 2024, the gigawatt-hour throughput on EVgo's network nearly tripled, compared to the first quarter of 2023.
EVgo's revenue reached a company record $66.6 million during the second quarter, and charging-network revenue increased 146% year over year, representing the seventh sequential quarter of double-digit charging-revenue growth.
While EVgo's usage increases with its total number of accounts, the company continues to add talent to its team. In July, it announced it was adding former Tesla charging-team leaders Martin Sukup and Jeff Inhofer, as well as General Motors' veteran Alex Keros.
Thanks to the addition of talent from rivals and a growing customer base and charging network, EVgo is well-positioned to thrive in the coming decades as charging infrastructure is needed to push the adoption of EVs in the U.S. market.
Game-changing batteries
Investors often like to toss around the buzz words "game changing," but QuantumScape truly offers that potential with its solid-state battery technology. The company's battery technology has the potential to improve charging times, extend EV ranges, cut out expensive materials like zinc and cobalt to lower costs, and improve safety.
The challenge for QuantumScape has been getting this technology ramped up to commercial volumes for automakers. The good news is that QuantumScape has finally delivered a plan to do just that when it announced a partnership with Volkswagen's wholly-owned battery company, PowerCo.
The partnership will do a couple of positive things for QuantumScape investors. First, after certain technical progress is made, PowerCo will make an advance royalty payment that will grant it the ability to mass-produce battery cells based on QuantumScape's platform. The non-exclusive license will give PowerCo the ability to produce up to 40 gigawatt-hours (GWh) annually, which would be enough to supply roughly 500,000 vehicles.
Second, the capital-light licensing arrangement, as well as potential royalty payments, will push the company's cash runway 18 months further into 2028, which is excellent news for a pre-revenue company burning cash. As QuantumScape begins the all-important acceleration of production throughout 2025, the company is well-positioned to thrive if it can master commercial volume production with PowerCo.
Shining start-up
When it comes to EV start-ups, Rivian has been distinguishing itself from weaker operations that have failed, such as Fisker. Rivian's first vehicles, the R1T and R1S, have been incredibly well-received by consumers and critics alike, and the company has continuously reduced costs and improved production efficiency.
More specifically, during the second quarter, the company recorded a 41% improvement in cash used in operating activities, compared to the first quarter of 2024. It expects a 20% material-cost reduction from the first generation of R1 vehicles to the second generation. I completed the transition to the next generation vehicle and began producing during the second quarter.
The challenge for Rivian, which will test investors' patience, is bridging the gap between its refreshed R1 vehicles and the roll-out of the R2 crossover, which will take place during the first half of 2026. But for investors patient enough to wait on Rivian's product pipeline, the future is bright with the R2 to be followed by the R3 and R3X. Already, the R2 has logged over 100,000 pre-orders.
The R2 price tag is expected to cost around $45,000, with the R3 costing even less. This will help open the doors to new segments, as well as a more mainstream consumer. Further, as the company continues to lower losses per vehicle and improve production efficiency, the company estimates it will generate positive gross margins during the fourth quarter, a huge step in proving to investors it has a path to profitability down the road.
Bottom line
These three EV companies offer investors a chance for superb returns by 2030, but challenges and risks remain in the rapidly evolving and challenging EV industry. If EVgo can continue to add consumers and expand its network, QuantumScape can solve production ramp-up challenges with its solid-state battery technology, and Rivian can continue to push its vehicles toward breakeven, then investors could have positive results in the years ahead.
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Daniel Miller has positions in General Motors. The Motley Fool has positions in and recommends Tesla and Volkswagen Ag. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
