For investors who jumped into the start-up electric vehicle (EV) industry hoping to find the next Tesla, it's been a rough ride, to say the least. Many start-ups are suffering from a cash crunch, slowing demand, and high costs, among other variables. It has forced some to file bankruptcy, and others, such as Fisker, seem to be nearing the end of their rope.
So are these two new EV stocks the next big thing, or stocks for investors to be wary of? Let's dive in and see.
1. Zeekr
You likely haven't heard of Zeekr Intelligent Technology(NYSE: ZK) before. That's because the China-based, Geely-owned sub-brand was only created three years ago and only recently went public. Zeekr is focused on EVs and was intended to compete with the likes of NIO and Tesla.
The brand has caught on fairly quickly in China. It achieved a total delivery of 10,000 units of its Zeekr 001 in less than four months after its initial delivery, which is one of the fastest for EV models in China, according to company filings.
Its product lineup focuses primarily on the 001, a five-seater crossover hatchback; the 009, a luxury six-seater multi-purpose vehicle (MPV); the X, a compact SUV; and an upscale sedan model. At the end of 2023, Zeekr had delivered a total of over 196,000 vehicles since its first vehicle delivery in October 2021, almost all of which were delivered in China.
One advantage the company has being a former sub-brand of Geely is the synergies between the two companies. Zeekr develops its EVs on a set of open-source platforms owned by Geely Holding, which are compatible with sedans, SUVs, MPVs, hatchbacks, roadsters, pickup trucks, and a robotaxi. This shared platform improves cost efficiency and simplifies the vehicle development process, giving the company competitive advantages in the market.
There's certainly optimism surrounding the company as it topped its initial public offering (IPO) estimates, and shares rose almost 35% above the offering price on the day of its IPO. It was the largest U.S. listing by a China-based company since 2021, and currently the stock is valued with a market capitalization of just under $7 billion.
2. VinFast
VinFast Auto(NASDAQ: VFS) is another foreign-based EV maker but has recently been focused on getting a foothold in the U.S. market. VinFast is a member of Vingroup JSC in Vietnam and was founded in 2017. It manufactures and exports anything from electric SUVs to scooters to buses across Vietnam -- where it dominates -- as well as North America and, soon, Europe.
The young EV maker has a couple of intriguing qualities to it, including a state-of-the-art plant in Hai Phong that boasts up to 90% automation with annual production capacity of 300,000 units. It also has the backing of the larger Vingroup which has poured in over $9 billion to help fund the company.
Further, Vietnamese billionaire Pham Nhat Vuong recently pledged to invest at least another $1 billion of personal wealth into VinFast as the company continued to bleed cash. However, for investors, that kind of backing and support is reassuring at a time when a handful of start-up EVs are on the brink of bankruptcy.
Currently, VinFast is making inroads into the valuable U.S. EV market using a growing dealership network. It recently added 12 franchised dealerships to sell its EV crossovers, which brings its total count to 18 dealerships across seven states. It's the first phase of what the automaker eventually expects to become a network of more than 100 U.S. dealers by the end of 2024.
The next big thing?
Both of these EV stocks have an intriguing investment thesis. VinFast dominates its home market and is prioritizing highly valuable U.S. and European markets while having the financial backing of a much larger Vingroup and the wealthy billionaire Vuong. On the other hand, Zeekr is focused on China and has proven itself capable of quick growth.
Both companies are losing money, highly speculative, and have a long way to go on the path to profitability. However, they are certainly worth keeping on your watchlist as investors try to find the next out-of-the-box idea in the EV industry.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio and Tesla. The Motley Fool has a disclosure policy.
