The recent downturn in EV stocks has left many investors feeling gloomy about the future of electric vehicles. With high interest rates, inflation and insurance costs dampening customer demand, EV sales have hit the skids. Several once high-flying EV makers have seen their stocks nosedive in recent months as a result.
However, I believe the weakness in EV stocks presents a golden buying opportunity. Yes, headwinds persist in the form of high rates and production bottlenecks. But let’s not lose sight of the long-term trend — governments worldwide are heavily promoting EVs, and sales are projected to surge over the coming decade. EV penetration still hovers around just 1% globally, meaning almost all of the growth is still ahead. Here are three stocks to look into to buy into that future growth:
Aehr Test Systems (AEHR)
I believe Aehr Test Systems (NASDAQ:AEHR) presents an intriguing opportunity at current levels. This California-based company provides critical testing equipment for semiconductor manufacturers. Now, you may wonder why a semiconductor testing business fits into a discussion about EV stocks. Here’s why I think Aehr should be on investors’ radars:
Though not a pure-play EV stock, Aehr counts several major EV chipmakers among its key customers. Its technology is used to test and validate the chips that enable many sophisticated features in the EVs we see today. So, while Aehr does not manufacture EV components, its fortunes are tied closely to the booming demand for silicon used in electric vehicles.
That demand took a hit last year when Tesla (NASDAQ:TSLA) announced plans to reduce its reliance on silicon carbide chips by 75%. The broader EV market slowed down as rising interest rates pressured consumer spending. Understandably, Aehr’s stock pulled back in response. Revenue growth expectations have been scaled back for the near term.
However, I believe these headwinds obscure Aehr’s long-term growth potential. EV sales will reaccelerate once rates peak and economic stability returns. Non-Tesla EV brands are increasing market share. Thus, more chips will be needed to power these vehicles.
Trading at just 22x forward earnings, Aehr looks attractively valued relative to its projected 30% annual EPS growth. Renewed EV demand and new customer wins could catalyze upside.
Luminar Technologies (LAZR)
I cannot deny that Luminar Technologies (NASDAQ:LAZR) has been a frustrating stock at times. This lidar sensor startup rode enthusiasm around driverless cars to dizzying heights in late 2020. However, with EV demand growth slowing over the past year, LAZR has struggled. Despite improving sales, analysts have scaled back expectations. The stock sits nearly 94% below all-time highs.
Yet, with LAZR hovering around $2, I believe much of the downside risk appears priced in at current levels. Make no mistake — Luminar remains a risky play. Volatility will persist. But for investors with risk tolerance, LAZR offers explosive upside potential on any renewal in EV demand trends.
Here is why I am warming up to LAZR’s long-term prospects: lidar costs are falling rapidly, making the sensors more viable for integration. Analysts expect the company to turn EPS-positive in 2026, with triple-digit annual earnings (on average) growth after that. Put 2027’s expected profits into the equation, and LAZR trades at just 3x forward earnings — dirt cheap for a hypergrowth tech disruptor.
As economic stability returns and interest rates drop, consumers will resume purchasing higher-end vehicles packed with new technologies like lidar. Luminar’s deep ties with marquee automakers position it to ride this rebound.
Li Auto (LI)
U.S. investors often overlook Chinese manufacturer Li Auto (NASDAQ:LI) in the search for promising EV stocks. That is a mistake. While Tesla grabs headlines, Li Auto has quietly built herself into a formidable force in China’s flourishing premium EV segment. The proof lies in last year’s delivery figures: 376,030 vehicles, up 182% year-over-year. December saw the highest monthly total ever, above 50,000.
Li Auto is solidly profitable, unlike many pre-revenue EV startups with soaring top-line growth. Q3 net income rose over 272% along with a 271% revenue jump. Management is rewarding employees handsomely for this outperformance, with bonuses reaching up to 8 months’ salary.
Yet, Li Auto trades at just 27x forward earnings and 2x sales — cheaper than any U.S.-based rival. As Chinese EV penetration accelerates through the 2020s, these valuations underestimate Li Auto’s staying power.
Will Li Auto continue outpacing rivals at home while making inroads abroad? I believe so. The company delivers products with cutting-edge technology at reasonable prices for a premium brand. This balanced tactical approach positions Li Auto well to ride multiple consumer trends favoring EVs through the decade.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.