Warren Buffett isn’t known for chasing hype, but that doesn’t mean he’s missing out on the current EV boom.
Rivian Automotive, which debuted on Nasdaq a week ago at $78 per share, now trades at nearly $150. Lucid Group, which went public through a SPAC deal this summer, surged 77% over the past month.
Then there’s Tesla, which despite its recent pullback, is up a whopping 148% over the past year.
However, Buffett bought into the industry more than a decade ago. He poured hundreds of millions into Chinese electric-vehicle maker BYD, and that bet is now paying off handsomely.
Here’s a look at the legendary investor’s favorite EV stock — along with two other Chinese manufacturers that may be worth pouncing on with any extra cash you’ve got.
In 2008, Buffett’s company Berkshire Hathaway bought 225 million shares of BYD for $232 million.
Berkshire’s latest shareholder letter shows it still held those shares as of Dec. 31, 2020 — except their market value had surged to roughly $5.9 billion.
Considering that BYD has gone up another 34% this year, Buffett’s company would have racked up another $2 billion gain on that position, assuming he hasn’t sold any shares.
And there’s more to the company than just hype. In Q3, BYD sold 183,000 new electric vehicles (including hybrids), up 294% year over year. And when it comes to pure EVs, the company sold 91,616, representing a 186% increase.
But despite its entrenched position, BYD shares are not listed in America. They only trade over the counter here, so you would need to use a specialized broker.
Thankfully, other fast-growing Chinese EV makers have made it to U.S. stock exchanges.
NIO is one of them.
The company entered the market in December 2017 with a seven-seat premium electric SUV called the ES8. One year later, it debuted the ES6, and in late 2019, NIO added a five-seat “crossover coupe” SUV called the EC6 to its lineup.
The company delivered 24,439 EVs in the third quarter of this year, doubling the number of EVs delivered during the same period last year. As of Oct. 31, cumulative deliveries of NIO’s three models have surpassed 145,000 vehicles.
NIO shares have been on a roller coaster ride. Last summer, the stock was trading at less than $10. It skyrocketed to over $60 during the meme stock frenzy earlier this year, before losing a good chunk of the gains. Today, shares are trading at around $40 apiece.
If you’re wary about putting your money into such volatile tickers, you can always dump your “spare change” into a portfolio tailored to your comfort for risk.
XPeng is another Chinese EV company trading in the U.S. stock market.
It went public in August 2020 with an IPO price of $15. Thanks to the market’s huge appetite for EV stocks over the past year, XPeng shares have climbed to over $49 apiece.
Again, it’s not just hype — business is booming. In Q2 of 2021, XPeng delivered 17,398 EVs, representing a 439% increase from the pandemic-struck Q2 2020 and marking a new quarterly record.
What’s more impressive was revenue, which jumped 536.7% year-over-year to $582.5 million in Q2.
The next few weeks could be eventful for XPeng shares, as the company is scheduled to report Q3 2021 earnings on Tuesday, Nov. 23 before market open.
New tech or old art?
Investors love EV stocks because many of them deliver oversized returns, but you should always remember they’re still subject to the ups and downs of the stock market.
If you want to invest in something more stable that still has high return potential, consider this overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultra rich, like Buffett. But with a new investing platform, you can invest in iconic artworks, too, just like Jeff Bezos and Bill Gates do.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.