The recent expiration of the $7,500 electric vehicle (EV) tax credit has raised concerns in the U.S. auto industry. Automakers brace themselves for potential sales declines. Despite this, certain companies are positioned to thrive. Below are three stocks worth noting.
Tesla: Resilience Amidst Changes
Tesla remains a prominent player even after the tax credit expiration. Despite a tough start to 2025, Tesla’s stock has shown considerable strength. In the first quarter of 2025, Tesla delivered 336,681 vehicles, marking a 13% decline year-over-year. This was followed by a 13.5% decrease in the second quarter, with 384,122 deliveries.
New models like the Cybertruck contributed minimally to overall sales, with fewer than 10,000 units sold each quarter. Nevertheless, Tesla’s stock has risen 14% year-to-date. The company’s current price-to-sales (P/S) ratio stands at 17.4, significantly higher than competitors like Toyota at 0.78 and Volkswagen at just 0.16. This signifies investor confidence in Tesla’s future innovations, such as self-driving technologies, rather than just current sales figures.
Nio: A Competitive Edge Without U.S. Sales
Nio, a Chinese EV manufacturer founded by William Li, stands to gain from the tax credit expiration. The company does not sell cars in the U.S., which shields it from revenue losses in that market. Nio primarily operates in China, where demand for EVs remains robust. It is also expanding into Europe, with established networks in countries like Germany and Norway.
Competitive pricing is a key strategy for Nio. Its new Onvo L90 electric SUV is priced at $37,000, or just $25,000 with its battery-as-a-service (BaaS) plan. This model allows users to swap batteries easily, making it an attractive option for consumers.
Toyota: Hybrid Focus and Strategic Adjustments
Toyota has historically been cautious about fully electric vehicles, focusing instead on hybrid technology. The latest models, including the Sienna and Camry, are hybrid-only in the U.S. This means Toyota is largely unaffected by the tax credit situation since hybrids never qualified for it.
In late 2022, Toyota entered the U.S. EV market with its bZ SUV. As of now, it has sold around 35,000 units, including 18,570 in 2024. Toyota’s slow transition to fully electric vehicles may pose challenges for future growth, yet it remains resilient. The company maintains a 3.2% dividend yield, making it a compelling choice for investors amid market uncertainty.
Conclusion
The expiration of the EV tax credit signals challenges for the automotive industry, but not all companies will feel the impact evenly. Stocks in Tesla, Nio, and Toyota offer varying degrees of resilience and opportunity. Investors should consider these factors when navigating the evolving landscape of the EV market.
