Wall Street analysts pick their favorite Tesla alternatives for 2022

Published Tue, Dec 21 202111:57 PM ESTUpdated Wed, Dec 22 202112:15 AM EST

Tesla may be the best known electric vehicle maker in the world, but investors can find opportunity in other EV makers, according to several analysts that closely follow the sector. Wedbush analyst Dan Ives said in a note to clients on Monday Dec. 13 that the EV sector represents a massive market opportunity with potentially multiple winners. "We believe 2022 will be an inflection point year for the EV industry as the stage is set for massive consumer demand in the year ahead," Ives said. GM , Ford and VW are all "laser focused on the EV revolution," Ives said, adding that there will be an "unprecedented conversion to EVs in 2022" as more consumers are "attracted to the innovative designs, improved battery technology, lower price points, and environmental backdrop of buying an EV." EVs currently represent only 3% of autos globally today, but Wedbush believes that figure will rise to 5% by the end of 2022, and 10% by the end of 2025. In the next decade, the investment firm expects the EV market to ultimately grow into a $5 trillion industry where Tesla competes against a number of other players. " Of the $5 trillion green tidal wave of EV spending expected over the next decade, we believe $2.5 trillion of this is Tesla's to own with an iron grip on the market today, with the other $2.5 trillion up for grabs among the 100+ OEMs [original equipment manufacturer] going after EVs," Ives wrote. U.S.-based Rivian will help pave the way for a new EV market on pickups and SUVs, he added. "We believe Rivian is in a very strong competitive position on the EV consumer luxury front," Ives said. Rivian raised more than $10 billion in funding before going public in November in an IPO that saw its stock pop. Rivian, which counts Amazon and Ford as investors, says it has 55,400 preorders for its R1S SUV and R1T pickup truck and a contract to build 100,000 electric vans with Amazon by 2030. Elsewhere, GM has a "golden opportunity" to lay the groundwork and ultimately convert 20% of its massive customer base to EVs by 2026 and north of 50% by 2030, Ives said. JPMorgan There are several European automakers that investors should also consider next year, according to Jose Asumendi, head of European autos equity research at JPMorgan. Asumendi told CNBC that Stellantis and Mercedes owner Daimler are his two favorite stocks right now and that their share prices should rise next year. "Stellantis offers for me probably one of the most rational EV product strategies over the next year," he said. The company — formally Fiat Chrysler — is maintaining a "great balance" between optimizing the cash flow generation from its internal combustion engine business and gaining substantial market share in EVs across regions, Asumendi said. In the premium segment of the market, Mercedes-Benz has already launched the EQS and the EQA EVs, and the company will likely follow on with more electric offerings in 2022, Asumendi said. UBS In a note to investors on Dec. 7, a team of UBS analysts led by Patrick Hummel said they expect Tesla to remain the undisputed leader in the EV market. However, they believe that Daimler offers the best combination of earnings upside and "aggressive luxury EV transition." "VW remains best placed to be the #1 incumbent in EV and sentiment is likely to improve, even though VW needs to get faster in execution," the bank said. It also argued that GM is a good stock pick as it offers the highest autonomous vehicle and software optionality among incumbents. Meanwhile, Stellantis is a "strong bottom-up earnings story on faster and bigger merger synergies," UBS said.

The Mercedes Vision EQS of German car maker Mercedes is pictured at the company's booth at the Frankfurt motor show IAA 2019, in Frankfurt am Main Germany, on September 10, 2019.

Daniel Roland | AFP | Getty Images

Tesla may be the best known electric vehicle maker in the world, but investors can find opportunity in other EV makers, according to several analysts that closely follow the sector.