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5 Best EV Stocks In Canada For Green investing (July 2024)

Best EV Stocks In Canada

5 Best EV Stocks In Canada For Green investing (July 2024)

Canadians bought more electric vehicles (EVs) between 2019 and 2020 than all of 2002-2010.

However, EVs still make up a very small percentage of the total vehicles currently in use, and it will take years, perhaps even a couple of decades before the EV market is saturated.

So looking into and investing in the best EV stocks in Canada now might be a forward-looking choice.

EV Industry In Canada

Vehicle manufacturing is not Canada’s forte. A few countries dominate this industry: China, Japan, the US, and Germany.

According to the stats, these four countries make more vehicles than the rest of the world put together.

While Canada may not have an established reputation in EV manufacturing on a global scale, it benefits from the innovation and advancements these major players bring.

EV Production And Stocks

Tesla is one of the largest EV companies globally, and many conventional vehicle manufacturers like Ford and Volkswagen (which is close on Tesla’s tail) are making great strides in that area.

But no country is in the position of giving any competition to China in the EV production market.

China is currently responsible for about one out of every two EVs produced in the world, and Chinese manufacturers are among the largest ones, beating companies with decades in the automotive industry.

And since many of the top Chinese EV producers are listed in the US markets, they are accessible to Canadian investors as well.

EV Market (Sales)

EVs are penetrating different markets at different paces, and this pace and local EV adaption is governed by many factors, including the climate policies of the country.

Norway, which is ironically the largest oil producer in Europe (if we don’t include Russia), saw more EV sales in 2021 than conventional vehicles – In a ratio of about two to one. Norway is offering a much lower tax on EVs, among a few other incentives.

New Zealand is offering cash rebates for people switching to EVs. Canadians also have a range of federal and provincial incentives to buy EVs.  

But that’s just one piece of the puzzle. Logistics of EVs, electricity costs, charging hubs, and a few other factors have the opposite effect on the sales and market penetration of EVs.

Best EV Stocks In Canada

  • The Lion Electric Company (LEV.TO)
  • Magna International (MG.TO)
  • NFI Group Inc. (NFI.TO)
  • Parkland Company (PKI.TO)
  • GreenPower Motor Company (GPV.V)

1. The Lion Electric Company

Lion Electric Stock
  • Ticker: LEV.TO
  • Forward Dividend Yield: N/A
  • Upcoming Dividend Date: Jul 19, 2024
  • Market Cap: $266.93 Million

The Lion Electric Company isn’t a forerunner in the electric vehicle (EV) space but could garner a significant market share given its all-electric R&D and manufacturing expertise and experience.

Other competitive advantages include manufacturing facilities in Montreal and Illinois, not to mention the automated battery factory in Mirabel.

However, the growth story for this EV stock has yet to pan out. Lion Electric gained upward momentum from its market debut on May 7, 2021, but only briefly.

Nevertheless, you can give this emerging growth company a second look for its bargain price and despite the history of losses and negative cash flows.

The total revenue has more than doubled (116%) in the first half of fiscal 2023. With the EV market developing rapidly, profitability could come sooner than later.

However, the game changer has arrived with the historic opening of the largest all-electric U.S. plant dedicated to medium and heavy-duty commercial vehicle production on July 21, 2023.

By year-end, Lion Electric’s 900,000-square-foot facility in Joliet, Illinois, can manufacture 2,500 all-electric school buses. It can produce 20,000 vehicles per year (buses and trucks) at full scale.

The electric vehicle battery is a growth catalyst too. Strategic alliances, partnerships, and acquisitions are future inorganic growth opportunities.

2. Magna International

Magna International Stock
  • Ticker: MG.TO
  • Forward Dividend Yield: 3.26%
  • Dividend Payout Ratio: 56.17%
  • Dividend Yield (12-Month Trailing): 3.21%
  • Upcoming Dividend Date: May 31, 2024
  • Market Cap: $16.56 Billion

Magna International is expanding to seize opportunities in the electrification of road transportation and strengthen its market position. The Canadian auto parts manufacturer impressed investors with its record US$10.98 billion in sales (a 17% year-over-year increase) in the second quarter of 2023.

The global network includes 351 manufacturing operations and 103 product development, engineering, and sales centres in 30 countries. However, operating results depend primarily on the volume of car and light truck production by customers in North America, Europe, and China.

Still, expect Magna to seize the moment and capitalize on the surging demand for eco-friendly vehicles. The company will US$790 million to build three new supplier facilities. Two facilities will rise at Ford Motor Co.’s Blue Oval City campus in Tennessee.

Magna fully supports the American auto manufacturer’s goal of building 5,000 electric trucks (F-series electric pick-ups) per year once the construction of the plants is complete. The third facility in Lawrenceburg will focus on vehicle frame production. Management said production in the three plants will start in 2025.

Meanwhile, Magna continues to build and add more to its manufacturing lineup of EVs. The company will start manufacturing electric off-road vehicles in Austria in 2026.  You’d be investing in a mobility technology company and be instrumental in advancing innovative EV technology.  

3. NFI Group Inc.

NFI Group Stock
  • Ticker: NFI.TO
  • Forward Dividend Yield: N/A
  • Upcoming Dividend Date: Oct 17, 2022
  • Market Cap: $1.96 Billion

The hype and trends around EVs help increase investors’ awareness on an unprofitable electric bus and coach manufacturer like NFI Group.

But you and other prospective investors can look beyond the financial losses from 2020 to 2022 and instead focus on the innovation and disruption the company brings to public transportation.

While demand remains strong, rapid inflation and supply chain challenges limit signing more contracts and stress the balance sheet. Nevertheless, orders are piling up in 2023. NFI signed a five-year deal with the Toronto Transit Commission to build 641 40-foot battery electric buses.

The Miami-Dade County Transportation and Public Works ordered 100 zero-emission, battery-electric, 60-foot, heavy-duty transit buses. Its subsidiary, Alexander Dennis Limited, entered an electric vehicle partnership with BYD U.K. for Go-Ahead London’s order of 141 battery-electric buses. 

Another subsidiary, New Flyer of America, received an order for six zero-emission, battery-electric 40-foot transit buses from the Central Ohio Transit Authority. More encouraging signs include a growing backlog and increasing revenues in manufacturing and after-marker segments.

The company is in a transition period and should do better financially when supply chain challenges ease and production rates increase.

NFI projects revenue to climb to highs of US$2.8 billion, US$3.6 billion, and US$4 billion in 2023, 2024, and 2025, respectively. The decent revenue growth should propel the EV stock higher than its current market-beating return.  

4. Parkland Company

Parkland Fuel Stock logo
  • Ticker: PKI.TO
  • Forward Dividend Yield: 3.72%
  • Dividend Payout Ratio: 69.27%
  • Dividend Yield (12-Month Trailing): 3.6%
  • Upcoming Dividend Date: Jul 15, 2024
  • Market Cap: $6.53 Billion

Parkland Corporation isn’t technically an EV stock, but its EV charging strategy could open doors to other geographies and drive organic growth. The international fuel distributor and convenience retailer operate an ultra-fast EV charging network in British Columbia.

Its ESG goals include a 40% greenhouse gas (GHG) emissions reduction per site in its marketing and commercial operations by 2030. You can find or spot Parkland’s ON the Run ultra-fast chargers along Canada’s highways and other major routes. Each station can charge most EV models in 30 minutes or less.

The beauty of investing in Parkland is the diversified revenue sources. However, the retail fuel stations and convenience stores (4,000 total locations) in Canada, the U.S., and the Caribbean contribute the most to the top line. Also, the net income in the last four years has been remarkably stable.

Parkland targets $2 billion in Adjusted EBITDA by 2025. In the first half of 2023, the Adjusted EBITDA level has climbed to $470 million. The company only needs to develop the existing, resilient businesses and capture synergies to drive organic growth and achieve the goal.

If you’re a dividend earner, you’d love Parkland more, as it has never missed a quarterly dividend payment since 2017.

5. GreenPower Motor Company

GreenPower Motor Stock
  • Ticker: GPV.V
  • Forward Dividend Yield: N/A
  • Upcoming Dividend Date: Aug 28, 2020
  • Market Cap: $40.53 Million

GreenPower Motor Company has striking similarities with Lion Electric and NFI except that a micro-cap stock has a higher risk. The $133.7 million company promotes eco-friendly rides through its purpose-built zero-emission passenger, buses, and cargo vehicles.

This Vancouver-based firm is well known for its “BEAST,” North America’s first purpose-built electric Type-D school bus.

GreenPower’s EV Star Platform, an Original Equipment Manufacturer (OEM) platform, offers various passenger, cargo, and logistic market solutions to end-users, operators, and commercial customers.

The strategic acquisition of Lion Truck Body in 2022 enables GreenPower to vertically integrate, capture new businesses (truck lines), and boost product offerings. Revenue has been rising consistently every year since fiscal 2021 (12 months ending March 31st), although GreenPower has yet to report income.  

If you’re looking for positive signs, the deliveries in the fourth quarter of fiscal 2023 resulted in the highest-ever annual revenue ($39.7 million) for GreenPower. It sold only one BEAST but delivered a total of 122 EVs. 

The near-term growth initiatives include opening a school bus manufacturing facility in West Virginia, expanding the dealer network in new U.S. states, and entering new markets in North America.

Interestingly, GreenPower has far better returns in three years than Lion Electric, NFI Group, and Parkland. Only Magma International has superior returns during the same period.

EVs and the Environment

As the world grapples with the consequences of climate change, the shift towards electric vehicles is more than just an economic move; it’s an environmental imperative.

EVs play a pivotal role in the global objective of achieving net zero emissions by 2050. Unlike their gasoline counterparts, EVs produce zero tailpipe emissions, making them a cleaner transportation option.

Should You Invest In EV Stocks In Canada?

If you believe in the future of this technology, then it’s an investment you might want to consider. Many EV stocks in Canada (and in other countries) have already gone through the cycle of initial hype, optimistic spikes, and resulting corrections.

And in the future, the stock’s performance might be a relatively more faithful representation of the company’s financial health and growth.

While electric vehicles have seen a notable increase in sales between 2019 and 2023, the market penetration in Canada is still in its early stages. With EVs constituting a small percentage of total vehicles in use, the potential for growth in the coming years is immense.

Several factors, including governmental incentives, increasing environmental awareness, and the entrance of global automakers into the Canadian market, will likely propel this growth.

FAQs

Are there any new Canadian EV companies worth looking into?

The Lion Electric Company is a rising star, known for its electric medium and heavy-duty urban vehicles. Another interesting player is GreenPower Motor Company, which focuses on electric buses, including school buses.

Which EV battery stocks are performing well in Canada?

While Canada has numerous mining companies involved in extracting raw materials for batteries, when it comes to battery technology and production, The Lion Electric Company stands out, with investments in battery manufacturing facilities.

What Canadian Company is the Next Tesla?

While there are many Canadian companies that show great promise in the global EV market, ousting the top EV producer in the world and the most well-known name in this space is almost impossible for any Canadian company manufacturer right now.

However, NFI Group is a leader in a specific market segment, i.e., Zero-Emission-Buses (ZEBs).

How To Buy EV Stocks In Canada

Conclusion

Best EV Stocks In Canada

EVs are the future, and they are one of the most substantial steps humanity will have to take to reach net zero by 2050.

The best EV stocks in Canada have already proven their mettle, and they may offer far more aggressive growth phases in the future as EVs become more mainstream and the revenues start growing organically.

So consider buying before this lucrative asset class becomes too expensive to touch. And if you are looking for a different sustainable investment, these hydrogen stocks or carbon capture stocks might be more to your liking.

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