2 Top Electric Vehicle Stocks to Buy in December

It's been a wild ride for electric vehicle (EV) stocks over the past few years as rising inflation and parts shortages pushed vehicle prices higher (leaving some buyers on the sidelines) and caused production hiccups for many companies.

But each year, it becomes increasingly clear that EVs are the future of the automotive marketplace, even if that future is a little slower to arrive than previously thought. Here are two electric vehicle stocks to buy now as the market continues to take shape.

1. Rivian

I bought shares of Rivian Automotive (NASDAQ: RIVN) earlier this year, and despite its price not budging much since, the company's dealmaking and cost-cutting keep me bullish on the long-term prospects.

For one, Rivian is creating unique products that continue to attract large investments. Amazon was an early investor in Rivian and still owns 17% of the company.

The e-commerce juggernaut uses 10,000 Rivian electric vans to deliver packages to its customers, and the full order of 100,000 vans will be delivered by 2030.

More recently, Volkswagen and Rivian created a joint venture in which VW will receive some of Rivian's technology for use in its own vehicles. The partnership not only proves that Rivian is at the cutting edge of EV technology but also gives it up to $5.8 billion from VW.

Those funds should help Rivian as it launches its smaller R2 and R3 models in the coming years. In the meantime, the company cut costs for its current lineup of vans, R1T trucks, and R1S SUVs by up to 35%, moving it closer to gross profitability. Management says the company will achieve a modest gross profit by the end of the fourth quarter, something many of its fellow EV start-ups can't claim.

The stock has a price-to-sales ratio (P/S) of just 2.8 right now, much cheaper than rival Lucid's P/S ratio of 7.2. Just keep in mind that Rivian's shares are likely to be volatile as the company grows.

2. BYD

BYD (OTC: BYDDY) is a China-based company that's one of the largest EV makers in the world, manufacturing more than 3 million vehicles in 2023, half of which were battery-powered EVs. The company produces a full lineup of vehicles, letting BYD benefit from cost savings and production efficiencies other EV makers don't have.

The company has often been compared to Tesla because of its size and competitiveness in the EV market, so it was notable when BYD reported results for the third quarter (ending Sept. 30) with revenue up 24% from the year-ago quarter to $28.2 billion -- ahead of Tesla's $25.2 billion.

BYD holds an impressive 20% of the automotive market in China and has its eyes set on ramping up exports. Currently, it sends about 8% of its vehicles to a handful of international markets, and its European exports rose 32.6% in the third quarter.

If all of that's not enough to convince you to pick up some shares of BYD, perhaps the stock's price-to-earnings ratio of just 21 right now makes it look cheap compared to Tesla's earnings multiple of 106.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Neiger has positions in Rivian Automotive. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool recommends BYD Company and Volkswagen Ag. The Motley Fool has a disclosure policy.