Contrary to the numerous mainstream reports that EV demand will be slowing down this year, the market is already showing solid signs of recovery. In China for instance, which is currently the world’s biggest EV market, EVs drove first-quarter sales growth, rising 31.8% to 2.09 million units, as automakers launched new models and cut prices.

In the US, the number of newly introduced EV options that can go 300 miles or more on a single charge, which is considered the threshold for a long-range vehicle, increased to 30 models at the beginning of 2024, representing a 500% increase in three years.

It is therefore no surprise that research firm Fastmarkets forecasts global EV sales growth will increase by 36% year-on-year in 2024, marking another year of consecutive double-digit growth rates. 

In other large emerging vehicle markets like India and Southeast Asia, the EV market has been gaining major traction thanks to increasing government support. Thailand and Malaysia both provide tax support for final EV purchases, while in the Philippines, as part of its push to develop the country’s EV sector, the government is looking to incentivize the manufacture of four million EV units in the next 10 years.

That means that although EV stocks are down right now, the long-term fundamentals of the broader sector remain strong, and now would be the perfect time to spot undervalued companies. And it won't be only EV companies that will benefit from a rebound in demand; battery stocks will also benefit from the tailwinds of this trend. 

With that being said, here are four stocks that investors should consider adding to their watchlist as EV demand picks up again. 

VivoPower International (NASDAQ:VVPR) is a sustainable energy solutions company that  believes sustainability doesn’t need to be expensive. This is why it has taken a differentiated approach to getting into the EV market. Through its subsidiary, Tembo, the company provides conversion kits with all the parts required to convert a vehicle from an internal combustion engine to an EV. Think motors, batteries, transmission, charger, software, and the rest of the components that make the converted vehicle work safely and seamlessly.

Initially, these conversion kits are targeted at some of the most widely used utility vehicle models, including the Landcruiser and Hilux, which are designed to function in the harshest and most rugged terrains. The kits pack a 72kWh battery, which allows a 180 km to 190 km range as well as more pulling power and hill climbing capabilities than the diesel equivalent predecessor.

Tembo’s value proposition is simple and straightforward. Its users will incur lower maintenance and operational costs, have less downtime, and won’t need expensive fuel infrastructure.

So far, VivoPower International (NASDAQ:VVPR) has secured a commitment of 5000+ kits and an order pipeline of 10,000+, illustrating the company’s strong growth prospects. Those included an MOU in Jordan for 1,000 kits, opening a path to the Middle East, which is the largest Landcruiser market, and a definitive agreement in Kenya for 4,000 kits, providing entry into second-hand vehicle segments.

Furthermore, the company signed a definitive joint venture agreement with Francisco Motor Corporation in September 2023 to develop and supply electric utility vehicle (“EUV”) electrification kits for a new generation of electric jeepneys (e-jeepneys) in the Philippines.

In order to better position itself for this coming recovery, VivoPower International (NASDAQ:VVPR) recently revealed that Tembo would go public via a merger with Cactus Acquisition Corp. 1 Limited (CCTS), a NASDAQ-listed SPAC, and change its name to Tembo Group. 

CCTS will issue 83.8 million shares in exchange for Tembo shares at $10 per CCTS share, which implies a valuation of Tembo of $838 million. The deal, which will be finalized in May, will also see 16.76 million Tembo Dividend Shares distributed to VivoPower shareholders, who will receive 5 Tembo Group shares for each VivoPower share held.

What that means is that even in a base-case scenario where Tembo share’s debut is at say $1 per share instead of $10, VVPR stock would surge to at least $28 per share. 

This incredible upside potential is further reaffirmed by the fact that VivoPower International (NASDAQ:VVPR) received a direct investment of $5 million into Tembo at a pre-money valuation of $120 million from a private investment office of a member of the ruling Al Maktoum family of Dubai.

To further illustrate his confidence in the company, Vivopower announced that executive chairman and CEO Kevin Chin is increasing his individual shareholding in the company by 146,084 shares (about 4.4% of the outstanding shares) to increase his shareholding to 12.3%.

Plug Power Inc. (NASDAQ:PLUG) is a global leader in hydrogen fuel-supply solutions and hydrogen applications for material handling, power generation, and e-mobility. The company’s end-to-end hydrogen value chain includes electrolyzers to make green hydrogen and the infrastructure needed to liquefy, store, transport, dispense, and convert hydrogen into carbon-free electricity.

PLUG recently announced that it signed a contract to provide a significant U.S. electric vehicle manufacturer with hydrogen infrastructure and fuel cell technology for its material handling fleet. The automotive facility is one of the largest in the nation dedicated to electric vehicle and battery production, and under the agreement, Plug Power will supply the entire material handling fleet at the facility, including forklifts and tuggers, with its fuel cell solutions. 

The partnership also includes the installation of on-site hydrogen infrastructure, such as two liquid hydrogen storage tanks and over 10 hydrogen dispensers, to support the facility's expansion into hydrogen applications. Plug Power will begin the installation and commissioning of the hydrogen infrastructure in 2024, with the facility anticipated to be fully operational by the first quarter of 2025.

Although the company has not yet achieved profitability, CFO Paul Middleton gave some interesting insights into why the company was facing problems at the JPMorgan 2024 Industrials conference. Basically, PLUG has been subsidizing the hydrogen fuel market as it waits for its own production plants to come on line. The Georgia plant finally came on line in January

Enovix Corp. (NASDAQ:ENVX) develops high-performance batteries, leveraging its more than 626 technology patents and patent applications globally.

The company recently announced it has been granted 15-year Pioneer Status from the Malaysian Investment Development Authority (MIDA) for manufacturing its batteries in its high-volume manufacturing facility by the name Fab2.

Enovix’s Pioneer Status application was approved by the Government of Malaysia for the manufacture of lithium-ion batteries within the country for 15 years, with the primary benefit of this status being an exemption from the payment of income tax, subject to meeting certain conditions

In July 2023, Enovix and YBS International Berhad, a Malaysia-based investment holding company, signed a Master Service Agreement to support Enovix’s Fab2 site. Since then, Enovix has made significant progress, establishing Fab2, hiring nearly 100 team members and building out approximately 250,000 square feet of factory space. 

Earlier this month, the company revealed that it had completed Factory Acceptance Testing (FAT) for its Gen2 Agility Line and is on track to produce the first silicon battery samples from Fab2 in the second quarter of 2024. “SAT (Site Acceptance Test) is also well underway. Both FAT and SAT processes ensure that we only place machines into service that meet our specifications for throughput, yield, and machine uptime," said Ajay Marathe, Chief Operating Officer at Enovix.

The company has had a successful start to the year, reporting a remarkable fourth-quarter revenue increase to $7.4 million, which beat estimates by an impressive $3.96 million. Moreover, its massive sales grew by 575.3% on a year-over-year basis, underscoring its powerful positioning in its niche.

Microvast Holdings, Inc. (NASDAQ:MVST) designs, develops, and manufactures lithium-ion battery solutions. The company was founded in 2006 and went public in July 2021 through a merger with SPAC Tuscan Holdings in a deal valued at over $700 million in cash.

The company recently reported FY 2023 earnings, revealing a significant year-over-year revenue increase of 49.9% to $306.6 million, with a record quarterly revenue of $104.6 million in Q4 2023, representing a 61.4% increase.

The company's financials, particularly in gross margin improvement and revenue growth, clearly illustrate its increasing efficiency and market penetration, especially in the EMEA region. Microvast's founder and CEO, Yang Wu, has expressed optimism about the company's trajectory, citing revenue growth in EMEA as a positive sign for continued success in 2024. 

Institutional investors are already taking a keen interest in the company, with Vanguard Group recently growing its holdings in the company by 8.9% in the 3rd quarter, according to its most recent 13F filing.  The fund owned 12.5 million shares of the company’s stock after purchasing an additional 1 million shares during the quarter, representing 3.95% of Microvast shares worth $23.6 million.

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