As governments around the world are eagerly looking to introduce new regulatory guidelines and tax incentives for electric vehicle (EV) manufacturers to help meet their carbon goals, several Canadian companies in the industry are steadily gaining momentum on the back of growing EV adoption among consumers. 

A snapshot of the Canadian market reveals that the electric car and battery electric vehicle (BEV) footprint has significantly enlarged over the last few years, with the first quarter of 2022 marking a record 26,018 new EVs registered during that time. In 2021 electric vehicles made up nearly 5.3% of new vehicle registrations for the year.

As of 2022, every one in eleven new vehicles registered is classified as a zero-emissions vehicle (ZEV) according to a Q4 2022 analysis. 

With the Canadian government introducing several transition goals over the next several years, with targets to have 10% of all vehicles on Canadian roads to be electric by 2025, 40% by 2030, and 100% by 2040, the names making this possible are expanding their electric lineups at an accelerating rate.

Now with cleaner and sustainable vehicles gaining momentum on a commercial level, investors are gearing their attention towards the names throughout the supply chain that are helping the world make an electric transition and meet climate goals. 

Canadian EV stocks to watch this year 

Although a good deal of electric car startups and legacy automakers now make up a majority of the EV market, several other well-known names that help make these vehicles run and operate are taking up the pedestal among retail and institutional investors. 

These stock picks are divided into car makers and parts companies that focus on producing high-quality electric cars while investment in charging stations are also now taking better shape among consumers and governments.

While several other names may entice investors, a deeper look reveals that although some automakers or parts manufacturers may have a branch dedicated to EVs or BEVs, or look to make the transition to producing their own line of EVs, these companies are usually not considered EV companies. 

NFI Group

Manufacturer and distributor of heavy-duty electric transit buses and motor coaches, the Winnipeg, Manitoba-headquartered NFI Group (TSE: NFI) had a challenging start to 2023, with stock prices sliding down 16% between January 1 and May 1, 2023. 

While navigating turbulent economic headwinds has been difficult, not only for NFI Group, but many other EV automakers and parts companies, stock conditions on a year-to-date (YTD) basis have been significantly steady, with prices swinging upwards more than 8%. 

Although there has been slow adoption of battery-electric and fuel-cell electric buses in cities around the world, NFI has sold multiple units to nearly 80 cities in six different countries. In total, these buses have completed over 65 million electric miles to date. 

During its Q1 2023 results, NFI delivered revenue of USD$ 524 million with an equivalent of 792 units, 21% thereof from battery- and fuel-cell-electric buses. The total number of units delivered during the first quarter is an increase of 20% compared to Q4 2022, and revenue jumped upwards by 14% for the same recorded period. 

There is a steady upside to NFI, with a moderate buy streak, as the company manages to navigate supply chain worries and increasing material costs. 

Although conditions have been challenging throughout much of the first half of the year, the company has recently made new changes to its board of directors and hopes that ongoing collaboration between the executives and shareholders would continue to help it expand into newer markets in the coming months. 

Sigma Lithium Resources 

Sigma (CVE: SMGL) has taken environmental and social operations into overdrive, being one of a few lithium extraction companies in the world that operate a green technology plant that runs on 100% renewable energy and 100% recycled water in Grato do Cirilo, Brazil.

The company is aiming to improve sustainable practices within the EV supply chain, especially among extraction and mining companies that often misguide the environmental impact the overall industry has. 

With its Green Tech Lithium Plant, the company is expected to deliver nearly 15,000 tonnes of Green Lithium by May 2023, and estimates to run at full production capacity by July this year. 

SMGL performance has marked a 45% increase since the start of the year with YTD prices swinging upwards for the majority of April and May 2023. Last year alone SMGL prices tripled, with several announcements that global EV giant, Tesla (NASDAQ: TSLA) is potentially looking to purchase Sigma Lithium.

Although conditions on the stock market are looking relatively healthy, a further look shows that the company is facing some financial troubles, as it has yet to report a positive annual and quarterly net income. 

Perhaps advanced additions to the company’s production plants and overall delivery of Green Lithium could help it in the near term, with further analysis required to properly navigate long-term challenges for Sigma Lithium. 

Patriot Battery Metals 

Owned by the flagship parent company, Corvette Property, headquartered in the James Bay Region, Quebec, Patriot Battery Metals (CVE: PMET) is a mineral exploration company that produces mineral components for car batteries. Another branch of operations includes precious metal exploration. 

PMET has shown a significant upside in recent months, with share prices rising more than 170% over the last six months. What’s more, year-over-year (YOY) net income jumped by 148.68%, marking one of the first positive periods of operation for the company. 

Several factors have helped contribute to PMET’s overwhelming growth in recent months. For starters, being owned by Corvette Property gives the company a greater upside to exploring new sites for potential mining and mineral extraction. 

Secondly, Patriot Battery Metals, in partnership with Corvette Property initiated the Corvette Project, a land project of 214 km2, which hosts more than 70 different lithium outcrops over a 50-kilometer basis. During the winter exploration leg of the project, the company explored nearly 25 kilometers of land and is seeing significant potential in these and the remaining areas for the coming years in terms of lithium extraction.

While there may still be a lot the company needs to improve in terms of environmental and sustainable practices, it remains a stronghold for investors that are looking to get their foot in the door into the Canadian EV supply chain. 

Martinrea International

There’s a lot of potential for Martinrea International (TSE: MRE), a component manufacturer for automakers, to see a major upswing this year, as some analysts predict MRE is nearly 37% undervalued. 

Though these conditions could either make prices move north or south, overall MRE holds a strong position within the EV supply chain, especially with demand on a commercial level now starting to ramp up. 

YTD prices are up by 11%, making up for the losses experienced between April and May 2023. The company has a healthy balance sheet, reporting USD$1.30 billion in revenue in March 2023, marking a 12.98% YOY change. For the same recorded period, net income rose by 91% with USD$48 million in total net income. 

The good news is that MRE could see ongoing price swings in the coming year, as demand for its components continues to grow on the back of rising EV sales. The company is gradually updating its production lines, looking to introduce more sustainable practices across its manufacturing chains. 

Magna International 

The last name on our list of EV stocks to watch this year is Magna International (TSE: MG), a producer and manufacturer of car components that ships to several cat-producing nations across the world. 

The Aurora, Ontario-based manufacturer reported USD$209 million in profits for Q1 2023. Furthermore, the company posted revenue of USD$10.67 billion for the same recorded period, surpassing Wall Street forecasts, and analysts of USD$10.12 billion. The company expects a full-year revenue range of USD$40.2 billion to USD$41.8 billion. 

On the shared front, Magna has a profit of USD$0.77 earnings and adjusted for non-recurring costs, it was USD$1.11 per share.

Another positive upside for Magna is that the first quarter sales were up by 11%, despite having to navigate price increases and a shortage of critical materials due to supply chain constraints. 

Share performance has been a different scenario, despite reporting positive growth during the first half of the year. YTD performance slipped by 7.37% from January to May 2023, while on a full one-year spectrum, prices fell by 2.88%. 

While these decreases are relatively modest, there is a potential upside that conditions in the year ahead could play in favor of Magna International as it further increases output, and delivers more high-end components and parts for electric cars. 

The bottom line 

There’s a lot of potential for these Canadian EV companies, and while some may hold a better position in terms of their sustainable and social contribution, other companies are steadily following in their footsteps. 

Making slight improvements throughout the business chain, introducing new advancements, and putting to work greener technology can help these companies ride out a wave of electrification as consumers and governments around Canada, and the world are ramping up to become more climate-conscious and reach their sustainable goals within the next decade.