Will EV Stocks Make a Comeback in 2026?

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• Rivian’s R2 launch.
• The decline of EVs in the U.S.
• Will autonomy be a value add for EV companies?
• Hidden gems in the EV market.

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A full transcript is below.

This podcast was recorded on June 10, 2026.

Travis Hoium: Do we have a new winner in the EV market? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium joined today by Lou Whiteman and Rachel Warren.

Before we get started, I actually want to mention that we have the SpaceX IPO coming out later this week, and we're going to be covering that on Breakfast News. If you are not getting that, you can go to news.fool.com. Get that in your inbox every morning. Big highlight of the SpaceX coming out Thursday morning.

But now onto our regularly scheduled topic, that is, electric vehicles. Guys, we don't talk about electric vehicles nearly as much as we did a couple of years ago. A lot of different changes in the market, from incentives to the amount of competition in the market. But we did get some news yesterday. Rivian is actually starting to sell the R2. I wanted to dive into what's going on in this EV market because this is where there potentially could be some hidden gems for investors because some of these stocks are pretty beaten up from their all-time highs. Rachel, does the EV market still have growth after some of these tax changes, and what's the competitive dynamics there? Because I want to get an overview of what's going on. This is no longer just a Tesla-centric market anymore.

Rachel Warren: That's very much the case. It's interesting, some of these dynamics, as we've seen a shift in consumers leaning towards used versus new EVs. I'll dive into that a bit. I think the shift from the federal incentive structure has had more of maybe a trickle-down effect than some would have thought. This idea of transitioning from a one-time point-of-sale credit to a multiyear loan interest deduction obviously, it applies to a multiplicity of vehicles, not just EVs, but we're going to focus on the EV market here. You've got a $10,000 annual tax deduction on American-made auto loan interest. It offers long-term savings for certain brackets. But obviously, you also as a buyer, you have to have the upfront capital or credit to absorb that initial purchase price. When the federal government ended the $7,500 point-of-sale credit for new EVs, obviously, this created a dynamic where these cars became a lot more expensive for a lot of average consumers.

Now, what's been really interesting to look at is how we're seeing growth in the used EV market. Obviously, these are vehicles that will have already absorbed that massive first-year depreciation that we tend to see. There's a upfront discount built into the sticker price. For manufacturers, it's created a bit of a bifurcated market. You've got tech-forward or premium brands that can leverage these shifts, but a lot of the legacy manufacturers are maybe going to be struggling to lower some of their retail prices fast enough to keep pace. One final thing I'll note: early-adopter EVs leased or bought in recent years are now hitting the used market in massive numbers. That means that secondary market supply is very high, and in some cases, it could drive used EV prices down to near parity with traditional gas cars if we look ahead to the next five years or so. I also think as these early generation EVs they lease out, they flood the secondary market. There's a question, could this cannibalize new car demand that we will have to see?

Travis Hoium: Lou, it's really interesting to see the competitive dynamics in this space, and we've been looking at the industrials and the auto industry for a very long time. But if you just look at the number of new EVs sold, it seems like the tax credit ending did impact sales starting in the fourth quarter, as you would naturally think of 2025 when that rolled off, 216,000 units, according to Cox Automotive. That's down from about three or four years ago, and the numbers are essentially flat over that period of time. There has not been this huge adoption curve at the same time, and I think this is what's really interesting as we look at this from an investment perspective. I just pulled the number of electric vehicles in the SUV category, and there's now with the R2, that puts us at 20 competitors in the market. Five years ago, there was essentially two. It was either you get a model layer or a Model 3.

Lou Whiteman: I will forever wonder how much of the drop-off is due to the tax credit and how much of it is just all the early adapters got theirs and it's just not a mainstream product yet. But that's what the R2 is trying to solve. In theory, they are trying to become the Subaru of the EV market.

Travis Hoium: Do you think you can do that, because looking at the list, the Chevy Equinox is about $10,000 less starting point. You have the Ford Mustang Mach-E, which is about 5,000 less than that $45,000 starting point, the ID4 from Volkswagen. It isn't like there's nothing out there in this category.

Lou Whiteman: The IX3. Look, I'd even put some of just the hybrid vehicles from Toyota and Honda right there as real competitors. Rachel mentioned, there's no advantage in that interest deduction credit for EVs now, so there's nothing that really makes them special. Can they do it? They are trying to offer this idea that you get a more premium, feature-loaded soft road product. Again, I would say arguably BMW and Volvo, and some of these might say, hello, we're here.

To me, though, we have to care about market share because they need to generate cash from these. But they designed the R2 in such a way where the bill of materials, basically, which is a way of how much it costs to actually make it or the stuff that goes into it, is about half of what the ROS was. They need this to be a margin driver, much more than they needed to be just taking over the world or becoming the new Toyota Corolla. There's a niche there they can do it, but even then, I'm not sure because unfortunately, they want to position this as a, if not luxury, at least a more quality product at about half of the expense. They took a lot out of it to get there. I think they're in a tough place, but I do think there is a window of a market there. I don't think we should really focus on just volume here. We need to focus on can they do this profitably and actually move some of these things?

Travis Hoium: To that point, one of the things that I think is really hard to look at with a company like Rivian in the launch of the R2 is I think it is an attractive vehicle. It has a niche in the market, but it is a niche, and that niche is filled by a lot of vehicles. If you're looking in that, let's say, $40,000-50,000 price range for an SUV that can seat four or five people, you're not just looking at Rivian. You have Jeep, you have a bunch of offerings from Chevy, Ford, the big U.S. automakers, some of the international automakers. Is there enough of a market there to be a niche player that can have the volume that can ultimately drive to profitability? We're investors. Fundamentally, that is the question is, you can't have a plant that can make 400,000 vehicles, which they need to build this Georgia plant, and then have it sitting idle. The economics just don't work.

Lou Whiteman: Again, I think it's a very narrow road to this all working out. I do think they're pursuing a path, but the market we're in, you want to have diversity of product revenue, to put all of your chips in one basket, so to speak, just the nature of this business. I don't know if there is just a product that can make this work. I think the R2 is a decent attempt at it. But as investors, I am more cautious or more gun-shy here than I am bullish or excited about this. They always had a tough challenge. I think with Elon, we've forgotten the fact that most automakers it doesn't work out for. Tesla is the exception to the rule, not the rule. I don't think we're saying anything we don't know about Rivian, but just because the R2 is out there, it's not just slam-dunk success.

Travis Hoium: Other than a note with Tesla's economics is, if you look throughout their history, the high margins that they eventually got to happened during the pandemic, when there was a lot of demand for vehicles, and there wasn't enough supply for vehicles. Tesla was one of the companies that kept producing vehicles. They didn't make the same chip mistakes that a lot of the legacy automakers did. They actually raised their prices during the pandemic. Coincidentally, those margins went up at the same time as we've gotten back to more of a normal state of supply for the industry. Tesla's margin is actually not any better than any of the other legacy automakers. We'll see where Rivian can come out there. The one thing that they would like to point out, and we'll see if this is going to be something in the future, is software that they're selling. We're going to talk about how autonomy could potentially be a tailwind for Rivian and other automakers. Next, you're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing. If we're going to talk about electric vehicles, we need to talk about autonomy as well. The software is a service that a lot of these companies are selling. Tesla. Started this. Rivian has launched their autonomy products, planning to be fully autonomous. Level 4, I believe, it would be not Level 5 in 2028. But again, more and more competition coming into the market. I mentioned Rivian, Lucid also has a deal with Nuro and Uber. Lou, is this the thing that could be a growth avenue for EV companies, specifically to differentiate themselves in a different way from the legacy automakers, or are they just talking about this a little bit differently than everybody else?

Lou Whiteman: No. This is not going to be the answer here.

Travis Hoium: You're not excited to pay $100 a month not to drive your vehicle that's supposed to be fun to drive?

Lou Whiteman: There's a point to that, but look, I'm not a car guy, for one thing. Vehicles are utilities. They are to get me from point A to point B. I'm not the one to ask here. But look, first of all, you have to convince me that Rivian and Lucid and all of these companies can really come to market at the timetable they're hoping for. Tesla and even Waymo have shown that this is a very hard problem to solve. I am going to take the over on all of the time tables.

Secondly, you have to explain to me how these products can still provide a competitive advantage, a differentiator in a moment where Detroit is not standing still, and Detroit is coming out with their own products as well. There is a long tradition here that goes back to the lowly windshield wiper. Technology, innovation, all of these things come out. It's a premium thing for a moment, and then it becomes commoditized. Today's premium upgrades are tomorrow's standard features. That's what most likely comes out of this. That's how the trend continues. I'm not saying they shouldn't invest in here, but the difficulty is, this is not going to be premium. This is going to be table stakes. If not autonomous, at least driver assist. Everybody is there. The Honda I bought has all of these tools for free that you shouldn't, but you can basically self-drive on the highway. You can do that right now for free with a Honda. Explain to me how, in five years, this is going to be a premium source of revenue for some other company.

Travis Hoium: Lou, I want to push you on some of the things that have been premium in the past and then have become standard because I think you and I are both old enough. We can play the Old Man shouting at Clouds characters here, where automatic windows were not standard when I was a kid. Airbags used to be a premium feature. Hope you want to buy this vehicle because it has airbags, whereas this other one doesn't. Are those a couple more examples of the things that you're talking about that these are premium until everybody has them?

Lou Whiteman: Leather seats. We're seeing it today, adaptive cruise control. When I was shopping for there was one automaker, not one of these, that still you had to pay not a subscription fee, but a package for adaptive cruise control. I looked at six different vehicles. The other five of them, it was free. It was standard. That package is not going to last. There's just so long of a history here. If everybody would collude with each other and agree to never give this away, but this is a highly competitive, low-margin industry, and if you're putting all of that money into it, you try to take advantage in near term, that just always leads to commoditization. That's where we're headed with this, too. I have no doubt about that.

Travis Hoium: Rachel, is autonomy something where a company like Rivian can differentiate itself, or is Lou right that this is just going to be the next windshield wiper, the next power windows that we look back and my kids, once they start driving, go, wait a second. You used to have to actually drive your vehicle?

Rachel Warren: I don't think it's going to necessarily be a differentiator, and I'll explain why I have a little bit of a different take than Lou. But I also don't think it's going to become so commoditized that, at least not 5-10 years from now, this is just the norm in every vehicle. But going back to the idea of autonomous software being the thing that drives revenue forward, that expands margins for these unprofitable cash-burning companies. I think that is a very difficult hill to climb. First, you have to think about the technology itself. It faces what I would say is the severe 99% problem, meaning the software can handle standard highway driving, but mastering that final 1% of the chaotic, unpredictable urban edge cases, it requires a computing power and software sophistication that a lot of these pure-play EV start-ups or other automakers are burning billions trying to solve without having a guaranteed timeline.

There's also the capital destruction that goes back to hardware redundancy. If you're looking at integrating expensive LiDAR, dual superchip processors, redundant braking and steering systems into these mass market vehicles, that is a really significant weight on corporate profitability, and that also trickles down to the consumer at a time when a lot of consumers are demanding more price accessible cars.

Then finally, the other note all make, we were seeing these commercial fleet partnerships with the likes of Uber, but it's not a silver bullet. There's still a really crushing operational burden that a lot of these automakers are going to have. There's wear and tear and rapid depreciation of these high commercial vehicles. One final thing I'll note, you think about how standard cars are designed for a consumer who maybe drives 12,000 or more miles a year. But a commercial robotaxi is often running constantly in dense city centers. There's really accelerated mechanical wear and tear, so there's a lot of really practical realities that even if you see this software becoming the go-to for these automakers, I don't think it offsets the costs that they're going to be experiencing elsewhere. That's where, when you have a really unprofitable company burning cash, I think they're already facing an uphill battle.

Travis Hoium: The analogy here may just be the EDV, the delivery vehicle that was supposed to be 100,000 units of demand from Amazon. I actually see these around every once in a while. They're huge. I'm sure they're great, and they're efficient, and they seem like they hold a lot of boxes. But it has not been a huge sales driver for Rivian. Hey, this is going to be our silver bullet just doesn't quite materialize. I think we have plenty of questions about what the future of some of these EV companies are, especially Rivian and the economics. But when we come back, I want some Hidden Gem stock ideas because there are some opportunities out there. We'll get to that in a moment. We're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing. Guys, as you look at the EV market, are there any hidden gems? Lou, I'm going to have you go first.

Lou Whiteman: The one I'm really still watching is QuantumScape, which is Ticker QS. This is solid-state batteries. They are the breakthrough that need to happen to get me off the fence, to get me to buy an EV.

Travis Hoium: Explain. Why is solid state important?

Lou Whiteman: QuantumScape, and they're not the only ones doing this, but on paper, basically, it is a more stable battery, period. Lithium-ion batteries are not stable. We're just not using great designs now. We're using the designs we have to use. With a more stable battery, A, you can pack more into it, so you don't have to charge as often. But also, you can charge it a lot faster. The charging time would be about a gas station visit. It would basically be what we're all used to. As consumers, it would just give us what we want. These are really cool. They've been around forever. The hard part, and it's taken decades to even get close to this, is mass-producing. It is really hard to make them at scale for automakers or others. QuantumScape is slowly getting there. They have great partners like Volkswagen. It seems to be on the path. Again, there's others here, too, so there's a lot of risk. But if and when they get here, that's when the EV revolution is really going to happen. It's amazing the numbers we've sold, given the lack of technology we have here to solve problems, but it would solve so many issues, from just the ability to pack them, the number of batteries needed, some of the heat concerns, and a lot of that. It is just a better chemistry if you can do it at scale.

Travis Hoium: Rachel?

Rachel Warren: The company on my watch list is NXP Semiconductors, ticker NXPI. They essentially dominate the automotive processing and battery management systems market, and their proprietary microcontrollers, these are mission-critical components that monitor things like cell voltage. They optimize thermal management calculates real time range accuracy. This means that a lot of major global automakers require their hardware to prevent issues like battery degradation or catastrophic overheating, and they have a really structural mode in radar processors, secure vehicle-to-everything communication chip. I think that if you're looking at the growth in advanced driver assistance systems and you're looking for a potential direct beneficiary of that, a profitable, diversified hardware play like NXP Semiconductors could be an interesting one to take a look at.

Travis Hoium: I'm going to play a little bit here too as well. Do you guys know the No. 2 EV manufacturer in the U.S.?

Lou Whiteman: General Motors.

Travis Hoium: General Motors. Guess what? General Motors' stock over the past three years, up 124%, that beats Rivian, Tesla, Lucid, which is down 92%, so take it out with a grain of salt, and QuantumScape, and the stock is still trading for just six times forward earnings estimates. Sometimes the obvious answer, which is the legacy companies are going to be just fine, is the hidden answer. It doesn't sound like a Hidden Gem, but I think if you're interested in EVs, take a look at them.

As always, people on the program may have interest in the stocks they talk about in The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards, and it's not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, and Dan Boyd behind the glass, I'm Travis Hoium. Thanks for listening. We'll see you here tomorrow.

Lou Whiteman has positions in QuantumScape. Rachel Warren has positions in Amazon. Travis Hoium has positions in Uber Technologies and has the following options: long December 2027 $5 puts on Rivian Automotive. The Motley Fool has positions in and recommends Amazon, NXP Semiconductors, Tesla, and Uber Technologies. The Motley Fool recommends Bayerische Motoren Werke Aktiengesellschaft, General Motors, and Stellantis. The Motley Fool has a disclosure policy.