We recently compiled a list of the 12 Small Cap EV Stocks to Buy Now. In this article, we are going to take a look at where BorgWarner Inc. (NYSE:BWA) stands against the other small-cap EV stocks.
In 2024, electric vehicles (EVs) represented 8.1% of the 16 million vehicles sold in the United States, according to Cox Automotive. While this was a record share, it was still below the 10% that analysts had expected at the beginning of the year. Despite this, some believe that the EV market may be picking up pace.
READ ALSO: 11 Stocks That Will Bounce Back According To Analysts and 11 Best Stocks Under $15 to Buy According to Hedge Funds.
Despite the fact that overall EV adoption has been slower than expected, brands like Cadillac are expanding their electric lineup. By the end of 2025, Cadillac plans to offer five EVs. These include the Escalade IQ, Optiq crossover, Lyriq, the upcoming three-row Vistiq, and the luxury Celestiq. Cadillac expects roughly one in three vehicles it sells in the US this year will be all-electric.
Brad Franz, Cadillac’s director of marketing, told CNBC that the company is launching EVs to grow its business and attract new customers to the brand instead of just shifting sales from gas-powered cars. According to Franz, the EV portfolio will offer customers more choices. In 2024, the company sold about 29,000 EVs. For 2025, Cadillac aims for EVs to make up between 30% to 35% of its sales in the US.
However, Cadillac has abandoned its earlier plan to sell only EVs by 2030. Instead, the company said that customer demand will determine the elimination of gas-powered vehicles.
This approach reflects a broader trend. A number of automakers have turned their back on plans to exclusively sell EVs in the near future as customer adoption has not been as fast as expected.
To compile our list of the 12 small-cap EV stocks to buy now, we reviewed our own rankings and consulted various online resources to compile a list of the best small-cap EV stocks. Please note that we defined small-cap stocks as those with a market capitalization between $500 million and $10 billion. From an initial pool of more than 20 small-cap EV stocks that met our criteria, we focused on the top 12 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q4 2024 database of more than 1,000 elite hedge funds. The 12 small-cap EV stocks to buy now were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q4 2024.
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Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is BorgWarner Inc. (BWA) The Best Small Cap EV Stock To Buy?
Workers assembling a state-of-the-art engine in a modern auto factory.
Market Capitalization: $6.65 Billion
Number of Hedge Fund Holders: 43
BorgWarner Inc. (NYSE:BWA) is a global supplier of automotive and e-mobility solutions. The company provides essential components for internal combustion, hybrid, and electric vehicles. It designs, manufactures, and sells products mainly to original equipment manufacturers (OEMs). BorgWarner Inc. (NYSE:BWA) ranks among the best EV stocks to buy now.
On May 8, JPMorgan increased its price target on BorgWarner Inc. (NYSE:BWA) from $42 to $43 and maintained an “Overweight” rating. This decision follows the company’s strong Q1 2025 results, with both revenue and earnings before interest and taxes (EBIT) surpassing JPMorgan’s estimates and Bloomberg’s consensus. BorgWarner Inc. (NYSE:BWA) reported revenue of $3.515 billion, above JPMorgan’s estimate of $3.480 billion and the consensus of $3.421 billion. Even though vehicle production declined year-over-year, the company successfully grew its organic sales, mainly because of a 47% surge in electric product sales. Additionally, the firm highlighted the management’s decision to exit the charging business because of tough market conditions in North America and Europe. This strategic move is expected to reduce sales by $30 million but improve EBIT by $15 million in 2025 and by $30 million in 2026. BorgWarner Inc. (NYSE:BWA) also plans to consolidate its battery systems business into one facility. This is expected to help the company save about $10 million in 2025 and $20 million in 2026. These strategic actions, combined with strong cost control and execution, are expected to help offset lower industry production and timing issues because of tariffs. As a result, JPMorgan now expects the company’s EBIT to reach $1.36 billion in 2025, up from its previous forecast of $1.29 billion, and $1.4 billion in 2026, an increase from the previous $1.35 billion.
Overall, BWA ranks 1st on our list of small-cap EV stocks to buy now. While we acknowledge the potential of BWA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BWA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
