The electric vehicle (EV) industry is an integral part of the energy transition. And while long-term emissions reduction targets haven't changed, investor enthusiasm for EV stocks certainly has.

Aside from , many pure-play electric car companies are still unprofitable and will likely rely on credits to reach profitability. Even legacy automakers investing in EVs are struggling to make the investments pay off. Ford, for example, saw a rise in EV sales but also larger losses from EVs.

Investors interested in electric car stocks should understand the risks and volatility that come with the industry. But for those with a high risk tolerance and a long-term time horizon, that volatility could be well worth it over time.

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Source Fool.com