Electric Vehicle (EV) stocks have become investor favorites lately since EVs are finally going mainstream. While Tesla is leading the race, many legacy automakers have announced their plans to become fully or partially electric going ahead. On the other hand, there are several startups with promising technology that are also making a mark in the electric vehicles space. (Read more about the factors behind the rise of the Electric Vehicle sector).
According to the International Energy Agency, in 2021, electric car sales more than doubled to 6.6 million globally, which was almost 9% of the global car market. With this, it also more than tripled its market share compared to 2019. Additionally, according to a 2021 Bloomberg report, the global electric vehicle market size is expected to grow to USD 917.7 billion by 2028, growing at a revenue CAGR of 20.6% over the forecast period.
Not surprisingly, every investor wants a share of the EV pie. By investing in EV stocks listed on the US markets, investors can not only invest in companies based in the United States but global companies in the EV space from China, Japan and other countries.
When we think of EV stocks, we think of stocks of companies that are into the manufacturing of electric vehicles, like Tesla. However, taken in a broader context, the EV stocks encompass a wide range of companies that are part of the EV value chain. Let us take a look.
First, there are companies like Tesla, which focus only on making electric vehicles. They are pure EV stocks. An interesting fact – the Tesla Model 3 has been the world’s best-selling electric car for four years in a row! Nio and Li Auto, both Chinese companies, are other major players in this space. And let us not forget that Apple also plans to launch an electric car soon.
Second, there are major automakers like Toyota and General Motors, which are heavily investing in electric vehicles but still produce traditional vehicles. General Motors has announced that it will sell only electric vehicles by 2035. Toyota, on the other hand, plans to sell 3.5 million EVs a year from 2030.
Next, there are companies that manufacture vehicle parts or supply raw materials, which are required to manufacture the electric vehicle. This would include companies such as Qualcomm that build technology that makes electric vehicles possible. Qualcommhas also built a wireless EV charging solution. Nvidia is also another major player that manufactures chips used in electric vehicles. Recently Intel launched a new division that will design chips and processors for electric vehicles. And of course, there is Google, which is heavily investing in EV and autonomous vehicle technology.
Batteries are a core part of any electric car. Companies that manufacture batteries for electric vehicles such as Panasonic and Contemporary Amperex Technology are key players in the EV ecosystem. EV battery stocks are thus another investment opportunity.
Finally, electric vehicles need to be charged and this requires building an extensive charging infrastructure. Companies such as Blink Charging and ChargePoint Holdings operate in this space.
Lets now take a look at how to invest in EV stocks in the US from India:
Direct investment in EV stocks
When investing directly, you can buy stocks across all different categories of companies mentioned above. Through the Vested platform, you can directly invest in electric vehicle stocks in a few simple steps. Also, Vested lets you buy fractional shares of these companies for as little as $1.
Invest in EV stocks through ETFs
t may not be possible for an investor to invest in multiple stocks. Apart from the process, it requires a fair bit of knowledge and understanding of the EV industry and its players. An alternate way to invest in EV stocks is through ETFs thattrack the sector.
One example of such an ETF is the Global X Autonomous & Electric Vehicles ETF (DRIV). The ETF invests in companies that are involved in developing autonomous vehicle technology, electric vehicles and their components and materials. Apart from the focus on companies that are into developing technology for autonomous vehicles, it also has exposure to companies that produce EVs and components such as lithium batteries and critical elements required for EV production like lithium and cobalt. Its top holdings as of 10th March 2022, include Apple, Alphabet, Intel, Qualcomm, Tesla, Microsoft, Nvidia and others.
Another ETF from the Globax X stable, is the Global X Lithium & Battery Tech ETF (LIT). This ETF invests in the full lithium cycle from mining, refining and battery production. Apart from Panasonic and Contemporary Amperex Technology, it has companies like TDK Corp, Naura Tech and Albemarle Corp among its top holdings.
So, this was a quick overview of how you can add EV exposure to your portfolio. The sector holds a lot of potential. However, do make sure to do your due diligence and assess your risk appetite before investing.
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Our team members at Vested may own investments in some of the aforementioned companies/assets. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. Note that past performance is not indicative of future returns. Investing in the stock market carries risk; the value of your investment can go up, or down, returning less than your original investment. Tax laws are subject to change and may vary depending on your circumstances.
This article is meant to be informative and not to be taken as an investment advice, and may contain certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success or lack of success of particular investments (and may include such words as “crash” or “collapse”). All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.
This video is meant to be informative and not to be taken as an investment advice and may contain certain “forward-looking statements” which may be identified by the use of such words as “believe”, “expect”, “anticipate”, “should”, “planned”, “estimated”, “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success of or lack of success of particular investments (and may include such words as “crash” or “collapse”.) All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.