Investors interested in electric cars have avariety of options. car manufacturers liketesla enginesfocus solely on electric vehicle manufacturing and can be invested directly in purchasing inventory. Automotive companies that make vehicle parts or supply raw materials used in the production of electric cars are another way to gain portfolio exposure to electric cars. Another slightly less risky option is to invest inexchange traded funds(ETF) with interests in securities related to the production of electric vehicles or parts of electric vehicles.
- The two main ways to invest in electric vehicles are to buy shares of automakers that focus on building electric vehicles, like Tesla, or to buy an exchange-traded fund that invests primarily in companies tied to electric vehicles.
- Investors can also gain exposure to electric vehicles by investing in certain automakers looking to expand into the market, such as Toyota and General Motors.
- Meanwhile, investors can also find opportunities by looking for companies that offer electric vehicle parts and supplies, such as Plug Power or Polypore International.
Direct investment options
Some big automakers like Toyota are investing heavily in electric vehicles and allow investors to choose both traditional and electric vehicles for their investments. Chevrolet and Nissan have also made notable models of electric cars available in the US market. Investors should carefully consider the investment opportunities available and assess the potentialrisk-return tradeoffoffered by electric vehicles and the automotive industry.
In addition to Tesla (TSLA), investors can also search for companies such as Li Auto Inc. (LI), Nio Inc. (NIÑO), Nikola Corp. (NKLA) y Canoo Inc. (GOEV), which focus exclusively on the manufacture of electric vehicles.
Many manufacturers also develop auto parts for traditional and electric vehicles. Polypore International (OPP) produces lead-acid batteries and lithium-ion batteries, which serve both conventional and electric vehicles.This action offers investors the opportunity to invest generally in the production of vehicle batteries. As the use of electric vehicles and conventional vehicles grows, more batteries will be required, and this company is likely to benefit from the increased global demand for cars.
Another battery company, Plug Power (PLUG), manufactures hydrogen fuel cell batteries used in electric vehicles and many other types of electronic equipment.These batteries can replace lead-acid batteries in forklifts. Plug Power batteries are also used outside of the automotive industry, giving the company a large market.
Chemical and Mining Society of Chile (SQM) is a major supplier of lithium, an element used in many batteries that power electric vehicles and other clean technologies.Investing in companies such as Polypore International, Plug Power and SQM provide portfolio exposure to electric vehicles, while maintaining a number of holdings outside of the automotive industry.
The Infrastructure Investment and Jobs Act of 2021 will support the electric vehicle industry: $7.5 billion of the total bill $550 billion in funds will be allocated to invest in a network ofcharging stations for electric vehiclesthrough the US
Electric Vehicle Exchange Traded Funds
ETFs that track electric vehicles are another possible opportunity for investors. These funds allow investors to buy shares in funds that follow the development of the electric vehicle industry. Investments are spread across multiple companies, reducing investment risk and offering returns similar to thoseaverage returnsacross the industry.
ETFs track stock gains and lossesindexesand are traded directly on the stock exchange in a similar way to trading shares. As with traditional stock trading, stop loss limits can be placed and dividends are paid into brokerage accounts.
Significant ETFs that include electric vehicle stocks and supplier stocks include QCLN and LIT. The first trustNASDAQclean green energyindex fund(QCLN) has Tesla among its holdings and includes other companies with green-tech offerings.Global X Lithium (IN) keeps track of lithium suppliers and battery companies. Major holdings of this fund include Albemarle Corp., Yunnan Energy-A Ltd., and Ganfeng Lithium Co. Ltd-A.