Select Page

How to Invest in Electric Cars?

by | Oct 23, 2022 | Environment, Green Energy, Natural Resource Management, Renewable Energy

Introduction

There are a variety of options available to investors looking to invest in electric cars. Automobile developers such as Tesla focus only on the manufacture of electric vehicles. However, there are also companies within the automotive sector that manufacture vehicle parts and components. Some companies even deal with supplying raw materials for producing electric cars. If you’re wondering how to invest in electric cars, these companies are a great way of gaining portfolio exposure to electric car investments.

Electric cars are the future. They’re better for the environment as compared to diesel or petrol cars. Because they do not have a tailpipe, they cannot release carbon dioxide while in operation. Electric cars contribute to improved air quality in towns and cities. Electric cars are generally much quieter than their diesel counterparts. Therefore, they can even bring down noise levels in urban areas. Electric cars will play a significant role in helping the world achieve net-zero emissions.

How to Invest in Electric Cars?

Source

The increased enthusiasm surrounding electric cars will likely make the electric car sector even more attractive to investors. But how to invest in electric cars? What are the different ways of gaining exposure to this new area? Should you be putting your money in electric cars, suppliers of electric car parts, or other types of renewable energy?

Direct Investment Options

Some large-scale and famous automakers, such as Toyota, have heavily invested in electric vehicles. These companies allow investors to choose between investing in electric or traditional vehicles.

In addition to Tesla, other companies that focus solely on manufacturing electric vehicles include Nio Inc., Li Auto Inc., Nikola Corp., and Canoo Inc.

Some manufacturers develop auto parts for both traditional and electric vehicles. Companies like Polypore International produce lead-acid batteries as well as lithium-ion batteries. Companies like these allow investors the opportunity to invest in the production of vehicle batteries. As more people demand electric vehicles, battery production will have to grow too. Companies dealing in electric vehicle battery production will benefit from the increasing global demand for electric cars.

Plug Power is a battery company that manufactures hydrogen fuel cell batteries for electric vehicles. Other types of electronic equipment use hydrogen fuel cells too. Many industries outside the automobile industry also use hydrogen fuel cells, giving companies producing them a large market.

Sociedad Quimica y Minera de Chile (SQM) supplies lithium to electric vehicle producers. Lithium is an essential component of batteries in electric vehicles. Investing in companies like these allows you to gain exposure to electric car investments while also maintaining diverse holdings outside the automobile industry.

The more technologically advanced electric cars become, the greater the need for semiconductors. Semiconductor chips are the brains of the electric car. The chips power EV batteries and power-train components. Nvidia, Maximum Integrated Products (MXIM), and NXP Semiconductors are some semiconductor chip stocks with EV exposure.

Electric Cars Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) track the gains and losses of stock indexes. These are traded directly on the stock market in a manner similar to trading stocks. These funds allow investors to purchase shares in funds that track developments in the electric car industry. With ETFs, you can spread your investments over multiple companies. This reduces the risks associated with investments.

ETFs that track electric car companies are another possible investment opportunity. QCLN and LIT are some ETFs, including electric vehicle and supplier stocks. The Clean Edge Green Energy Index Fund (QCLN) includes Tesla and other companies with green technologies among its holdings. Global X Lithium (LIT) is an ETF that tracks lithium suppliers and battery companies.

Launched in December 2019, the Ninety One Global Environment Fund’s unique approach sets it apart from other funds. The fund targets companies contributing to positive environmental change through decarbonization. The move toward fully embracing electric cars aligns with the fund’s mission.

Global X Autonomous and Electric Vehicles ETF (DRIV) is one of the oldest ETFs in the electric car space. The fund tracks the Solactive Autonomous & Electric Vehicle Index. The index includes companies manufacturing electric cars, their parts and components, and those supplying raw materials for electric car production.

KraneShares Electric Vehicles and Future Mobility ETF (KARS) tracks the Bloomberg Electric Vehicles Index. The index follows the entire electric car industry, right from lithium mining to battery and vehicle production.

Conclusion

How to Invest in Electric Cars?

In 2021, China recorded more than 3 million electric car sales. The same year, Europe recorded a little over 2 million electric car sales.

Many consumers today are more mindful of the environmental impacts of their purchasing choices. This contributes to the popularity and growth of electric cars.

Electric cars are better for the environment. Considering their production and the electricity generation to keep them running, they still emit fewer greenhouse gases and pollutants than diesel or petrol cars.

There are two popular options if you’re wondering how to invest in electric cars. The first one is directly investing in companies that manufacture electric vehicles and their parts and components. You could also invest in companies supplying raw materials like lithium to electric vehicle manufacturers. Investing in these diverse companies allows you adequate exposure to the world of electric car investments while also reducing investment risks.

The second option is to invest in ETFs that track indexes comprising of electric car stocks. EFTs let you spread your investments over multiple, well-performing electric car companies. There are many ETFs that give you an accurate representation of how well electric car companies are performing.

 

Author

  • Sigma Earth

    The author has done a master's in Environmental science and is currently working as chief Environmental Advisor with New Delhi State Government.

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *