- More auto manufacturers are bringing EVs to the market, allowing a larger number of consumers to purchase these cars.
- Investors should not ignore traditional automakers since many are jumping into the EV space.
- While there are no mutual funds dedicated to electric vehicles, there are ETFs as well as individual stocks to invest in.
Electric cars are becoming more popular for many reasons. Not only are they a great way to save money on gas, but they are also better for the environment.
As an investor, you might wonder how to invest in this space to earn a return on your money. Here is where the electric vehicle industry stands now, as well as the biggest players and how to invest in them.
What’s new with the electric vehicle industry?
With many automakers focusing on electric vehicles, more EVs are reaching showroom floors than ever before. This gives consumers a sizable selection of makes and models.
Cox Automotive found that average EV prices increased to over $66,000 in August 2022, which is 15.6% higher than a year ago. This price point is driven by sales of luxury SUVs, which command higher prices and a limited supply of electric vehicles due to supply chain issues.
Additionally, many auto manufacturers are using the supply chain to their advantage and focusing on higher profit margin vehicles to continue charging a premium.
Automakers are introducing less-expensive EVs in different vehicle sizes to encourage buyers to purchase an EV instead of a gasoline-powered one. This lower price point will cater to a larger segment of the population who cannot afford the higher prices of luxury electric vehicles.
The coming year will see multiple new EV makes and models reach consumers, lowering the average cost and increasing access. Many popular and well-loved brands are seeing EV versions added to their lineups.
Ultimately, this means buyers are more likely to trade in their gasoline-powered model for the EV version. Buyers get the familiarity of the model they love with the lower cost of ownership, which is a winning combination.
What Are the Best EV Stocks?
The best EV stocks are those issued by companies with a solid foundation in investments, management and vision. Here’s a look at the most popular EV stocks currently available.
Tesla is famous for having a highly valued stock that has weathered downturns in the stock market and the economy. It’s worth noting that Tesla is more of a technology company than an auto manufacturer due to the number of software suites needed to operate each vehicle.
The company’s biggest issue is its inability to deliver a consistent build quality of its vehicles even though it continues to increase production year-over-year.
Even so, when most consumers think of EVs, Tesla is the first brand they think of. This name recognition helps Tesla to continue to attract new buyers.
Rivian is a startup backed by two major companies, including Ford and Amazon, and offers a private investment opportunity. Ford delivers its expertise in designing, building, and delivering vehicles, while Amazon and the investors supply the funds.
This creates a solid combination that enables the company to easily overcome hiccups and production issues. It also makes the stock a good buy for a long-term hold.
Fisker tried to bring an exotic EV roadster to the market, known as the Fisker Karma. However, it was beset by multiple issues that caused it to fold.
Fortunately, the company has been resurrected and is now producing two electric vehicles, including the Fisker Ocean and the Fisker PEAR. Reservations are being accepted for both models.
While Ford is a household name, the brand is making a strong push into electric vehicles. The company initially came out with the Mustang Mach E, and its best-selling pickup, the F150, is being electrified.
While Ford still sells gas-powered vehicles, the significant push it is making into the EV space is one that investors should keep an eye on.
Like Ford, General Motors is also pushing into the EV space. The brand aims to put everyone in an electric vehicle and is aggressively following this plan by introducing various vehicles at different price points.
Volkswagen is an under-the-radar EV company. In addition to the Volkswagen brand, it owns Audi, Porsche, SKODA and SEAT. The last two are popular brands in Europe.
With a strong footprint in Europe and North America, the second-largest auto manufacturer in the world is quickly moving into the EV space.
How can you invest in the electric vehicle industry?
You can invest in the EV industry through a few different investment strategies.
To date, there are no mutual funds since the EV industry is primarily made up of automotive manufacturers found in many types of mutual funds and ETFs. Some mutual funds have a large exposure to electric vehicles, but they also own a number of non-EV stocks.
Another option is to buy securities issued by automakers and create your EV portfolio. Most EV manufacturers are publicly traded, allowing you to pick and choose the companies you’d like to have in your investment profile. The risk here is investing in the wrong company.
For example, investors were excited about Nikola, an EV maker of heavy-duty trucks. The stock peaked at around $60 per share in 2020. However, news came out the CEO was providing false statements to drive the stock value higher. Now, the stock is at just over $2 per share.
While investing in companies like Ford or General Motors is less risky than a startup, there is still risk involved. As a result, you must always research the company, its founders and major investors, and the products it’s releasing to the market.
Q.ai offers a Clean Tech Investment Kit that includes renewable energy, EVs, the supporting infrastructure and more. Q.ai takes the guesswork out of investing. Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations. Then, it bundles them up in handy Investment Kits, like clean tech, that make investing more straightforward and better aligned to your interests.
What do EV industry investors Need to Know?
EV industry investors need to practice patience. The industry is still in its early days, even though Tesla has been producing cars for a decade.
Major auto manufacturers took their time bringing EVs to the market, and many all-electric models haven’t been on the road for that long. Some exceptions, such as the Nissan Leaf and Chevrolet Bolt, have been available for a few years.
All of the older EVs have proven the concept of an all-electric car with ease and perform as well as internal combustion powered engines.
The primary issue EVs face is the lack of charging infrastructure in the United States. EVs are best suited for commuters whose daily drives stay within the battery range of their vehicle since public charging stations are few and far between.
While retailers are installing charging stations in their parking lots for the convenience of shoppers, very little is being done to make it easy for people to buy an EV and keep it charged. This issue will constrain the adoption of EVs for the foreseeable future and impact their production, adoption and source of profit for manufacturers.
The bottom line
The best course of action for investors who want to add EV stocks to their portfolios is to stick to the major auto manufacturers. Tesla may have pioneered the modern EV, but its lock on the EV industry is vulnerable because the technology that propels its vehicles is unpatentable.
It’s only a matter of time before the major automakers catch up and produce electric vehicles surpassing Tesla’s build quality, repairability and affordability. This will cause the playing field for EVs to level out.
Download Q.ai today for access to AI-powered investment strategies.