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Saturday, 01/11/2020 2:50:44 PM

Saturday, January 11, 2020 2:50:44 PM

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>>> Electric Vehicles to Rev Up in 2020: Play These ETFs


Sanghamitra Saha

January 9, 2020

With automation and technological breakthrough emerging rapidly, the fast pickup in autonomous vehicles is in the cards. Elon Musk’s Tesla TSLA’s solid growth momentum and amazing one-year stock performance supports the fact.

Electric vehicle maker Tesla's shares have surged 39.9% in the past year, breezing past the S&P 500’s 25.7% (as of Jan 7, 2019). It clearly performed better than other car makers as Ford F was up 10.5%, Honda Motors HMC and General Motors GM were almost flat and Toyota Motor TM gained 15.7%.

Tesla’s previous issues like production delays and heavy financial losses are really a matter of the past. The company delivered approximately 367,500 vehicles last year, marking a notable jump of 50% jump from 2018. The deliveries were within the range of the company’s guidance but higher than Wall Street estimates. The stock has a Zacks Rank #2 (Buy) and a Growth Score of A.

Not only Tesla, Japanese tech giant Sony has built a prototype electric car, as part of its new Vision-S initiative, which is targeted at mobility. CEO of Sony sees huge growth in the vehicles industry that are “connected, autonomous, shared and electric” and expects strong “social and environmental impacts” of this.

There is also growing enthusiasm for Tesla’s all-electric “Cybertruck,” whichis releasing in 2021 and 2022. Other electric trucks, including Rivian R1T and the electric version of Ford F-150, will also be hitting the markets soon.

Global electric vehicle sales rose to an all-time high of 1.2 million units sold between January and October 2019. It accounted for 7% of all auto sales globally. China is the market with 45% market share, followed by Europe’s 24% and the United States’ 22%.The global stock of electric passenger cars marked an increase of 63% in 2018 from the previous year, per IEA.

In the recent past, more than 10 automakers have come up with their EV plans. If these plans materialize, the sector will be able to manufacture and sell about 25 million units (of more than 400 models) by 2025, or 20% of all global cars sold, per Frost & Sullivan. General Motors, Toyota and Volvo have all fixed a target of 1 million EV sales by 2025. Plus, there are other automakers like BMW, Aston Martin and the Renault Nissan & Mitsubishi Group that are considering lucrative EV plans.

Needless to say, the enthusiasm over the EV space has prompted ETF issuers to come up with EV and battery-related funds. In past two years, there was a surge in the launches of these ETFs, with which investors can tap this accelerating industry.

Amplify Advanced Battery Metals and Materials ETF BATT

Such an uptick in the EV market should provide a boost to the battery industry as well. The fund, launched in June 2018, looks to provide exposure to lithium, cobalt, nickel, manganese and graphite via publicly-traded stocks. Companies that are in the business of mining, exploration, production, development, processing or recycling of advanced battery metals and materials, get entry to the fund. The fund charges 72 bps in fees (net).

Global X Autonomous & Electric Vehicles ETF DRIV

Launched in April 2018, the fund gives exposure to companies involved in the development of autonomous vehicle technology, electric vehicles, and its components and materials. The fund charges 68 bps in fees.

Innovation Shares NextGen Vehicles & Technology ETF EKAR

The fund debuted in February 2018. It measures the performance of a portfolio of companies that have business involvement in the development or use of or investment in New Energy Vehicles and Autonomously Driven Vehicles. The fund charges 65 bps in fees (read: An ETF to Invest in Self-driving & Electric Cars).

KraneShares Electric Vehicles and Future Mobility Index ETF KARS

Launched in January 2018, the fund follows companies engaged in the production of electric vehicles or their components or engaged in other initiatives that may change the future of mobility. The fund charges 70 bps in fees.

Global X Lithium & Battery Tech ETF LIT

The fund invests in the full lithium cycle, from mining and refining the metal, through battery production. The fund charges 75 bps in fees (see all Materials ETFs here).