Next year we’ll see all
electric vehicles (EVs) introduced by established brands such as
Audi, BMW, Cadillac, Ford, Hyundai, Jaguar, Kia, Mercedes-Benz,
Porsche, Volvo, and Subaru, as well as from new brands including
Bollinger Motors, Canoo Lifestyle, Fisker, and Lucid Group.
One major advantage of EVs over conventional cars and
trucks is that they produce little, if any, greenhouse gas
emissions. Thus, broad adoption could result in improved air
quality.
While nobody can predict how well the market will
accept this onslaught of new cars and trucks, it’s obvious that
change on the way. How can stock investors profit from this change.
Given all of the unknowns, I think that investing via
exchange-traded-funds makes more sense that betting on individual
stocks. With that in mind, here are four ETFs, each representing
different market segments, that look good to me. If you do want to
buy individual stocks instead of ETFs, I suggest that you focus on
the biggest holdings for each ETF that I’ll include in the
descriptions.
Autonomous Drivers
Simplify Volt Robocar
Disruption and Tech (VCAR): This fund holds 25 or so stocks that
it expects to dominate the autonomous driving segment of the
electric vehicle industry. The fund, managed by Volt Equity, expects
Tesla to remain the dominant player in the “robocar” race and Tesla
accounts for over 20% of the portfolio. Next biggest holdings are
Nvidia (NVDA), Vale (VALE), Taiwan Semiconductor (TSM) and KUKA
A.G.
(KUKAY), which is a
robotics parts supplier based in Augsburg, Germany. A December 2020
IPO, the Simplify fund has returned 19% over the past 12-months.
Transportation Services
Smart Transportation &
Technology (MOTO): focuses on firms that will be involved in the
production of electric vehicles that will be primarily be used to
offer transportation services such as Uber. Nvidia (NVDA), Tesla
(TSLA), and ON Semiconductor (ON), each account for about 5% of the
total portfolio. Rounding out the top five are Alphabet (GOOG) and
Infineon Technologies (IFX). A November 2019 IPO, the fund has
returned 22% over the past 12-months.
Lithium Battery Production
Global X Lithium & Battery
Tech (LIT): Currently, all electric vehicles require lithium
batteries. This fund holds stocks involved in all aspects of lithium
battery production from mining to refining to battery production.
About 45% of the funds holdings are based in China and only 22% are
based in the U.S. Top holdings available to U.S.-based investors
include Albemarle (ALB), Tesla (TSLA),
Sociedad Química y
Minera de Chile (SQM), Mineral Resources Australia (MALRF), and
Livent (LTHM). Trading since July 2010, the fund has returned 58%
over the past 12-months and averaged 46% annually over the past
three years.
EV Components
KraneShares
Electric Vehicles & Future Mobility (KARS): Hold companies
involved in manufacturing electric vehicles or components used in EV
production. Biggest holdings available to U.S.-based investors
include Ford Motor (F), Tesla (TSLA), Analog Devices (ADI), Infineon
Technologies (IFX) and General Motors (GM). A January 2018 IPO, the
fund has returned 37% over the past 12-months and averaged 40%
annually over the past three years.
Those are my ideas. While the
future for the EV industry looks bright, expect plenty of bumps
along the way. So don’t use cash to buy these ETFs that you’re going
to need back anytime soon.
published 12/21/21
