The electric vehicle, or EV, market has exploded substantially in recent times and it’s expected to continue its rise within the next decade and beyond. As government regulations limiting carbon emissions increase, automakers have been forced to shift their attention to electric cars.
Most companies are vying to acquire a bit of the EV market, from your automakers themselves to those that supply parts and components employed in EVs. The opportunity of growth helps make the EV industry irresistible to investors, but success is much from guaranteed.
Buying electric vehicles: Exactly what does the market industry appear to be?
The electrical vehicle market has grown significantly in the last decade. In 2012, only 120,000 electric vehicles were sold globally, according to the International Energy Agency. In 2021, global EV sales reached 6.6 million vehicles. Recent growth has largely been driven by China, which included 3.3 million EV sales in 2021, over were bought from the entire world in 2020.
Investing in electric vehicles
5 top EV companies:
Tesla (TSLA)
Ford (F)
General Motors (GM)
Volkswagen (VWAGY)
Nissan (NSANY)
All five of these companies offer electric vehicles, with Tesla is the clear market leader. Tesla held a 64 percent share of the market of EV sales through the third quarter of 2022, in accordance with Kelley Blue Book. Its Model 3 and Y vehicles combine to account for nearly Sixty percent of EV sales within the U.S.
Tesla is unique in that it is targeted on electric vehicles exclusively, whereas other automakers for example Ford and General Motors still produce gas-powered vehicles. These legacy manufacturers are looking to ramp up their production of EV vehicles within the future to meet regulatory requirements and take advantage of growing requirement for EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
Even though the possibility of future growth is of interest to investors, the EV industry is not without risks. High-growth industries often attract tons of competition that can hurt the returns investors ultimately earn. Stock prices can be overpriced in exciting new industries, causing investors to overpay for growth which could or may not materialize. Be sure to understand the companies you’re investing in prior to a purchase order, or consider deciding on a diversified portfolio available through an electric vehicle ETF.
An additional way to purchase the EV companies are to pay attention to companies that supply a various EV makers, and that means you don’t need to predict which manufacturer could be the ultimate champion. Companies like BorgWarner and Aptiv supply different components utilized in EVs, while BYD produces rechargeable batteries along with making EVs themselves. Albemarle, on the other hand, can be a specialty chemicals company who makes lithium compounds utilized in lithium batteries, that happen to be employed in EVs, among other products. These companies should see their sales linked with EVs grow as the overall level of interest in EVs continues to increase.
Just as with the pure EV makers, suppliers to EV companies can get bid approximately prices making it difficult for investors to earn attractive returns. Growth doesn’t always materialize as fast as investors hope high might be bumps from the road. Shortages that cause high prices for components today can shift to periods of oversupply and falling prices.
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