The electric vehicle, or EV, market is growing substantially in recent years and it’s anticipated to continue its rise on the next decade and beyond. As government regulations limiting carbon emissions increase, automakers have already been forced to shift their care about electric cars.
Many organisations are vying to secure a piece of the EV market, from the automakers themselves to those who supply parts and components found in EVs. The opportunity for growth helps to make the EV industry appealing to investors, but success is far from guaranteed.
Committing to electric vehicles: Precisely what does the market industry seem like?
The electrical vehicle market has grown significantly during the last decade. In 2012, only 120,000 electric vehicles were sold globally, in accordance with the International Energy Agency. In 2021, global EV sales reached 6.6 million vehicles. Recent growth has largely been driven by China, which taken into account 3.3 million EV sales in 2021, a lot more than were sold in the entire world in 2020.
Investing in electric vehicles
5 top EV companies:
Tesla (TSLA)
Ford (F)
Automobile (GM)
Volkswagen (VWAGY)
Nissan (NSANY)
All five of such companies offer electric vehicles, with Tesla to be the clear market leader. Tesla held a 64 percent market share of EV sales throughout the third quarter of 2022, according to Kelley Blue Book. Its Model 3 and Y vehicles combine to be the cause of nearly 60 percent of EV sales from the U.S.
Tesla is exclusive in this it targets electric vehicles exclusively, whereas other automakers for example Ford and Gm still produce gas-powered vehicles. These legacy manufacturers would like to modernise their production of EV vehicles from the future in order to meet regulatory requirements and utilize growing demand for EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
Even though the risk of future growth is attractive to investors, the EV companies are not without risks. High-growth industries often attract lots of competition that could hurt the returns investors ultimately earn. Share values can be overpriced in exciting new industries, causing investors to overpay for growth that could or may well not materialize. Make sure to view the companies you’re investing in before making a purchase, or consider selecting a diversified portfolio available using an electric vehicle ETF.
An additional way to purchase the EV companies are to focus on companies that produce a number of different EV makers, and that means you don’t have to predict which manufacturer will be the ultimate champion. Companies like BorgWarner and Aptiv supply different components utilized in EVs, while BYD produces rechargeable batteries together with making EVs themselves. Albemarle, alternatively, is a specialty chemicals company that creates lithium compounds found in lithium batteries, which can be found in EVs, among other products. These businesses should see their sales associated with EVs grow because overall level of demand for EVs will continue to increase.
Just like the pure EV makers, suppliers to EV companies can get bid approximately prices which render it challenging for investors to earn attractive returns. Growth doesn’t always materialize you’d like investors hope and there could be bumps in the road. Shortages that cause expensive for components today can shift to periods of oversupply and falling prices.
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