The electric vehicle, or EV, market has grown substantially in recent years and it’s expected to continue its rise in the next decade and beyond. As government regulations limiting carbon emissions increase, automakers happen to be instructed to shift their awareness of electric cars.
Most companies are vying to acquire a piece of the EV market, in the automakers themselves to people who supply parts and components found in EVs. The chance of growth makes all the EV industry popular with investors, but success is a lot from guaranteed.
Committing to electric vehicles: Simply what does the market appear to be?
The electric vehicle market has grown significantly over the past decade. In 2012, only 120,000 electric vehicles were sold globally, in line 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 purchased from the whole world in 2020.
Investing in electric vehicles
5 top EV companies:
Tesla (TSLA)
Ford (F)
Vehicle (GM)
Volkswagen (VWAGY)
Nissan (NSANY)
All five of the companies offer electric vehicles, with Tesla to be the clear market leader. Tesla held a 64 percent market share of EV sales through the third quarter of 2022, as outlined by Prizes. Its Model 3 and Y vehicles combine to account for nearly 60 percent of EV sales within the U.S.
Tesla is exclusive for the reason that 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 within the long term to meet regulatory requirements and take advantage of growing demand for EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
While the possibility of future growth is attractive to investors, the EV companies are not without risks. High-growth industries often attract tons of competition that may hurt the returns investors ultimately earn. Share prices can be overpriced in exciting new industries, causing investors to overpay for growth that will or might not exactly materialize. Be sure you understand the companies you’re purchasing prior to an investment, or consider picking a diversified portfolio available with an electric vehicle ETF.
An alternate way to put money into the EV market is to focus on firms that produce a a few different EV makers, so that you don’t have to predict which manufacturer may be the ultimate champion. Companies such as BorgWarner and Aptiv supply different components employed in EVs, while BYD produces rechargeable batteries together with making EVs themselves. Albemarle, however, is really a specialty chemicals company that creates lithium compounds employed in lithium batteries, that happen to be used in EVs, among other products. These businesses should see their sales tied to EVs grow as the overall amount of demand for EVs is constantly increase.
Just like the pure EV makers, suppliers to EV companies will get bid as much as prices that make it hard for investors to earn attractive returns. Growth doesn’t always materialize as soon as investors hope where there might be bumps in the road. Shortages that lead to expensive for components today can shift to periods of oversupply and falling prices.
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