The electric vehicle, or EV, market has exploded substantially in recent years and it’s likely to continue its rise within the next decade and beyond. As government regulations limiting carbon emissions increase, automakers are already forced to shift their awareness of electric cars.
A lot of companies are vying to secure a bit of the EV market, from the automakers themselves to those that supply parts and components found in EVs. The opportunity for growth helps to make the EV industry irresistible to investors, but success is far from guaranteed.
Purchasing electric vehicles: Simply what does industry seem like?
The electric vehicle market is growing significantly in the last decade. This year, 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 accounted for 3.3 million EV sales in 2021, more than were purchased from the whole planet in 2020.
Buying electric vehicles
Top five EV companies:
Tesla (TSLA)
Ford (F)
Vehicle (GM)
Volkswagen (VWAGY)
Nissan (NSANY)
All five of the companies offer electric vehicles, with Tesla is the clear market leader. Tesla held a 64 percent business of EV sales in the third quarter of 2022, based on Kelley Blue Book. Its Model 3 and Y vehicles combine to account for nearly 60 percent of EV sales inside the U.S.
Tesla is exclusive in that it concentrates on electric vehicles exclusively, whereas other automakers including Ford and Gm still produce gas-powered vehicles. These legacy manufacturers want to expand their production of EV vehicles in the future in order to meet regulatory requirements and utilize growing requirement for EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
Whilst the prospect of future growth is of interest to investors, the EV market is not without risks. High-growth industries often attract lots of competition that will hurt the returns investors ultimately earn. Share values 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 buying prior to making a purchase, or consider deciding on a diversified portfolio available through an electric vehicle ETF.
A different way to spend money on the EV market is to spotlight companies which offer a a few different EV makers, therefore you don’t need to predict which manufacturer could be the ultimate champion. Companies for example BorgWarner and Aptiv supply different components employed in EVs, while BYD produces rechargeable batteries together with making EVs themselves. Albemarle, conversely, is really a specialty chemicals company who makes lithium compounds employed in lithium batteries, which are used in EVs, among other products. These firms should see their sales stuck just using EVs grow as the overall level of interest in EVs continues to increase.
Just like the pure EV makers, suppliers to EV companies can get bid up to prices that make it challenging for investors to earn attractive returns. Growth doesn’t always materialize as soon as investors hope and there could be bumps in the road. Shortages that lead to high costs for components today can shift to periods of oversupply and falling prices.
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