The electric vehicle, or EV, market has grown substantially recently and it’s likely to continue its rise on the next decade and beyond. As government regulations limiting carbon emissions increase, automakers have already been made to shift their care about electric cars.
A lot of companies are vying to obtain a part of the EV market, through the automakers themselves to those who supply parts and components utilized in EVs. The opportunity of growth makes the EV industry irresistible to investors, but success is way from guaranteed.
Investing in electric vehicles: What does industry look like?
The electrical vehicle market is continuing to grow significantly in the last decade. In 2012, only 120,000 electric vehicles were sold globally, based on the International Energy Agency. In 2021, global EV sales reached 6.Six million vehicles. Recent growth has largely been driven by China, which landed 3.3 million EV sales in 2021, more than were sold in everyone in 2020.
Committing to electric vehicles
Top 5 EV companies:
General Motors (GM)
All five of such companies offer electric vehicles, with Tesla is the clear market leader. Tesla held a 64 percent share of the market of EV sales throughout the third quarter of 2022, according to Prizes. Its Model 3 and Y vehicles combine to are the cause of nearly 60 % of EV sales in the U.S.
Tesla differs from the others in this it is targeted on electric vehicles exclusively, whereas other automakers like Ford and Vehicle still produce gas-powered vehicles. These legacy manufacturers are looking to expand their manufacture of EV vehicles in the long term to meet regulatory requirements and exploit growing requirement for EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
Whilst the risk of future growth is of interest to investors, the EV companies are not without risks. High-growth industries often attract tons 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 will or may well not materialize. Be sure to see the companies you’re purchasing before you make an order, or consider choosing a diversified portfolio available with an electric vehicle ETF.
An additional way to spend money on the EV companies are to pay attention to businesses that offer a number of different EV makers, so that you don’t need to predict which manufacturer could be the ultimate champion. Companies including BorgWarner and Aptiv supply different components found in EVs, while BYD produces rechargeable batteries together with making EVs themselves. Albemarle, conversely, is often a specialty chemicals company that produces lithium compounds found in lithium batteries, that happen to be employed in EVs, among other products. These firms should see their sales linked with EVs grow because the overall a higher level interest in EVs is constantly increase.
Just as with the pure EV makers, suppliers to EV companies could get bid approximately prices making it a hardship on investors to earn attractive returns. Growth doesn’t always materialize as quickly as investors hope and there can 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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