Harry Domash's Winning Investing

Electric Vehicles About to Take Off

Next year we’ll see all electric vehicles (EVs) introduced by established brands such as Audi, BMW, Cadillac, Ford, Hyundai, Jaguar, Kia, Mercedes-Benz, Porsche, Volvo, and Subaru, as well as from new brands including Bollinger Motors, Canoo Lifestyle, Fisker, and Lucid Group.

One major advantage of EVs over conventional cars and trucks is that they produce little, if any, greenhouse gas emissions. Thus, broad adoption could result in improved air quality.

While nobody can predict how well the market will accept this onslaught of new cars and trucks, it’s obvious that change on the way. How can stock investors profit from this change.

Given all of the unknowns, I think that investing via exchange-traded-funds makes more sense that betting on individual stocks. With that in mind, here are four ETFs, each representing different market segments, that look good to me. If you do want to buy individual stocks instead of ETFs, I suggest that you focus on the biggest holdings for each ETF that I’ll include in the descriptions.

Autonomous Drivers

Simplify Volt Robocar Disruption and Tech (VCAR): This fund holds 25 or so stocks that it expects to dominate the autonomous driving segment of the electric vehicle industry. The fund, managed by Volt Equity, expects Tesla to remain the dominant player in the “robocar” race and Tesla accounts for over 20% of the portfolio. Next biggest holdings are Nvidia (NVDA), Vale (VALE), Taiwan Semiconductor (TSM) and KUKA A.G. (KUKAY), which is a robotics parts supplier based in Augsburg, Germany. A December 2020 IPO, the Simplify fund has returned 19% over the past 12-months.

Transportation Services

Smart Transportation & Technology (MOTO): focuses on firms that will be involved in the production of electric vehicles that will be primarily be used to offer transportation services such as Uber. Nvidia (NVDA), Tesla (TSLA), and ON Semiconductor (ON), each account for about 5% of the total portfolio. Rounding out the top five are Alphabet (GOOG) and Infineon Technologies (IFX). A November 2019 IPO, the fund has returned 22% over the past 12-months.

Lithium Battery Production

Global X Lithium & Battery Tech (LIT): Currently, all electric vehicles require lithium batteries. This fund holds stocks involved in all aspects of lithium battery production from mining to refining to battery production. About 45% of the funds holdings are based in China and only 22% are based in the U.S. Top holdings available to U.S.-based investors include Albemarle (ALB), Tesla (TSLA), Sociedad Química y Minera de Chile (SQM), Mineral Resources  Australia (MALRF), and Livent (LTHM). Trading since July 2010, the fund has returned 58% over the past 12-months and averaged 46% annually over the past three years.

EV Components

KraneShares Electric Vehicles & Future Mobility (KARS): Hold companies involved in manufacturing electric vehicles or components used in EV production. Biggest holdings available to U.S.-based investors include Ford Motor (F), Tesla (TSLA), Analog Devices (ADI), Infineon Technologies (IFX) and General Motors (GM). A January 2018 IPO, the fund has returned 37% over the past 12-months and averaged 40% annually over the past three years.  

Those are my ideas. While the future for the EV industry looks bright, expect plenty of bumps along the way. So don’t use cash to buy these ETFs that you’re going to need back anytime soon.

published 12/21/21

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