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Are these the best electric vehicle (EV) stocks and ETFs to watch?

Electric car stocks have been popular even before Elon Musk sent a Tesla Roadster into space in 2018. Read on to learn why electric vehicle stocks have value, and which EV manufacturers are jostling for space on the stock market.

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Electric car stocks and ETFs: what you need to know about the sector

Electric vehicles (EVs) no longer represent a vision of the future. Last year, sales of battery-powered electric vehicles and plug-in hybrid electric vehicles made up 4.2% of the global car market – up from 2.5% the previous year.

While Tesla still controls the lion’s share of global EV market, there are various challenger firms emerging – from NIO in China, to Workhorse Group in Ohio.

Furthermore, traditional automakers such as BMW and Toyota have been pivoting towards the EV space and investing in artificial intelligence and battery technology.

But the market still has a lot of room to grow. In the UK, the government has been rolling out on-street charging points across the country, as well as offering a series of incentives to encourage people to make the switch to electric.

By 2030, the UK will end the sale of new petrol and diesel cars and vans, while in the US, President Biden has ordered that all 645,000 government-issued cars and trucks will be replaced with US-made EVs. Many other countries, including Canada, Norway, Spain and Singapore, have also committed to phasing out gas-run vehicles over the next ten to 20 years.

How to trade or invest in electric vehicle shares and ETFs

You can invest and trade in electric vehicle stocks by choosing a stock portfolio that include large- and small-cap companies which are active in the space. Alternatively, electric car ETFs offer instant diversification across the entire EV sector.

Follow these steps to access the growing EV market:

  1. Decide whether you want to trade an EV exchange traded fund (ETF) for broad exposure, or an EV stock
  2. Choose whether to trade or invest
  3. Open an account or log in to your existing account
  4. Place and monitor your trade

Trading and investing are two ways to take a position on electric vehicle stocks and ETFs. When you invest, you effectively take a long-term position in a company or fund in the hope that its value will rise over time. When you trade, you are making short-term decisions to make quick gains in growing markets.

Find out more about the difference between trading and investing

Five electric vehicle shares to watch

  1. Tesla
  2. NIO
  3. Arcimoto
  4. Spartan Energy Acquisition Corporation
  5. Workhorse Group

Tesla

Easily the most famous EV manufacturer in the world – last year it was estimated that Tesla owns a massive 18% share of the global electric vehicle market. In 2020, Tesla’s market cap grew by more than $550 billion, making it the largest automaker in the world by a long shot.

The company is no stranger to criticism, with unpredictable chief executive officer (CEO) Elon Musk known for his ability to move Tesla’s stock price with a single tweet. The firm has also come under fire for delays in the roll-out of its electric vehicles, including the much-maligned cybertruck and the more affordable Model 3 car.

But the company’s long-term value lies in its ability to dominate the booming electric vehicle market, and produce the most efficient and cost-effective lithium-ion batteries.

NIO

Chinese electric vehicle manufacturer NIO has positioned itself as an affordable alternative to Tesla. Since the company was founded in 2014, it has released three premium electric SUVs and a sports car, and pioneered a battery-swapping programme across China.

The company has invested heavily in self-driving technology and other automation features. In 2020, it launched NOMI, the world’s first in-car artificial-intelligence system.

Arcimoto

Inventors of the ‘fun utility vehicle’ or FUV, Arcimoto is carving out its own niche in the EV market by creating vehicles which are particularly suited for emergency services and deliveries. A new model – the Cameo – is currently in production, designed specifically for film making.

The company’s rapid growth led to its promotion from the NASDAQ Capital Market to the NASDAQ Global Market in April 2021.

Spartan Energy Acquisition Corporation

Spartan Energy Acquisition Corporation merged with electric vehicle maker Fisker in October 2020, with the aim of becoming ‘the No. 1 e-mobility service provider with the world’s most sustainable vehicles’.

The merger gave Fisker access to more than $1 billion, which will be used to fund the company’s manufacturing operations through to the end of 2022. By then, the automaker expects to have launched its first electric SUV, the Fisker Ocean.

Workhorse Group

Another US-based company, Ohio’s Workhorse Group designs and builds electric vehicles and aircraft, including delivery drones. For the year ending 31 December 2020, Workhorse reported its net income of $69.8 million – up from a loss of $37.2 million the previous year.

However, its stock price took a nosedive in March 2021, after it lost out on a lucrative contract with the US Postal Service.

iShares Electric Vehicles and Driving Technology Ucits ETF

The iShares Electric Vehicles and Driving Technology UCITS ETF mirrors the performance of a bespoke index of companies that are active in the electric vehicle space.

This means that investors can access multiple EV stocks and shares, including software manufacturers with a single investment. This exchange-traded fund (ETF) includes NVIDIA, EV heavy hitters such as Tesla, and traditional automakers such as Toyota and Hyundai, who have moved into the electric vehicle space in recent years.

iShares Self-Driving EV and Tech ETF

The iShares Self-Driving EV and Tech ETF shares a lot in common with the iShares Electric Vehicles and Driving Technology Ucits ETF, but with an emphasis on tech firms rather than car manufacturers.

NIO and Tesla make the list, along with companies such as Apple and Qualcomm, which are working on software solutions for self-driving cars.

KraneShares Electric Vehicles and Future Mobility Index ETF

Unlike the other two electric vehicle ETFs mentioned above, KraneShares Trust’s KraneShares Electric Vehicles and Future Mobility Index ETF is not heavily weighted towards the US market, and has no exposure to Tesla.

Instead, it offers access to China’s equity market by tracking companies such as Baidu and NIO, alongside more traditional EV plays such as NVIDIA and BMW. As the name suggests, this fund is future focused, and includes several small but innovative tech shares.

Why do people trade and invest in EV stocks and ETFs?

  • It is a growth industry, which has the buy-in of many governments
  • Despite its infancy, the industry has already proven its ability to scale
  • EV stocks and ETFs can form part of a balanced ESG portfolio
  • It is easy to diversify, with many EV stocks and ETFs to choose from
  • It is quick and easy to access these investments through the IG platform

Electric vehicle shares and ETFs summed up

  • The EV market is set to grow substantially over the next 20 years
  • You can take advantage of this growth by investing in EV stocks and ETFs
  • It is easy to build a diversified EV share portfolio with IG

Publication date : 2021-05-04T07:13:32+0100


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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