The electrical vehicle, or EV, market has grown substantially recently and it’s anticipated to continue its rise over the next decade and beyond. As government regulations limiting carbon emissions increase, automakers have been instructed to shift their focus on planet.
Many organisations are vying to acquire a piece of the EV market, in the automakers themselves to those that supply parts and components used in EVs. The chance of growth helps to make the EV industry attractive to investors, but success is a lot from guaranteed.
Investing in electric vehicles: Exactly what does the market look like?
The electrical vehicle market has exploded significantly during the last decade. In 2012, only 120,000 electric vehicles were sold globally, in line with the International Energy Agency. In 2021, global EV sales reached 6.6 000 0000 vehicles. Recent growth has largely been driven by China, which accounted for 3.3 million EV sales in 2021, greater than were sold in the whole planet in 2020.
Buying electric vehicles
Top five EV companies:
Tesla (TSLA)
Ford (F)
General Motors (GM)
Volkswagen (VWAGY)
Nissan (NSANY)
All five of such companies offer electric vehicles, with Tesla being the clear market leader. Tesla held a 64 percent share of the market of EV sales during the third quarter of 2022, based on Kelley Blue Book. Its Model 3 and Y vehicles combine to be the cause of nearly Sixty percent of EV sales within the U.S.
Tesla is unique because it concentrates on electric vehicles exclusively, whereas other automakers including Ford and General Motors still produce gas-powered vehicles. These legacy manufacturers are looking to increase their creation of EV vehicles in the future years to meet up with regulatory requirements and exploit growing need for EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
Even though the potential for future growth speaks to investors, the EV market is not without risks. High-growth industries often attract tons of competition that may hurt the returns investors ultimately earn. Stock values can also be overpriced in exciting new industries, causing investors to overpay for growth that could or may well not materialize. Make sure to see the companies you’re purchasing before you make an investment, or consider selecting a diversified portfolio available through an electric vehicle ETF.
An alternate way to put money into the EV information mill to spotlight companies that offer a number of different EV makers, therefore you don’t must predict which manufacturer will be the ultimate champion. Companies such as BorgWarner and Aptiv supply different components utilized in EVs, while BYD produces rechargeable batteries as well as making EVs themselves. Albemarle, conversely, can be a specialty chemicals company that creates lithium compounds found in lithium batteries, which are utilized in EVs, among other products. These companies should see their sales associated with EVs grow because overall degree of interest in EVs will continue to increase.
Similar to the pure EV makers, suppliers to EV companies can get bid up to prices making it difficult for investors to earn attractive returns. Growth doesn’t always materialize as soon as investors hope where there could be bumps in the road. Shortages that lead to high prices for components today can shift to periods of oversupply and falling prices.
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