The electric vehicle, or EV, market has exploded substantially lately and it’s likely to continue its rise within the next decade and beyond. As government regulations limiting carbon emissions increase, automakers have already been instructed to shift their care about electric cars.
Many organisations are vying to secure a part of the EV market, through the automakers themselves to those who supply parts and components found in EVs. The potential for growth helps make the EV industry irresistible to investors, but success is way from guaranteed.
Committing to electric vehicles: Precisely what does the market industry seem like?
The electrical vehicle market has grown significantly during the last decade. In 2012, only 120,000 electric vehicles were sold globally, in accordance with the International Energy Agency. In 2021, global EV sales reached 6.Six million vehicles. Recent growth has largely been driven by China, which taken into account 3.3 million EV sales in 2021, more than were purchased in the entire world in 2020.
Buying electric vehicles
Top 5 EV companies:
Tesla (TSLA)
Ford (F)
Vehicle (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 market share of EV sales through the third quarter of 2022, based on Kelley Blue Book. Its Model 3 and Y vehicles combine to account for nearly 60 % of EV sales within the U.S.
Tesla is different in that it concentrates on electric vehicles exclusively, whereas other automakers for example Ford and General Motors still produce gas-powered vehicles. These legacy manufacturers are looking to modernise their production of EV vehicles from the coming years to meet up with regulatory requirements and utilize growing interest in EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
As the prospect of future growth is of interest to investors, the EV industry is not without risks. High-growth industries often attract lots of competition that may hurt the returns investors ultimately earn. Share values can be overpriced in exciting new industries, causing investors to overpay for growth which could or might not exactly materialize. Be sure to understand the companies you’re committing to prior to an order, or consider deciding on a diversified portfolio available using an electric vehicle ETF.
An alternate way to spend money on the EV companies are to pay attention to companies that supply a few different EV makers, which means you don’t need to predict which manufacturer will be the ultimate champion. Companies including BorgWarner and Aptiv supply different components used in EVs, while BYD produces rechargeable batteries together with making EVs themselves. Albemarle, however, is a specialty chemicals company that creates lithium compounds utilized in lithium batteries, which can be found in EVs, among other products. These firms should see their sales stuck just using EVs grow since the overall level of interest in EVs is constantly on the increase.
Just like the pure EV makers, suppliers to EV companies can get bid as much as prices making it challenging for investors to earn attractive returns. Growth doesn’t always materialize as quickly as investors hope and there could be bumps within the road. Shortages that lead to high costs for components today can shift to periods of oversupply and falling prices.
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