The electric vehicle, or EV, market has exploded substantially recently and it’s supposed to continue its rise within the next decade and beyond. As government regulations limiting carbon emissions increase, automakers happen to be forced to shift their attention to planet.
Many organisations are vying to get a bit of the EV market, from the automakers themselves to those that supply parts and components used in EVs. The potential for growth helps to make the EV industry irresistible to investors, but success is much from guaranteed.
Committing to electric vehicles: What does the marketplace seem like?
The electric vehicle market is growing significantly over the past 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 taken into account 3.3 million EV sales in 2021, over were purchased from the whole planet in 2020.
Purchasing electric vehicles
Top five EV companies:
Tesla (TSLA)
Ford (F)
Vehicle (GM)
Volkswagen (VWAGY)
Nissan (NSANY)
All five of such companies offer electric vehicles, with Tesla is the clear market leader. Tesla held a 64 percent market share of EV sales throughout the third quarter of 2022, as outlined by Prizes. Its Model 3 and Y vehicles combine to be the cause of nearly 60 percent of EV sales in the U.S.
Tesla differs from the others in that it targets electric vehicles exclusively, whereas other automakers such as Ford and Gm still produce gas-powered vehicles. These legacy manufacturers would like to ramp up their output of EV vehicles from the coming years to meet regulatory requirements and take advantage of growing interest in EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
While the potential for future growth is attractive to investors, the EV industry is not without risks. High-growth industries often attract tons of competition that can hurt the returns investors ultimately earn. Stock values can also be overpriced in exciting new industries, causing investors to overpay for growth that may or may not materialize. Be sure to see the companies you’re investing in before you make an investment, or consider selecting a diversified portfolio available through an electric vehicle ETF.
A different way to spend money on the EV market is to focus on companies that produce a few different EV makers, therefore you don’t need to predict which manufacturer may be the ultimate champion. Companies for example BorgWarner and Aptiv supply different components found in EVs, while BYD produces rechargeable batteries as well as making EVs themselves. Albemarle, on the other hand, is often a specialty chemicals company that produces lithium compounds found in lithium batteries, that are employed in EVs, among other products. These lenders should see their sales tied to EVs grow because overall degree of demand for EVs is constantly increase.
Just as with the pure EV makers, suppliers to EV companies could possibly get bid up to prices which make it difficult for investors to earn attractive returns. Growth doesn’t always materialize you’d like investors hope there can be bumps in the road. Shortages that cause high costs for components today can shift to periods of oversupply and falling prices.
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