The electric vehicle, or EV, market has grown substantially recently and it’s expected to continue its rise in the next decade and beyond. As government regulations limiting carbon emissions increase, automakers are already expected to shift their awareness of electric cars.
Most companies are vying to get a bit of the EV market, in the automakers themselves to those that supply parts and components found in EVs. The chance of growth helps to make the EV industry popular with investors, but success is far from guaranteed.
Buying electric vehicles: What does the marketplace seem like?
The electrical vehicle market has exploded significantly in the last decade. In 2012, only 120,000 electric vehicles were sold globally, according to the International Energy Agency. In 2021, global EV sales reached 6.Six million vehicles. Recent growth has largely been driven by China, which accounted for 3.3 million EV sales in 2021, a lot more than were bought from the whole world in 2020.
Committing to electric vehicles
Top 5 EV companies:
All five of these companies offer electric vehicles, with Tesla being the clear market leader. Tesla held a 64 percent business of EV sales throughout the third quarter of 2022, as outlined by Prizes. Its Model 3 and Y vehicles combine to account for nearly 60 percent of EV sales within the U.S.
Tesla is unique in that it concentrates on electric vehicles exclusively, whereas other automakers such as Ford and Automobile still produce gas-powered vehicles. These legacy manufacturers wish to modernise their manufacture of EV vehicles within the future to meet up with regulatory requirements and capitalize on growing interest in EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
Even though the risk of future growth speaks to investors, the EV industry is not without risks. High-growth industries often attract lots of competition that can hurt the returns investors ultimately earn. Share values can even be overpriced in exciting new industries, causing investors to overpay for growth that will or may well not materialize. Make sure you view the companies you’re purchasing prior to making an order, or consider picking a diversified portfolio available with an electric vehicle ETF.
An additional way to invest in the EV market is to focus on businesses that supply a number of different EV makers, therefore you don’t have to predict which manufacturer would be the ultimate champion. Companies for example BorgWarner and Aptiv supply different components employed in EVs, while BYD produces rechargeable batteries together with making EVs themselves. Albemarle, conversely, is often a specialty chemicals company which causes lithium compounds employed in lithium batteries, which can be found in EVs, among other products. These businesses should see their sales tied to EVs grow because overall degree of need for EVs is constantly on the increase.
Similar to the pure EV makers, suppliers to EV companies can get bid up to prices that make it hard for investors to earn attractive returns. Growth doesn’t always materialize as fast as investors hope there may 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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