Electric Vehicle ETFs To Buy This Year Instead Of Stocks 

It’s been an explosive time for the electric vehicle industry, and investors are noticing. In the coming year, it’s predicted that legacy automakers and EV startups will produce more than 400 new EV models, according to a report by McKinsey

After a banner year in 2022, seeing new EV sales skyrocket by a remarkable 65% in the United States, the bulging market now represents 5.8% of all new cars sold in America last year. 

Globally sales have also jumped significantly, in 2021 alone sales doubled, setting a new record of 6.6 million new EVs purchased, a steaming increase from the 120,000 recorded in 2012 of electric cars sold worldwide. 

With steady consumer demand, sustained government policy support, new subsidies, and tax incentives poised for manufacturers and motorists - EV producers are gearing themselves for another thriving year, and investors should be paying attention. 

Though massive developments have been underway to boost the EV market - from California banning the sale of combustion engine cars by 2035 and the Inflation Reduction Act (IRA) introducing new tax stimulus - ambitious manufacturing targets could be setting investors up for success. 

Although EV stocks have had their moment in the sun, ongoing macroeconomic problems; inflation, supply chain constraints, labor issues, and component shortages, among others have caused increasing headwinds for companies, ultimately impacting their topline delivery throughout much of last year. 

The Chinese-based EV producer, Nio (NYSE: NIO), lost close to 8% on the final trading Tuesday of 2022, so far company stocks have slumped by 63% over the last year. The California-based automaker, Lucid Group (NASDAQ: LCID) may have been able to beat the guidance range they issued in August, producing 7,180 new vehicles in 2022, stocks lost an outstanding 80% between January 2022 and January 2023. 

Then there is Tesla (NASDAQ: TSLA), which has perhaps experienced the biggest headwinds this year. The leader in the U.S. and global EV market have seen stock performance come down roughly 60% in the past year. Over the past month, TSLA retreated by 24%, citing a grim performance outlook for the year ahead. 

While EV markets across the world are finding it difficult to stabilize, electric car price pressure, consumer demand, and supply remain critical elements for future performance. Some challenges may persist, but this year, investors could diversify their interest a bit more, and start tapping into EV ETFs as ongoing threats of a global recession could possibly see new car sales tank as consumers retreat.

Providing a bit more range in the electric car ecosystem, here’s a look at some of the best EV ETFs to consider in the coming months. 

KraneShares Electric Vehicles & Future Mobility ETF

Providing some diversity and legacy at the same time, KraneShares’ holdings include (NYSE: NIO), Tesla (NASDAQ: TSLA), and the auto parts company, Aptiv (NYSE: APTV), among others which include some semiconductor suppliers and even automaker Volkswagen (OTC: VWAGY). 

This ETF tracks the Bloomberg Electric Vehicles Index, while its top-performing holding is Contemporary Amperex Technology (CATL). While CATL does not trade in any U.S.-based exchange, the Chinese battery manufacturer is a key supplier for the industry and has been a crucial link for some companies in recent months as supply issues continue. 

The total annual fund operating expenseratio is steady at 0.70%, and currently has total net assets of $193,075,635, according to company sources. 

Global X Lithium & Battery Technology ETF 

With more than $3.8 billion of assets under management (AUM) and an expense ratio of 0.75%, this ETF comprises more than 40 stocks, including companies operating in lithium mining and advanced battery technology development. 

A big stake in the portfolio is dedicated to Albemarle Corporation, an American lithium giant, and the Chinese battery company, EVE Energy. Notably, this ETF doesn’t provide a lot of exposure to Tesla and is more centered around specific EV manufacturing companies and influential players in the global EV industry. 

Global X Autonomous & Electric Vehicles ETF

The Global X ETF provides investors with massive exposure to a wide range of companies, most of which are involved in the development of autonomous vehicle software and hardware. Additionally, the ETF has some allocation to EV manufacturers and familiar EV companies. 

With close to $1.3 billion of net assets as of 2021, the ETF has top holdings in Tesla (NASDAQ: TSLA), General Motors (NYSE: GM), Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL) and Nvidia (NASDAQ: NVDA), among others. 

Technology and advanced software, including a colorful array of semiconductor and battery component companies, make up a large chunk of this ETF. Global X has an expense ratio of 0.68%. 

iShares Self-Driving EV and Tech ETF

An ETF with a melange of different components and companies, including the Irish power company, Eaton Corporation PLC, and Swiss-based electrification specialist ABB Limited, among more than 120 others. This ETF covers all corners of the EV industry and has close to $450 million AUM.

iShares tracks the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index as its benchmark index. Currently, the pay-to-earnings (P/E) ratio is 15.47, and has about 11,100,000 shares outstanding as of mid-January 2023. 

SPDR S&P Kensho Smart Mobility ETF

This ETF tracks the S&P Kensho Smart Transportation Index, with a 20% stake in automobile manufacturers, including Tesla and Li Auto (NASDAQ: LI). Additionally, this fund is divided among other interests, including leaders in the category of AVs, transport systems, and drones. 

The SPDR is a diverse fund that supports the advancement of transportation systems, and the further development of EVs within this ecosystem. 

Top holdings include Veoneer (NYSE: VNE), a car tech provider, and Aspen Aerogels (NYSE: ASPN). There are also picks of heavy machinery manufacturers, semiconductor companies, and construction vehicle makers. With just about $200 million of AUM, and an expense ratio of 0.45% SPDR is a broad fund that gives a lot of exposure to different components.

Amplify Lithium & Battery Technology ETF 

Amplify is a largely liquid fund that offers investors exposure to a small range of components, with 38% of the funds’ assets located in China, and trades around 60,000 shares per day. 

With around $160 million of AUM, this portfolio fund has a substantial footprint in Asia and focuses a majority of its components on companies in lithium battery technology, battery storage, metals and materials, and electric cars. Amplify generally corresponds with the EQM Lithium & Battery Technology Index.

While it doesn’t have that much diversity, this fund is the perfect option for investors who want a bit more exposure to the lithium battery industry, a market that is starting to grow at stratospheric rates as electric cars enter the mainstream market. 

Final Thoughts 

The exciting developments in the electric vehicle market enable investors and shareholders a look into the future of the automobile industry. While there is still a lot of volatility to consider under the current economic climate, perhaps it would be a good time to diversify your portfolio, instead of solely focusing on EV stocks. 

With the overarching industry growing at stratospheric rates, other components, including mining, machinery, production, and battery technology associated with the growth of EVs can mean that companies could see a positive return on their top line in the coming months.