Electric Vehicles

What was once (not too long ago) a niche sideshow in the automotive market is poised to take over the whole thing, with electric vehicles anticipated to dominate car sales by 2040, according to BloombergNEF’s Electric Vehicle Outlook 2020.

But is the mass adoption of electric vehicles really as far off as 2030, when some projections anticipate that battery-powered cars will start to outsell conventional combustion engines? Or, is the electric vehicle revolution already here?

Right now, the prices of electric vehicle stocks are jumping. Tesla, which is expected to announce new battery technology in September, jumped 13% in one morning in June to an all time high of $1,746.69.  Now, it’s as high as $1,835.64 and looking at the next milestone of $1,900. 

Workhorse, a maker of electric vans, also jumped after it cleared the next hurdle to participation in California’s zero-emission subsidy program. These, in addition to a jump for the Chinese electric vehicle maker NIO, the Chinese electric scooter maker Niu, show the enthusiasm for the EV market. 

And there should be. Here’s why. 

What are electric vehicles? 

All-electric vehicles (EVs) are cars and trucks  equipped with an electric motor rather than a traditional internal combustion engine. The electric motor is powered by a large traction battery pack which requires a charging station or wall outlet to charge. 

Because EVs are powered by electricity, they don’t have the tailpipe that emits exhaust as is typical of internal combustion engines. EVs also do not require liquid fuel components, including a fuel pump, fuel line, or fuel tank. Hybrid vehicles, however, still do have these components, as they typically switch over to an internal combustion engine when the electric battery becomes depleted. 

Why invest in electric vehicles? 

Simply put, electricity is the future of transportation.

EVs have the potential to help slash carbon emissions and lower costs for drivers, which is why public utilities such as Xcel Energy are pushing to get 1.5 million electric cars on the road by 2030.

When investing in EVs, it’s more than a matter of purchasing pricey Tesla stock or not. Lots of companies stand to benefit from the adoption of electric vehicles, from battery manufacturers to companies thinking creatively about how to charge electric vehicles. 

These companies are trying to solve the biggest challenges for electric vehicles that have been stumbling blocks to their mass adoption. Namely, the production of batteries that hold a greater charging capacity for a longer period and the accessibility of charging opportunities. 

For example, a new type of battery—solid-state electrolyte— is scheduled to enter the commercial market in 2023. Solid-state batteries are generating major excitement for electric vehicle makers. The solid version of the battery can hold three times more energy than its traditionally liquid counterpart, not to mention it can hold that energy more efficiently and ultimately last longer. Battery prices are expected to fall as their energy density improves, making electric vehicles increasingly more affordable. 

EVs continue to become more mainstream as they become more affordable and charging equipment becomes more widely available.  Blink Charging, for example, designs, manufactures, and operates an electronic vehicle charging network that is managed by cloud software. According to the company, its EV charging equipment sales increased by more than 350% and its revenues for just the first six months of 2020 surpassed its total revenues for all of 2019. 

But, there’s more to all-electric vehicles than batteries and charging stations. 

Specifically, the list of key components in electric cars is long. In addition to the usual wheels and tires, you also need:

  • A charging port
  • A DC/DC converter
  • An electric traction motor to drives the wheels
  • An onboard charger that accepts energy from the charge port and converts it to charge the battery
  • A power electronics controller to “manage the flow of electrical energy delivered by the traction battery”
  • A thermal system to maintain an appropriate temperature range
  • A traction battery pack to store electricity for the motor
  • An electric transmission 
  • And more…

In other words, a shift from conventional combustion engines to all-electric means a shift to makers of these parts for suppliers. 

For example, Aptiv develops safety systems for electric vehicles. Safety systems are crucial considering the high voltage that powers electric vehicles and the “more than 8,000 connection points in a typical electric vehicle.”

Delphi offers automakers powertrain, electrical and battery management solutions for components including inverters, high-power electrical centers, high-voltage connection systems, combined inverter DC/DC converters (CIDD), high-voltage shielded cables, on-board and plug-in chargers and charging inlets.

Magna offers complete vehicle manufacturing, producing vehicles for BMW, Daimler, Jaguar Land Rover and Toyota. Magna was selected by the Beijing Automotive Group Co., Ltd. (“BAIC Group”) in 2019 to “produce up to 180,000 electric vehicles per year in China…starting in late 2020.”

Amphenol develops and supplies advanced interconnect systems, sensors, and antennas for hybrid and electric vehicles. 

These and other companies are poised for growth and are ripe for investment. 

How to invest in electric vehicles

Electric vehicles will outnumber traditional fuel-powered cars before we know it. Now is the time to get ahead of the curve, before affordable, little known stocks rise to the heights of Tesla. A search on Magnifi indicates that there are a number of ways for investors to access this fast-growing segment via ETFs and mutual funds, rather than focusing only on individual companies.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


GM

General Motors (GM)

Once the largest automotive manufacturer in the world, General Motors (GM) today remains the largest U.S. carmaker, producing more than 8.3 million cars and trucks annually. The company traces its roots back to the Durant-Dort Carriage Company, which was the country’s leading manufacturer of horse-drawn vehicles by 1904, when it merged with the Buick Motor Company to take on the then-new market for gas-powered vehicles. By 1962, more than half of all cars sold in the U.S. were produced by General Motors.

Today the company, headquartered in Detroit, designs, manufactures, markets, and distributes vehicles and vehicle parts, in addition to financial services. It has facilities in 37 countries and owns brands including Chevrolet, Buick, GMC and Cadillac, as well as overseas brands such as Holden, Wuling, Baojun and Jiefang.

GM’s worldwide sales volume reached 10 million vehicles in 2016 and the company reported $147 billion in revenue in 2018.

Rationale

A direct way to gain exposure to General Motors is to buy the listed shares. But that can be a risky approach, given GM’s bumpy business history and the current state of the U.S. auto industry as a whole. GM famously declared bankruptcy in 2009 following years of declining sales and was later bailed out by the government in 2014 through the Troubled Asset Relief Program.

A solution that can dampen some of that volatility is to buy funds that provide exposure to General Motors and other similar firms, rather than GM shares themselves. After all, the return drivers that will benefit GM might also benefit other similar firms in automotive, manufacturing, and financial services. As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like GM through these types of funds.

Investing in GM 

A search on Magnifi suggests that investors can gain access to GM via a number of different funds and ETFs, including those shown below.  

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.


Tesla (TSLA)

Few companies capture the spirit of innovation as it exists today as Tesla (TSLA), the California-based maker of electric cars, advanced battery systems, solar panels and other world-changing inventions. Founded in 2003 by engineers Martin Eberhard and Marc Tarpenning, Tesla was soon thereafter joined by current CEO Elon Musk, who invested in the company’s Series A round.

And the rest is history.

As of 2019, Tesla is producing three models of its all-electric vehicles — the Model S liftback sedan, the Model X SUV, and the Model 3 affordable sedan — and has new versions in development including the Model 3 crossover SUV, Roadster sports car and the Semi battery powered Class 8 semi-trailer truck. The company also produces solar panels and solar roof tiles via its SolarCity subsidiary, as well as whole-home rechargeable lithium ion battery systems the Powerwall and Powerpack and the Megapack, a Lithium-ion grid energy storage battery.

As of 2018, Telsa controlled 12% of the global market for plug-in electric passenger cars, with more than 245,000 vehicles delivered, making it the world’s best selling builder in its category.

Rationale

A direct way to gain exposure to Tesla is to buy the listed shares. However, this can be a volatile approach, given the company’s early stage and ongoing growing pains. A solution that can dampen some of that volatility is to buy funds that provide exposure to Tesla and other similar firms, rather than TSLA shares themselves. After all, the return drivers that will benefit Tesla might also benefit other similar firms in their industry, including those making electric vehicles as well as components and infrastructure for the industry. 

As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like Tesla through these types of funds.

Investing in TSLA

A search on Magnifi suggests that investors can gain access to Tesla via a number of different funds and ETFs, including those shown below. 

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.