4 ETFs to Play the EV Influx
Back in 2015, Volkswagen AG (OTC: VLKAF) was caught falsifying emissions testing data on its diesel-powered cars. It was a huge deal for the company.
It cost Volkswagen about $30 billion to settle the case. When this happened, the company had no concrete plans to build electric vehicles. But what a difference a few years makes.
Volkswagen is now rapidly moving to produce all its vehicles on an EV platform.
As part of its settlement here in the U.S., it must “electrify America.” So it created a subsidiary, Electrify America, that’s charged with spending $2 billion over the next decade to build out the country’s EV charging infrastructure.
As part of the settlement, Electrify America is responsible for the maintenance of its network for 10 years.
Once the infrastructure is in place, Volkswagen will have a nationwide charging network to compete with Tesla’s (Nasdaq: TSLA) Supercharger network.
By 2025, electric and plug-in hybrids could make up as much as 12% of all light-duty vehicles sold in the U.S. All the carmakers rushing into the EV production space are making that a reality.
Ironically, Volkswagen could end up with the best EV lineup of any automaker.
It plans to design all its EVs using the modular MEB EV platform.
One of the first vehicles it makes may be a Volkswagen EV microbus, the I.D. Buzz. The company also has released concept photos of the two-seater I.D. Buggy, I.D. Crozz (crossover), I.D. Vizzion (sedan) and a yet-to-be-named sporty vehicle based on the I.D. platform.
Furthermore, Volkswagen’s Porsche subsidiary is coming out with the Taycan EV. This model likely will compete directly with Tesla’s premium EVs.
Bring It On
Several other automakers have approached Volkswagen about using its MEB platform. And Volkswagen is happy to share.
One of those partners may turn out to be Ford (NYSE: F). The two are working together to produce a midsize pickup and a commercial van for overseas markets.
No word on whether the partnership will eventually lead to a new Ford EV.
A more near-term competitor to Tesla’s Model Y crossover is Kia (OTC: KIMTF). It’s pouring billions into EV development.
Kia’s first effort is its all-electric Niro crossover. The Niro has debuted internationally and is expected to hit the U.S. this spring. The company claims the price will be very competitive.
Another up-and-coming competitor is a Chinese startup called Byton. As evidenced by its California research and development facility, the company has big plans for the U.S. market.
Its M-Byte EV does the Tesla Model 3 one better. Its electronic dashboard screen is the size of seven iPads. And it has additional screens on the steering wheel and center console.
Byton expects to launch sales in China by the end of 2019. U.S. sales should follow shortly thereafter.
Lastly, following up on its i3 EV, BMW (OTC: BMWYY) is working on the iX3, i4 and iNEXT SUV.
How to Invest in the Coming EV Influx
U.S. EV sales are just starting to take off. But in China, sales have left the launch pad and are already soaring.
The best way I know to invest in the EV space is via one of the numerous exchange-traded funds (ETFs) that cover the sectors involved.
One such ETF for the EV industry is the Global X Lithium & Battery Tech ETF (NYSE: LIT). It tracks the Solactive Global Lithium Index.
The index comprises 40 companies that produce battery chemicals and electrical equipment, as well as companies that are involved in metals and mining. Its year-to-date return is 6.7%.
Another fund focused on EV battery materials is the Amplify Advanced Battery Metals and Materials ETF (NYSE: BATT).
It seeks to replicate the performance of the Solactive Battery Value-Chain Index. It has 44 holdings and a year-to-date return of 11.4%.
Then there’s the Global X Autonomous & Electric Vehicles ETF (Nasdaq: DRIV). It is designed to replicate the performance of the Solactive Autonomous & Electric Vehicles Index.
Its year-to-date return is 15.6%.
Perhaps the best of the lot is the KraneShares Electric Vehicles & Future Mobility Index ETF (NYSE: KARS). This fund follows the performance of the Solactive Electric Vehicles and Future Mobility Index.
The 78 companies in the index are heavily weighted toward semiconductor makers. Its year-to-date return is an impressive 20.1%.
Investors interested in the EV space might consider adding any of these ETFs to their portfolios.
You can read more about EVs and their role in what I believe is the coming disruption in energy in my new book, The Energy Disruption Triangle, now available online.