The electric vehicle, or EV, market has exploded 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 forced to shift their focus on electric cars.
Many companies are vying to get a part of the EV market, through the automakers themselves to those who supply parts and components used in EVs. The chance of growth makes all the EV industry attractive to investors, but success is much from guaranteed.
Committing to electric vehicles: Precisely what does the market appear like?
The electric vehicle market is growing significantly within the last decade. Next year, only 120,000 electric vehicles were sold globally, in accordance with the International Energy Agency. In 2021, global EV sales reached 6.6 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 sold in everyone in 2020.
Purchasing electric vehicles
Top 5 EV companies:
All five of those companies offer electric vehicles, with Tesla to be the clear market leader. Tesla held a 64 percent market share of EV sales throughout the third quarter of 2022, based on Kelley Blue Book. Its Model 3 and Y vehicles combine to be the cause of nearly 60 percent of EV sales within the U.S.
Tesla is different in that it focuses on electric vehicles exclusively, whereas other automakers such as Ford and Vehicle still produce gas-powered vehicles. These legacy manufacturers want to ramp up their creation of EV vehicles in the coming years to get to know 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 possibility of future growth wil attract to investors, the EV marketplace 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 may or may well not materialize. Be sure you view the companies you’re purchasing prior to an investment, or consider choosing a diversified portfolio available with an electric vehicle ETF.
An alternate way to spend money on the EV market is to concentrate on businesses that produce a few different EV makers, and that means you don’t need to predict which manufacturer could be the ultimate champion. Companies for example BorgWarner and Aptiv supply different components used in EVs, while BYD produces rechargeable batteries in addition to making EVs themselves. Albemarle, however, can be a specialty chemicals company that produces lithium compounds utilized in lithium batteries, which can be utilized in EVs, among other products. These lenders should see their sales stuck just using EVs grow because the overall a higher level demand for EVs continues to increase.
Similar to the pure EV makers, suppliers to EV companies can get bid as much as prices which render it challenging for investors to earn attractive returns. Growth doesn’t always materialize as soon as investors hope there may be bumps within the road. Shortages that lead to expensive for components today can shift to periods of oversupply and falling prices.
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