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Expect a Rally in EV ETFs on a Likely Apple-Hyundai Deal

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A boom in the electric vehicle segments is in the cards. Solid growth momentum in Elon Musk’s Tesla (TSLA - Free Report) and its amazing two-year stock performance support the fact. To add further optimism to the EV market, Apple (AAPL - Free Report) and Hyundai are closing a deal to build an electric car together, CNBC reported as quoted on Business Insider.

Sources told CNBC that the deal is yet to be signed and Apple may join hands with another automaker.If finalized, the EV would be Apple branded and built at South Korea’s Kia's (an affiliate of Hyundai) assembly plant in West Point, GA, CNBC indicated. Late last year, Apple said that it is foraying into the electric vehicle segment.

Apple said that this will have a brand-new battery technology, and plans to deliver its first EV sometime in 2024. The battery will have the potential to "radically" diminish charging time and increase range, one source told Reuters quoted on Business Insider.So far, EV has been in the spotlight thanks to Tesla. Apple’s entry into the field will make the space more appealing (read: Forget Sector Rotation: Tech ETFs to Rule in Christmas Week).

Apple looks to build 100,000 vehicles annually by 2024 at the Kia plant. The company aims to expand that annual capacity to 400,000 in the course of time. Per the sources, this would not be a commercial vehicle or a self-driving taxi but a consumer vehicle. Apple would vie for market share with electric-car makers like Tesla and Rivian, instead of eying dominance in the robo-taxi field and competing with firms like Waymo.

Market Impact

Kia shares jumped to their highest level in over two decades on Feb 3 after a local media report said the carmaker will sign a 4 trillion won ($3.59 billion) deal with Apple to build electric vehicles. The company’s shares should also benefit from the speculation. Apple shares gained about 1.9% after hours on Feb 3.

ETFs to Gain

Apple-heavy ETFs likeiShares Dow Jones US Technology ETF (IYW - Free Report) ,Select Sector SPDR Technology ETF (XLK - Free Report) and Vanguard Information Technology ETF (VGT - Free Report) should gain ahead (read: Warren Buffett Bets Big on Apple: Buy These ETFs).

Needless to say, the enthusiasm over the EV space has prompted ETF issuers to come up with EV and battery-related funds. In the past two years, there was a surge in the launches of these ETFs, with which investors can tap this accelerating industry.

Hence, electric vehicles-related ETFs like Amplify Advanced Battery Metals and Materials ETF (BATT - Free Report) , Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report) , KraneShares Electric Vehicles and Future Mobility Index ETF (KARS - Free Report) and The iShares Self-Driving EV and Tech ETF (IDRV) should also see decent gains in the near term (read: ETFs & Stocks to Bet on the EV Boom).

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