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Top EV ETFs for Electrifying Gains as Charging Network Expands
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Although the United States has been slow in adopting electric vehicles (EVs), the change that is currently happening in the sector is positive. Now, all 50 states are actively working on creating a national network of EV charging stations. This means that soon, there will be more convenient and accessible charging options across the country, supporting the growth of EVs.
According to Forbes, millions are being invested in the auto industry to create new high-paying jobs and support the EV market by building new manufacturing plants in conjunction with battery manufacturing and processing of electric vehicle components. Proposed vehicle emission standards by the U.S. Environmental Protection Agency (EPA) are driving market transformations.
Investors can choose to invest in electric car stocks or EV battery manufacturers. However, considering the uncertainty in the industry, it's wise to explore electric vehicle ETFs for a diversified approach. Here are some EV ETFs options. Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report) , KraneShares Electric Vehicles & Future Mobility ETF (KARS - Free Report) , SPDR S&P Kensho Smart Mobility ETF (HAIL - Free Report) and iShares Self-Driving EV and Tech ETF (IDRV - Free Report) .
EV Growth in the Country
The sales of all-electric cars in the United States are rising rapidly, surpassing the growth rate of the overall car market. As per insideevs, in the first three months of 2023, there were 257,507 registrations for Battery Electric Vehicles (BEVs), marking a 63% increase compared to the previous year. This accounted for about 7% of the total market, up from 4.6% in Q1 2022.
Tesla (TSLA - Free Report) dominated the BEV segment with 155,360 registrations, capturing approximately 60% of the market share. Non-Tesla BEV registrations reached 102,147, showing a significant increase of 128% year over year and accounting for a 40% market share. This growth indicates that the electric vehicle market is expanding, providing consumers with a wider range of brand and model options. The share of non-Tesla BEV has increased from 28% to 40%, since Q1 last year.
According to GlobeNewswire, the U.S. market for electric vehicle (EV) charging infrastructure is projected to experience significant growth, with estimates indicating a rise from USD 3.92 billion in 2022 to USD 43.46 billion by 2032. This surge in demand is driven by increasing sales of electric vehicles. Multiple government agencies, manufacturers, and service providers are entering agreements that offer lucrative opportunities for growth in the EV charging infrastructure market. The residential segment of the EV charging infrastructure market is projected to have the highest growth rate during the forecast period.
Global Market Outlook
Sales for global passenger electric vehicles in Q1 of 2023, rose 32% year on year with one in every seven cars sold being EV, as per counterpoint. Of all EV sales, BEV constituted 73% while plug-in hybrid EVs accounted for the rest.
The United States surpassed Germany to secure its position as the world's second-largest EV market in Q1 2023, with China retaining its leading position. The implementation of the EV tax credit subsidy in the United States is expected to contribute to a substantial increase in EV sales within the country. To meet the tax credit eligibility criteria, automotive OEMs are actively partnering with battery suppliers and establishing battery manufacturing plants across North America. As a result, the United States is well-positioned to outpace the European Union in the race to build EV batteries.
Developments in Charging Infrastructure
According to Reuters, Toyota Motor (TM - Free Report) recently announced its decision to embrace the ground-breaking "Gigacasting" technology pioneered by Tesla. This strategic move by the Japanese automaker aims to enhance performance and reduce production costs of the upcoming EVs.
Tesla's Giga Press, used in its factories worldwide, produces larger aluminum parts for automotive manufacturing than ever before. It provides benefits in terms of cutting-related costs for manufacturers as well as for making the vehicle light-weight, saving import considerations. Other automakers like General Motors (GM - Free Report) , Hyundai (HYMLF - Free Report) , and Geely's (GELYY - Free Report) affiliates are also embracing Gigacasting.
The White House has confirmed that EV charging stations equipped with Tesla standard plugs, along with the U.S. charging standard connection CCS, will be eligible for substantial federal subsidies. This announcement comes in the wake of Ford Motor (F - Free Report) and General Motors adopting Tesla's North American Charging Standard, disrupting the charging industry's previous trend of CCS connection.
Notably, this is the first time the Biden administration has directly associated Tesla with its plan to invest up to $7.5 billion in building high-speed chargers along 7,500 miles of major U.S. highways.
In other news, General Motors and Samsung SDI are teaming up to construct a new EV battery cell plant in Indiana, with a budget exceeding $3 billion. Located near New Carlisle, IN, the facility is set to commence operations in 2026 and is projected have an annual production capacity of 30 gigawatt hours.
ETFs in Focus
Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report)
The Global X Autonomous & Electric Vehicles ETF seeks to track the performance of the Solactive Autonomous & Electric Vehicles Index. With a basket of 75 securities, the fund has major allocations in the United States (57.1%) and Japan (11.1%).
The fund also has allocations to companies like Tesla (5.31%) and Toyota (2.96). Having gathered an asset base of $883.97 million, Global X Autonomous & Electric Vehicles ETF charges an annual fee of 0.68%.
DRIV has gained31.71% year to date and 20.49% over the past year.
The KraneShares Electric Vehicles and Future Mobility Index ETF seeks to measure the performance of Bloomberg Electric Vehicles Index, having a basket of 65 securities. The fund has investments in companies like Tesla (5.2%) and Samsung SDI (3.96%).
KARS has an asset base of $179.91 million and charges an annual fee of 0.70%. The fund has major allocations in the United States (19.9%), Hong Kong, China (18.17%) and Mainland China (14.47%).
The KraneShares Electric Vehicles and Future Mobility Index ETF has earned 11.62% year to date but has fallen by 6.13% over the past year.
The SPDR S&P Kensho Smart Mobility ETF seeks to track the performance of the S&P Kensho Smart Transportation Index. With a basket of 82 securities, the fund has an asset base of $55.48 million.
The fund has major allocations to automobile manufacturers (18.81%) and semiconductor (16.79%), with 80.88% its assets invested in the United States. The fund charges an annual fee of 0.45%. SPDR S&P Kensho Smart Mobility ETF has returned 13.8% year to date but lost 4.75% over the past year.
The iShares Self-Driving EV and Tech ETF seeks to track the results of the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. With a basket of 59 securities, the fund has an asset base of $429.74 million.
IDRV has major allocations in the consumer discretionary, materials and industrial sectors with a share of 57.61%, 17.29% and 15.72%, respectively. iShares Self-Driving EV and Tech ETF charges an annual fee of 0.47% and has generated 20.58% year to date and 9.47% over the past year.
Image: Bigstock
Top EV ETFs for Electrifying Gains as Charging Network Expands
Although the United States has been slow in adopting electric vehicles (EVs), the change that is currently happening in the sector is positive. Now, all 50 states are actively working on creating a national network of EV charging stations. This means that soon, there will be more convenient and accessible charging options across the country, supporting the growth of EVs.
According to Forbes, millions are being invested in the auto industry to create new high-paying jobs and support the EV market by building new manufacturing plants in conjunction with battery manufacturing and processing of electric vehicle components. Proposed vehicle emission standards by the U.S. Environmental Protection Agency (EPA) are driving market transformations.
Investors can choose to invest in electric car stocks or EV battery manufacturers. However, considering the uncertainty in the industry, it's wise to explore electric vehicle ETFs for a diversified approach. Here are some EV ETFs options. Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report) , KraneShares Electric Vehicles & Future Mobility ETF (KARS - Free Report) , SPDR S&P Kensho Smart Mobility ETF (HAIL - Free Report) and iShares Self-Driving EV and Tech ETF (IDRV - Free Report) .
EV Growth in the Country
The sales of all-electric cars in the United States are rising rapidly, surpassing the growth rate of the overall car market. As per insideevs, in the first three months of 2023, there were 257,507 registrations for Battery Electric Vehicles (BEVs), marking a 63% increase compared to the previous year. This accounted for about 7% of the total market, up from 4.6% in Q1 2022.
Tesla (TSLA - Free Report) dominated the BEV segment with 155,360 registrations, capturing approximately 60% of the market share. Non-Tesla BEV registrations reached 102,147, showing a significant increase of 128% year over year and accounting for a 40% market share. This growth indicates that the electric vehicle market is expanding, providing consumers with a wider range of brand and model options. The share of non-Tesla BEV has increased from 28% to 40%, since Q1 last year.
According to GlobeNewswire, the U.S. market for electric vehicle (EV) charging infrastructure is projected to experience significant growth, with estimates indicating a rise from USD 3.92 billion in 2022 to USD 43.46 billion by 2032. This surge in demand is driven by increasing sales of electric vehicles. Multiple government agencies, manufacturers, and service providers are entering agreements that offer lucrative opportunities for growth in the EV charging infrastructure market. The residential segment of the EV charging infrastructure market is projected to have the highest growth rate during the forecast period.
Global Market Outlook
Sales for global passenger electric vehicles in Q1 of 2023, rose 32% year on year with one in every seven cars sold being EV, as per counterpoint. Of all EV sales, BEV constituted 73% while plug-in hybrid EVs accounted for the rest.
The United States surpassed Germany to secure its position as the world's second-largest EV market in Q1 2023, with China retaining its leading position. The implementation of the EV tax credit subsidy in the United States is expected to contribute to a substantial increase in EV sales within the country. To meet the tax credit eligibility criteria, automotive OEMs are actively partnering with battery suppliers and establishing battery manufacturing plants across North America. As a result, the United States is well-positioned to outpace the European Union in the race to build EV batteries.
Developments in Charging Infrastructure
According to Reuters, Toyota Motor (TM - Free Report) recently announced its decision to embrace the ground-breaking "Gigacasting" technology pioneered by Tesla. This strategic move by the Japanese automaker aims to enhance performance and reduce production costs of the upcoming EVs.
Tesla's Giga Press, used in its factories worldwide, produces larger aluminum parts for automotive manufacturing than ever before. It provides benefits in terms of cutting-related costs for manufacturers as well as for making the vehicle light-weight, saving import considerations. Other automakers like General Motors (GM - Free Report) , Hyundai (HYMLF - Free Report) , and Geely's (GELYY - Free Report) affiliates are also embracing Gigacasting.
The White House has confirmed that EV charging stations equipped with Tesla standard plugs, along with the U.S. charging standard connection CCS, will be eligible for substantial federal subsidies. This announcement comes in the wake of Ford Motor (F - Free Report) and General Motors adopting Tesla's North American Charging Standard, disrupting the charging industry's previous trend of CCS connection.
Notably, this is the first time the Biden administration has directly associated Tesla with its plan to invest up to $7.5 billion in building high-speed chargers along 7,500 miles of major U.S. highways.
In other news, General Motors and Samsung SDI are teaming up to construct a new EV battery cell plant in Indiana, with a budget exceeding $3 billion. Located near New Carlisle, IN, the facility is set to commence operations in 2026 and is projected have an annual production capacity of 30 gigawatt hours.
ETFs in Focus
Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report)
The Global X Autonomous & Electric Vehicles ETF seeks to track the performance of the Solactive Autonomous & Electric Vehicles Index. With a basket of 75 securities, the fund has major allocations in the United States (57.1%) and Japan (11.1%).
The fund also has allocations to companies like Tesla (5.31%) and Toyota (2.96). Having gathered an asset base of $883.97 million, Global X Autonomous & Electric Vehicles ETF charges an annual fee of 0.68%.
DRIV has gained31.71% year to date and 20.49% over the past year.
KraneShares Electric Vehicles & Future Mobility ETF (KARS - Free Report)
The KraneShares Electric Vehicles and Future Mobility Index ETF seeks to measure the performance of Bloomberg Electric Vehicles Index, having a basket of 65 securities. The fund has investments in companies like Tesla (5.2%) and Samsung SDI (3.96%).
KARS has an asset base of $179.91 million and charges an annual fee of 0.70%. The fund has major allocations in the United States (19.9%), Hong Kong, China (18.17%) and Mainland China (14.47%).
The KraneShares Electric Vehicles and Future Mobility Index ETF has earned 11.62% year to date but has fallen by 6.13% over the past year.
SPDR S&P Kensho Smart Mobility ETF (HAIL - Free Report)
The SPDR S&P Kensho Smart Mobility ETF seeks to track the performance of the S&P Kensho Smart Transportation Index. With a basket of 82 securities, the fund has an asset base of $55.48 million.
The fund has major allocations to automobile manufacturers (18.81%) and semiconductor (16.79%), with 80.88% its assets invested in the United States. The fund charges an annual fee of 0.45%. SPDR S&P Kensho Smart Mobility ETF has returned 13.8% year to date but lost 4.75% over the past year.
iShares Self-Driving EV and Tech ETF (IDRV - Free Report)
The iShares Self-Driving EV and Tech ETF seeks to track the results of the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. With a basket of 59 securities, the fund has an asset base of $429.74 million.
IDRV has major allocations in the consumer discretionary, materials and industrial sectors with a share of 57.61%, 17.29% and 15.72%, respectively. iShares Self-Driving EV and Tech ETF charges an annual fee of 0.47% and has generated 20.58% year to date and 9.47% over the past year.
Tesla's Surge Boosts EV ETFs