Tesla’s remarkable earnings performance has reignited interest in the electric vehicle (EV) market, showcasing a significant 22% surge in its stock price that added nearly $150 billion to its market capitalization. The company recently reported its Q3 2024 results, which exceeded analysts’ expectations with earnings per share of $0.72, surpassing the anticipated $0.58. A notable achievement was Tesla’s breakthrough in production efficiency, with costs declining to a record low of $34,544 per vehicle, resulting in a per-vehicle gross profit of $8,698.
This momentum is not limited to Tesla; it reflects a broader trend of unprecedented global EV adoption. In the first half of 2024, global EV sales reached 3.4 million units, marking a substantial 25% year-over-year increase. As the automotive industry undergoes a transformation that encompasses not just vehicle manufacturing but also battery technology, charging infrastructure, and autonomous driving systems, investors are keen to tap into this burgeoning market.
Three exchange-traded funds (ETFs) stand out as prime opportunities for investors looking to capitalize on the EV revolution: KARS, DRIV, and TSLL. Each of these ETFs offers a unique approach to investing in the electric vehicle landscape, catering to various aspects of the sector.
1. KraneShares Electric Vehicles and Future Mobility ETF (KARS)
The KraneShares Electric Vehicles and Future Mobility ETF (KARS) has established itself as a significant player in the EV investment space since its launch in January 2018. KARS adopts a comprehensive strategy that goes beyond traditional automakers, providing exposure to the entire electric vehicle ecosystem through a carefully curated portfolio.
By tracking the Bloomberg Electric Vehicles Index, KARS captures a wide array of EV innovations, including battery manufacturers, charging infrastructure providers, and companies involved in autonomous driving technology and critical materials supply. A distinctive feature of KARS is its substantial focus on Asian markets, particularly China, which constitutes over 37% of its holdings. This strategic allocation is particularly relevant given China’s dominance in the global EV supply chain and its rapid market adoption.
With approximately $80 million in assets under management, KARS offers a modest 1% dividend yield, translating to an annual distribution of $0.23 per share. The portfolio composition of KARS showcases a roster of leading global EV companies. Notable holdings include:
- Contemporary Amperex Technology (4.90%) – China’s leading battery manufacturer
- Li Auto (4.24%) – An emerging player in the EV market
- BYD (4.16%) – A well-known name in the EV sector backed by Warren Buffett
- Arcadium Lithium (3.83%) – A key supplier of lithium for batteries
- Geely Automobile (3.75%) – A prominent automotive manufacturer
Although KARS has experienced a 14% decline year-to-date, it remains a compelling option for investors seeking exposure to the electric vehicle market’s growth potential.
2. Amplify Lithium & Battery Technology ETF (BATT)
The Amplify Lithium & Battery Technology ETF (BATT) focuses on the critical components that drive the electric vehicle revolution, specifically lithium and battery technologies. As the demand for electric vehicles continues to rise, so does the need for lithium, a fundamental element in the production of batteries.
BATT aims to provide investors with a diversified portfolio of companies engaged in the lithium supply chain, including mining, production, and battery manufacturing. The fund’s strategy is designed to capitalize on the increasing demand for electric vehicles and the corresponding need for efficient battery technologies.
With a diverse array of holdings, BATT offers exposure to companies that are at the forefront of lithium extraction and battery innovation. This ETF is particularly appealing to investors who wish to focus on the essential materials that power the EV industry.
3. Global X Autonomous & Electric Vehicles ETF (DRIV)
The Global X Autonomous & Electric Vehicles ETF (DRIV) provides a broader perspective on the electric vehicle market by focusing on companies involved in both autonomous driving technology and electric vehicles. This ETF captures the intersection of two transformative trends within the automotive industry: the shift to electric vehicles and the development of self-driving technologies.
DRIV’s portfolio includes a mix of established automakers and innovative tech companies, reflecting the diverse landscape of the EV and autonomous driving sectors. This ETF is ideal for investors looking to gain exposure to the future of transportation, as it encompasses companies that are pioneering advancements in both electric and autonomous vehicles.
As electric vehicle sales continue to gain traction, with a record market share of 8.9% in the U.S., these ETFs present strategic investment opportunities for those looking to benefit from the ongoing transformation of the automotive industry.
In summary, the electric vehicle market is experiencing rapid growth, driven by companies like Tesla and supported by increasing global adoption rates. ETFs such as KARS, BATT, and DRIV offer investors a range of options to engage with this dynamic sector, providing exposure to various aspects of the electric vehicle ecosystem. Whether focusing on traditional automakers, essential materials, or cutting-edge technologies, investors have the opportunity to ride the wave of the electric vehicle revolution.
