The electrical vehicle, or EV, market is growing substantially in recent years and it’s anticipated to continue its rise in the next decade and beyond. As government regulations limiting carbon emissions increase, automakers are already forced to shift their care about planet.
Many organisations are vying to secure a piece of the EV market, through the automakers themselves to those who supply parts and components used in EVs. The potential for growth helps to make the EV industry irresistible to investors, but success is way from guaranteed.
Purchasing electric vehicles: What does the market industry appear like?
The electrical vehicle market is continuing to grow significantly over the past decade. This year, only 120,000 electric vehicles were sold globally, in line with the International Energy Agency. In 2021, global EV sales reached 6.6 million vehicles. Recent growth has largely been driven by China, which included 3.3 million EV sales in 2021, over were purchased from the whole planet in 2020.
Purchasing electric vehicles
Top five EV companies:
Tesla (TSLA)
Ford (F)
General Motors (GM)
Volkswagen (VWAGY)
Nissan (NSANY)
All five of the companies offer electric vehicles, with Tesla is the clear market leader. Tesla held a 64 percent market share of EV sales during the third quarter of 2022, in accordance with Prizes. Its Model 3 and Y vehicles combine to are the cause of nearly 60 % of EV sales in the U.S.
Tesla is exclusive because it is targeted on electric vehicles exclusively, whereas other automakers for example Ford and General Motors still produce gas-powered vehicles. These legacy manufacturers are looking to expand their production of EV vehicles in the future to meet regulatory requirements and capitalize on growing requirement for EVs.
Other EV manufacturers include Rivian Automotive (RIVN), NIO (NIO), Li Auto (LI) and Nikola (NKLA).
Whilst the risk of future growth is attractive to investors, the EV companies are not without risks. High-growth industries often attract lots of competition that may hurt the returns investors ultimately earn. Stock values can be overpriced in exciting new industries, causing investors to overpay for growth which could or may well not materialize. Make sure you see the companies you’re committing to before you make an order, or consider deciding on a diversified portfolio available through an electric vehicle ETF.
An alternate way to spend money on the EV market is to spotlight companies that supply a number of different EV makers, therefore you don’t have to predict which manufacturer may be the ultimate champion. Companies such as BorgWarner and Aptiv supply different components found in EVs, while BYD produces rechargeable batteries in addition to making EVs themselves. Albemarle, however, is often a specialty chemicals company who makes lithium compounds found in lithium batteries, which are used in EVs, among other products. These businesses should see their sales linked with EVs grow because the overall degree of requirement for EVs will continue to increase.
Similar to the pure EV makers, suppliers to EV companies will get bid approximately prices which make it difficult for investors to earn attractive returns. Growth doesn’t always materialize you’d like investors hope there can be bumps from the road. Shortages that lead to high costs for components today can shift to periods of oversupply and falling prices.
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