Electric vehicles (EVs) are changing the automotive industry, creating new opportunities for investors. As more people look for environmentally friendly transportation options, the EV market is expected to grow to $1.47 trillion by 2030. Advancements in technology, government incentives, and a shift in consumer preferences toward sustainable choices support this growth.
In this article, well cover essential topics for investors looking to explore EV stocks. You’ll learn what EV stocks are and how to invest in them, get an updated EV market outlook for 2025, and understand why retail investors are showing increasing interest in this sector. We’ll also highlight the benefits and limitations of buying EV stocks, explore the bull and bear cases, and provide guidance on where to research EV stocks. Finally, well walk you through the steps on how to invest in EV stocks effectively.
Retail investors seem to like EV stocks for potential growth and returns, including disruptors like Tesla and NIO, and legacy automakers investing in EV tech.
The EV value chain includes more than just automakers, also covering battery minerals, technology, charging stations, and more.
EV stocks can be volatile in the short-term despite high interest from retail investors.
Retail investors can buy EV stocks and ETFs through platforms like Public.
What are EV stocks?
Electric Vehicle (EV) stocks represent shares in companies that are integral to the electric vehicle industry, including vehicle manufacturers, battery producers, and charging infrastructure suppliers. As electric cars transform the automotive industry, the growth potential of this sector is becoming increasingly evident. The rising demand for EVs, fueled by government support and a shift in consumer preferences, has led many investors to consider investing in EV stocks.
According to a report by Grand View Research, the global EV market is expected to reach $1.07 trillion by 2027, with a compound annual growth rate (CAGR) of 41.5% from 2020 to 2027. With such optimistic growth prospects, many investors are eager to explore the EV market and which types of companies make up its ecosystem.
Beyond just the vehicles themselves, the EV supply chain includes a multitude of components that play a crucial role in this burgeoning industry. In this article, we will delve into the basics of investing in EV stocks and the opportunities that lie within this dynamic market.
EV market outlook 2024
The electric vehicle (EV) industry has seen significant growth in recent years, driven by factors such as advancements in battery technology, government incentives, and consumer demand for more sustainable transportation options. As a result, many analysts predict that the market for EVs and associated technologies, like charging infrastructure and EV energy sources, is well-positioned for significant growth in the coming years
When looking at growing industries, analysts and researchers posit predictions as to adoption and revenue growth into the future. Regarding EVs, a recent report by Bloomberg New Energy Finance predicted that EVs could account for 10% of global passenger vehicle sales by 2025, rising to 28% in 2030 and 58% in 2040. So while EV sales today make a minority share of all sales, within 20 years they are expected to make up over half of all auto sales, according to these estimates.
In addition, according to the International Energy Agencys (IEA) Global EV Outlook 2021, the number of EVs on the road could reach 145 million by 2030. A report by BloombergNEF states that global electric vehicle sales are expected to grow from 3 million units in 2020 to 14 million units in 2025 and 54 million units by 2040.
According to Beyond Market Insights, the size of the Global Electric Vehicle Market was worth around USD 178.5 billion in 2021 and is predicted to grow to around USD 1108.8 billion by 2030 with a compound annual growth rate (CAGR) of roughly 22.5% between 2022 and 2030.
In 2024, the electric vehicle (EV) market is booming, with an estimated 10 million units expected to be sold. It means more people are choosing electric cars, especially with improved access to charging facilities. Experts are hopeful about new regulations and foresee that by 2025, EV sales could account for 15% of global passenger vehicle sales.
Beyond sustainability and technology, there are notable regulatory decisions that have shaped the EV industry, for example, the Inflation Reduction Act of 2022. One of the key provisions of the Act is the extension of tax credits for EV purchases, which aims to make EVs more affordable for consumers. Additionally, the Act includes funding for the development of charging infrastructure, which is essential for the growth of the EV market.
Why are retail investors are interested in EV stocks
There are a few reasons why retail investors are interested in retail stocks:
EV industry momentum:
EV stocks have gained significant popularity among retail investors in recent years. Data shows an increased consumer demand for EVs, and recent legislation further supports an increased interest in opting for EVs.
EV growth prospects:
Some retail investors have been drawn to EV stocks due to their potential for high growth and returns.
Consumer awareness:
In addition retail investors might also have an increased interest in these stocks if they are a consumer of EV products that are publicly traded, like Tesla (TSLA) and Rivian (RIVN). These companies, in addition to others such as NIO and Fisker, have been among the most popular EV stocks among retail investors.
Ease of investing:
The accessibility of commission-free trading platforms and social media platforms, such as Reddit and Twitter, has also contributed to the popularity of EV stocks among retail investors, as it allows for easy sharing of information and opinions.
How to buy EV stocks on Public.com?
1. Sign up for a brokerage account on Public
You can sign up for an account on our website or download the Public app from the App Store (iOS) or Google Play Store (Android).
2. Add funds to your Public account
There are multiple ways to fund your Public accountfrom linking a bank account to making a deposit with a debit card or wire transfer.
3. Choose how much you’d like to invest in EV stocks
Navigate to the Explore page. Then, search for the EV stock of your choice in the search bar. When you see the EV stock appear in the results, tap it to open up the purchase screen.
4. Manage your investments in one place
You can find your newly purchased EV stock in your portfolio alongside the rest of your stocks, bonds, options, crypto, ETFs, and Treasuries.
Key metrics to consider when evaluating EV stocks
When analyzing EV stocks, there are various factors that investors may consider. These are just a few of the many metrics that investors should consider when investing, including:
Sales growth and production numbers: Observing how effectively an EV company scales production and grows vehicle sales can offer insight into its market reach and potential profitability.
Profit margins and earnings reports: A companys earnings reports can highlight operational efficiency and financial health, which may indicate its long-term sustainability.
Battery technology advancements: Innovations in battery technology or partnerships with manufacturers can influence growth opportunities and competitive positioning.
Government policies and incentives: Regulatory changes, tax breaks, and infrastructure investments may also play a role in shaping the EV market and affecting stock performance.
Investors often consider a combination of these and other factors when making informed decisions about EV stocks.
There are several potential advantages to investing in electric vehicle (EV) stocks:
Growing industry:
The EV industry is expected to continue growing rapidly in the coming years, with many governments around the world setting ambitious targets for the adoption of electric vehicles. This growth could translate to higher sales and revenues for companies involved in the industry, which could in turn drive stock prices higher.
Environmental benefits:
Electric vehicles are often seen as a more environmentally friendly alternative to traditional gasoline-powered vehicles, as they produce fewer emissions and pollutants. Investors who are interested in companies that prioritize sustainability may be attracted to EV stocks for this reason
Technological innovation:
The development of electric vehicles requires significant investment in new technology and infrastructure, including battery technology, charging stations, and software for managing and optimizing electric vehicle fleets. Companies that are able to innovate in these areas may have a competitive advantage in the EV market, which could drive higher stock prices.
Government incentives:
Many governments around the world offer incentives for the purchase and adoption of electric vehicles, which can help boost demand for EVs and drive sales for companies involved in the industry. In addition, government policies that prioritize the transition to clean energy may create a more favorable regulatory environment for companies involved in the EV industry.
Limitations to consider when buying EV stocks
Amid this hype, as is the case with any growth stock, EV stocks can be risky. Below are some potential downsides to be mindful of:
Market competition:
The EV industry is becoming increasingly crowded, with many companies competing for market share. This competition can make it difficult for individual companies to stand out, which could limit their growth potential and impact stock prices negatively.
High valuation:
Many EV stocks are currently trading at high valuations, which may not be sustainable if the industry does not continue to grow at the expected rate. This could
result in a market correction, leading to potential losses for investors.
Regulatory risks:
The EV industry is heavily influenced by government policies and regulations, which can be subject to change. Changes in regulations or incentives could impact the demand for EVs and the financial performance of EV companies, which could negatively affect stock prices.
Supply chain risks:
The production of electric vehicles relies on a complex global supply chain, including the sourcing of rare minerals and metals for batteries. Any disruption to the supply chain could impact the production and profitability of EV companies, which could impact their stock prices.
EV stocks: Bull and bear cases
Overall, EV industry bulls are optimistic about the future of electric vehicles, citing trends such as the need for clean energy, advancements in battery technology and charging infrastructure, affordability, government support, potential for autonomous driving technology, and heavy investment in the industry. They see EVs as a rapidly growing market with significant potential for growth and returns
In contrast, EV industry bears have raised concerns about the high costs of EVs relative to gas-powered vehicles, risks associated with EV battery production and supply chain, limited availability of charging infrastructure, lack of standardization in charging technology, concerns about battery lifespan and disposal, and challenges faced by established automakers in transitioning to EV production. They are also cautious about the long-term sustainability of the EV market, which could inhibit future growth potential.
Where to research EV stocks
Given the popularity of EVs among investors, there are various sources from which diligent investors can gather data to make informed decisions. Trusted financial news outlets often cover this industry and investors can track company news, announcements, and earnings calls through publicly available investor relations websites.
Investing platforms like Public also offer in-context education, such as EV supply chain courses, audio shows with industry experts, and advanced charts on EV stock pages.
Investing platforms like Public also offer advanced metrics and insights on all listed stock symbols. By regularly monitoring these sources, investors can make educated and timely portfolio decisions and determine the best EV stocks based on their goals.
Few companies and ETFs in the EV value chain
There are several publicly traded companies that specialize in different aspects of the EV value chain. For example, EV automakers like Tesla, NIO, XPENG, and BYD, as well as legacy manufacturers like Ford and GM are increasingly investing in EVs. On the other hand, lithium battery companies such as Panasonic, LG Chem, and CATL play a crucial role in powering EVs and are also growing as demand for EVs increases.
There are also companies like ChargePoint, EVBox, Fisker, and Blink Charging, which focus on developing and providing EV charging infrastructure to support the growth of the EV industry. Its important for investors to research these companies thoroughly and understand their position in the EV value chain before making investment decisions.
Finally, investors can gain exposure to the EV industry through exchange-traded funds (ETFs), which provide diversified portfolios of EV-related companies. Some popular EV-focused ETFs include the Global X Autonomous & Electric Vehicles ETF (DRIV), the KraneShares Electric Vehicles & Future Mobility ETF (KARS), and the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN). These ETFs typically hold a mix of EV automakers, battery manufacturers, and charging infrastructure companies.
Investing in the rapidly expanding EV industry can be an enticing opportunity for investors. Nonetheless, it is crucial to conduct thorough research and grasp the intricacies of the industry before making any substantial investment decisions. While investing in individual EV stocks or ETFs can offer exposure to this market, diversification across various sectors and industries is essential for long-term investors.
Your path to investments in EV stocks with Public
Electric vehicle (EV) stocks are an exciting option for investors, driven by the global shift toward cleaner energy and advances in technology. Understanding what EV stocks are, how to invest in them, and the benefits and risks involved is important for anyone looking to get involved. While EV stocks show great growth potential, with strong government support and increasing demand, they also come with risks like market swings and regulatory changes.
For those interested in the future of transportation, EV stocks may be a good addition to a diversified portfolio. To learn more, sign up on Public today and join a community of informed investors!
EV stocks refer to stocks of companies that design, manufacture, and sell electric vehicles (EVs) or provide services and technology related to EVs.
What are some components of the EV value chain?
The components of the electric vehicle (EV) value chain include battery production, electric motor manufacturing, charging infrastructure development, and EV assembly. Additionally, other components such as software and sensors, recycling and disposal of used batteries, and research and development are also crucial parts of the EV value chain.
Are EV stocks a good investment?
EV stocks, for certain investors, can be considered a good investment due to the potential for growth, innovation and environmental benefits associated with the industry. However, as with any stock, there are uncertainties and risks to consider when investing including market volatility, competition, and shifting government policies amongst others. Whether or not EV stocks are a good investment depends on individual circumstances, investment goals, and risk tolerance.
