The sale of electric vehicles (EVs) is rising again, spelling opportunity for leveraged ETFs. Likewise, inverse funds can offer options when short-term weakness occurs.
Demand may finally show signs of keeping up with the supply of EVs on the market if the latest data provides any indication. As reported by Yahoo Finance, Cox Automotive’s Kelly Blue Book (KBB) noted specifically that EV sales rose 11% year over year while also rising 5% higher in the third quarter versus the previous one.
One important piece of data was the rising market share of the U.S. The U.S. was able to increase its market share by 8.9%, which is 1.1% higher than a year ago.
“While year-over-year growth has slowed, EV sales in the US continue to march higher,” said Stephanie Valdez Streaty, Cox Automotive’s director of insights.
One of the reasons for the rise is the number of incentives manufacturers are offering to move the cars off the lot. The KBB report noted the average of incentives in the third quarter was 12%, which is 5% higher than the average.
3 Ways to Trade EVs
If EV sales continue to trend higher, traders can look at the Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV). The fund seeks to achieve 200% of the daily performance of the Indxx US Electric and Autonomous Vehicles Index. It’s an ideal option for broad-based exposure to the EV market, with double leverage to maximize gains.
The index provides exposure to 25 U.S.-listed companies poised to disrupt the existing transportation market by bringing new and cleaner modes of transportation, such as electric and autonomous vehicles. Its top 10 holdings, as of July 31, include domestic electric vehicle manufacturers such as Tesla and Rivian. Likewise, the fund adds diversification by including manufacturers from China, such as Nio and Li Auto. This gives EVAV more global exposure to the short-term upside in EVs.
Tesla is one of the biggest movers and shakers in the EV industry, so for traders wanting more concentrated exposure to the stock and the ability to maximize profits should take a look at the Direxion Daily TSLA Bull 2X Shares (TSLL).
Likewise, traders can take advantage of price dips via the Direxion Daily TSLA Bear 1X Shares (TSLS). If the electric automaker sees an unfavorable earnings report or other negative news, TSLS allows traders to take advantage of the short-term price pullbacks.
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