Significant strides are being made in the U.S. and globally to build out the electric vehicle industry and infrastructure, and while it is often the manufacturers that garner much of the media attention, there is a depth of investment opportunity across the EV value chain that the KraneShares Electric Vehicles and Future Mobility ETF (NYSE: KARS) seeks to capture.
Many major auto manufacturers have announced a partial conversion to electric vehicles, either converting existing popular models to electric varieties or branching out into a whole new business arm committed to EVs. Demand and EV adoption is increasing exponentially both in the U.S. and abroad. The global EV market was $238 billion in 2021 and is anticipated to grow at a compound annual growth rate (CAGR) of 22.2% over the forecast period to 2030 according to a recent report from Emergen Research.
Image source: Emergen Research
Aside from the emissions benefits that EVs offer, there is great underlying foundational support for the growth of the EV ecosystem as a whole.
“Increasing investments towards Research & Development (R&D) activities by governments and various government initiatives such as favorable tax policies, funding for vehicle charging stations, and subsidies for purchasing those vehicles, are creating lucrative revenue growth opportunities for EVs, and such factors are expected to drive market revenue growth during the forecast period.”
The Benefits of Investing in the EV Ecosystem
Supply chain challenges, geopolitical impacts, and trade tensions have had impacts on EV production globally, and looking further afield than just the manufacturers can offer benefits for investors. The KraneShares Electric Vehicles and Future Mobility ETF (NYSE: KARS) offers a good solution for investors looking to capture the potential growth of major EV producers globally and provides diversification potential beyond its peers.
The fund takes not just a global approach to EV exposure but also invests along the entirety of the value chain, offering diversification for EV investors. KARS offers exposure to lithium miner and processor Albermarle Corp at a 4.61% weight, to battery manufacturers such as Contemporary Amperex at a 3.18% weight, to EV technology manufacturers like Nidec Corp at 4.08%, and to the big name EV producers globally, including China.
KARS measures the performance of the Bloomberg Electric Vehicles Index, which tracks the industry holistically, including exposure to electric vehicle manufacturers, electric vehicle components, batteries, hydrogen fuel cells, and the raw materials utilized in the synthesis of producing parts for electric vehicles.
KARS invests in many familiar car companies such as Tesla, Ford, and Mercedes-Benz, and major Chinese EV manufacturers such as Li Auto, Nio, and BYD. It also goes a step beyond and invests in the companies that contributed to the EV value chain, such as Samsung, LG, Panasonic, and Albemarle.
It has an expense ratio of 0.70%.
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