Explore Chinese EV Demand With KARS | ETF Trends

While electric vehicles have seen more muted demand in the United States, the same cannot be said for China. Chinese automaker BYD recorded sales of more than 600,000 electric vehicles in the first quarter of 2024, highlighting China’s notable demand for climate-friendly vehicles. This comes as BYD continues to battle Tesla for the top EV automaker spot, with Tesla raising prices for the Model Y in both China and the United States.

BYD and Tesla may need to step up efforts in the face of new competition, as well. Reuters reports that Xiaomi, a Chinese electronics maker, has told customers  the wait time for their new SU7 electric sedan could last as long as seven months.

The China Passenger Car Association noted that EV sales were a bit more muted in January and February of 2024. But BYD’s sales surge indicates the demand for battery-powered vehicles is still there. Other Chinese electric automakers such as Li Auto are also seeing strong results, with car deliveries in March leaping about 39% year over year.

Traders and investors seeking exposure to heavy-hitting EV automakers in China could consider the KraneShares Electric Vehicles & Future Mobility Index ETF (KARS). Benchmarked to the Bloomberg Electric Vehicles Index, KARS provides wide exposure to companies participating in producing electric vehicles and relevant components. The fund has a net expense ratio of 0.72%.

Measured Exposure

KARS has broad exposure to global players in the EV market. But the fund also has notable investments in some of the leading Chinese competitors. China represents more than 40% of its portfolio. In particular, the second-largest holding for the fund is in BYD, as the automaker continues to be a dominant force in China’s EV space.

BYD’s rivals remain sizable holdings for the fund as well, including Tesla, Li Auto, Xpeng, and Nio. Further, the fund is still invested in other global automakers such as Rivian and Volvo, ensuring KARS is not an all-in bet on China’s EV demand.

KraneShares possesses immense experience in navigating China’s investment market. The issuer’s largest fund is the KraneShares CSI China Internet ETF (KWEB), which currently has over $5.3 billion in assets under management.

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