Melting EV Price Gap Creates Opportunities | ETF Trends

The price gap between electric vehicles and gas-powered cars is continuing to shrink.

New data from Cox Automotive finds that the average EV price was $52,314 in February. This marks a 12.8% cost decline year over year. Price drops for electric vehicles are showing signs of acceleration, January 2024 saw prices lower 11.6% year over year.

Cox Automotive’s research adds that Tesla’s Model 3 and Model Y are key factors in the industry’s overall cost decline. In particular, the Model Y saw the lowest transaction prices on record, representing a year-over-year drop of 16.2%. The Model 3 also experienced a notable year-over-year cost decline of 12%, nearing the lowest level on record.

Cost concerns have remained a primary barrier to entry for potential EV customers. An annual AAA Survey found that 59% of individuals who are either undecided or unlikely to buy an EV consider cost the most concerning factor.

Indicators of potential price relief could encourage more consumers to give an electric vehicle a spin. Investors seeking exposure to potential growth in the EV market could consider the KraneShares Electric Vehicles & Future Mobility Index ETF (NYSE Arca: KARS).

KARS aims to track the performance of the Bloomberg Electric Vehicles Index through exposure to companies that produce electric vehicles with EV components. The fund possesses a net expense ratio of 0.72%.

Global Exposure

Notably, KARS features global exposure to several EV markets around the world, including China. Research from Harvard Business Review notes that EV sales in China accounted for nearly 60% of global EV sales in 2022. KARS holds assets in some of China’s largest EV companies, such as BYD and Li Auto.

Looking back at EV affordability, Tesla is one of the largest holdings within KARS. Meaningful exposure to the automaker places the fund in a prime position to capitalize on electric vehicle price shifts down the line.

The fund possesses roughly $107 million in assets under management. While the year-to-date return is still in the red, KARS is currently up about 5.7% over the last month.

Currently, 26 KraneShares ETFs are listed in the United States, representing approximately $7.2 billion in assets under management.

For more news, information, and analysis, visit the Climate Insights Channel.