One of the primary obstacles facing electric vehicle adoption is pricing relative to their internal combustion engine rivals. While EVs are still pricier than their traditional counterparts, the gap is closing, and that’s good news for exchange traded funds like the ARK Innovation ETF (NYSEArca: ARKK).
“Companies within ARKK include those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies (‘Genomic Revolution’), industrial innovation in energy, automation, and manufacturing (‘Industrial Innovation’), the increased use of shared technology, infrastructure and services (‘Next Generation Internet’), and technologies that make financial services more efficient (‘Fintech Innovation’),” according to ARK Invest.
Explaining why EVs are pricier isn’t hard. Tesla and other luxury models have a lot to do with it.
“These three market characteristics — the disappearance of the inexpensive new car, the high penetration of leasing for luxury brands, and the high true market value for luxury vehicles — gives me reason to think that EV sales could move quickly,” reports Nathaniel Bullard for Bloomberg.
EV Ramp-Up Is Huge for Tesla, Nio, and ARKK
With an emphasis on lowering emissions via their electrical vehicles, Tesla and Nio have been producing stellar gains over the past year. Nio is often seen as the Tesla of China, though it’s not an ARKK component.
Electric vehicle (EV) manufacturers played a significant role in the standout performance of alternative energy equities last year. With a strong 2020 in the rearview mirror, can these companies continue their upward momentum in 2021?
“Last year, an analysis from BloombergNEF found that ‘upfront cost parity’ for U.S. electric and internal combustion vehicles will arrive in 2024. That’s a milestone: in three years, there will be no price difference and no EV sticker shock. EV models might still be relatively expensive, but they won’t be more expensive than a comparable internal combustion engine vehicle,” according to Bloomberg.
ARKK is one of several ARK ETFs highlighted as early advocates for Tesla (NASDAQ: TSLA) stocks. The case for Tesla upside remains strong because of continuous advancements in electric vehicles.
ARKL’s Tesla allocation is meaningful in that Elon Musk’s company consistently proves adaptable. It’s also winning the electric vehicle (EV) battle in terms of $/charging rate, or miles of range added per minute of charging.
There’s more good news.
“Anyone leasing a luxury vehicle today will be returning that car to the dealer in 2024 and likely finding that there’s an electric vehicle waiting for them at their accustomed price point,” concludes Bloomberg.
For more on disruptive technologies, visit our Disruptive Technology Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.