Market observers continue talking about a recession and its impact on the auto industry. While growth names such as Tesla (NASDAQ: TSLA) aren’t immune from economic contraction, the case for electric vehicle adoption remains sturdy, a trend that supports the bull case for ETFs such as the ARK Autonomous Technology & Robotics ETF (NYSEARCA: ARKQ).
ARKQ captures the converging industrial and technology sectors, capitalizing from autonomous vehicles, robotics, 3D printing, and energy storage technologies. That wide mandate helps lever the ARK fund too much more than just self-driving cars, an important trait at a time of rapid robotics advancements. When it comes to electric vehicles, data confirm that this is an epic growth frontier.
“ARK’s thesis for the evolution of the market differs dramatically,” said ARK Invest in a recent report. “Based on Wright’s Law, we forecast EV sales will be 37 million units, six-times higher than the forecasting agencies’ consensus estimate for 2024.”
Global automotive industry observers believe electric vehicles will reach comparable price points to traditional internal combustion engine vehicles sometime in the next several years, making it more compelling for drivers to make the switch to electric vehicles.
Where The Growth Is At
Sales of electric vehicles are increasing and data suggest that rise is coming at the expense of traditional gas-powered equivalents.
“Despite an estimated 3.1 million drop in total auto sales worldwide, EV sales are expected to grow significantly during the next five years. EV sales growth could be lumpy as factories build to scale but should be robust over time as EV adoption gains traction,” according to ARK.
The automotive industry is constantly innovating whether it’s the rise of electric vehicles, autonomous self-driving transportation, and organizational initiatives to drive more innovation in the sector. DRIV enables investors to access high growth potential through companies critical to the development of autonomous and electric vehicles – a potentially transformative economic innovation.
“The Energy Industry Administration (EIA) has increased its US forecasts for EV sales significantly but consistently tapers growth beyond 2025, ignoring traditional adoption curves,” notes ARK. “The biggest risk to ARK’s forecast is whether or not traditional automakers will be able to scale EV production. If they do, then global EV sales could hit 37 million units in 2024.”
Tesla is ARKQ’s largest holding at nearly 11% of the fund’s weight.
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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.