The electrification of the automotive industry continues to receive full backing of the U.S. government. The current administration under President Biden is supporting a $1 billion fund focused on growing small- to medium-size electric vehicle businesses.
Investment firm Monroe Capital was tapped to facilitate the fund, which was dubbed the “Drive Forward Fund LP.”
“The Drive Forward Fund will seek to raise up to $1 billion and focus on investing in companies that play a pivotal role in fueling growth and innovation within the $1 trillion U.S. automotive industry, Monroe said,” an OilPrice.com report noted.
According to Monroe, per the report, the goal of the fund is “to provide financial support to the businesses that supply mission-critical parts such as powertrain, body, drivetrain, chassis, interiors, and electrical components, as well as complementary Software-as-a-Service (SaaS) and other auto technology and business service providers that cater to the industry.” For traders looking at opportunities, this could provide tailwinds for the EV industry as a whole.
As the government continues to shore up the EV industry, this could provide short-term pops in EV-related equities as capital markets react to the news. For traders, this can pave the way for opportunities in leveraged exchange traded funds. ETFs in particular can provide large-scale exposure to the whole industry or in certain ETF products; even single-stock exposure if traders so choose.
Double Up on EVs
For a broad-based play to double up on EV exposure, consider using the Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV). The fund seeks to achieve 200% of the daily performance of the Indxx US Electric and Autonomous Vehicles Index. It’s an ideal option for broad-based exposure to the EV market, with double leverage to maximize gains.
The index provides exposure to 25 U.S.-listed companies poised to disrupt the existing transportation market by bringing new and cleaner modes of transportation, such as electric and autonomous vehicles. Its top 10 holdings, as of July 31, include domestic electric vehicle manufacturers such as Tesla and Rivian. Likewise, the fund adds diversification by including manufacturers from China, such as Nio and Li Auto. This gives EVAV more global exposure to the short-term upside in EVs.
For traders seeking more concentrated exposure, Tesla is a certainly a familiar name in the EV industry. On that note, the Direxion Daily TSLA Bull 2X Shares (TSLL) can provide traders with twice the exposure to the stock to maximize profit potential.
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