According to a Kelley Blue Book report, EVs sales climbed in the second quarter. These bullish vibes can certainly add momentum to EV-focused ETFs if the trend continues toward the upside.
Lithium prices are in a depressed state and sales are languishing. So, many EV manufacturers were cornered into slashing prices. That could be helping to boost sales. That’s because consumers are taking advantage of the discounts. And that’s despite the current market environment where interest rates are elevated.
Continued Price Pressure
“This increased competition is leading to continued price pressure, gradually boosting EV adoption. Automakers that deliver the right product at the right price and offer an excellent consumer experience will lead the way in EV adoption,” Cox Automotive Industry Insights Director Stephanie Valdez Streaty explained.
The EV market was hit with a supply gut. That’s because manufacturers accelerated their production on the anticipation that EV adoption would rise amid global goals to reduce emissions. While demand has yet to catch up with supply, the long-term expectation is that it eventually will.
“We remain bullish on electric vehicle sales in the long term. The growth will, at times, be very slow, as all-time horizons in the automobile business are vast, but the long-term trajectory suggests that higher volumes of EVs will continue over time. As EV infrastructure and technology improve, and more models are launched, many shoppers sitting on the fence will eventually choose an EV,” Valdez Streaty said.
If bullishness continues for EVs, particularly in the short-term horizon, traders may want to look at 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.
Single Out Tesla With This ETF
If traders don’t want a broad-based approach to EVs, they can opt for single-stock ETFs that can add leverage exposure to the biggest players in the EV space. For example, Tesla traders can maximize gains if the stock heads upward with the Direxion Daily TSLA Bull 2X Shares (TSLL).
EV demand trajectory for the long-term skews toward bullishness. But traders can take advantage of price dips via the Direxion Daily TSLA Bear 1X Shares (TSLS). If the electric automaker sees monthly sales decline or other negative news, TSLS allows traders to take advantage of the short-term price pullbacks.
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