A healthy supply of electric vehicles (EVs) on public roads will require a healthy demand for critical minerals in order to meet carbon reduction goals. That could propel the Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV) to higher heights.
Critical minerals include lithium and nickel, which are both used in manufacturing batteries that provide EVs power. As such, a tremendous growth opportunity exists for investment in companies that mine for critical minerals.
This means countries like the United States will need to source the minerals elsewhere. One source could be other parts of the globe which are already rich with supply. In turn, this increases the country’s reliance on imports, which could potentially compound as demand for clean energy alternatives grow.
“The push towards a more sustainable future requires various key minerals to build the infrastructure of the green economy,” a Mining.com article mentioned. “However, the US is heavily reliant on nonfuel mineral imports causing potential vulnerabilities in the nation’s supply chains.”
“Specifically, the US is 100% reliant on imports for at least 12 key minerals deemed critical by the government, with China being the primary import source for many of these along with many other critical minerals,” the article added further.
Given the prospects for growth in the long term, there are also opportunities to be had in the short-term horizon. This where a fund like EVAV could be of benefit to traders.
Double Charge EV Exposure
EVAV seeks to achieve 200% of the daily performance of the Indxx US Electric and Autonomous Vehicles Index. The index provides exposure to 25 U.S.-listed companies poised to disrupt the existing transportation market. They aim to do this by bringing new and cleaner modes of transportation, such as electric and autonomous vehicles.
It also includes companies beyond vehicle manufacturers to paint a more holistic picture of the industry. The index includes charging station manufacturers such as ChargePoint and Blink. It also includes companies involved in software development and the manufacturing of various electrical components and EV manufacturers such as Tesla, Lucid, and NIO.
Tesla is one of the more commonly traded stocks. This gives EVAV a broad market option in EVs, as opposed to playing the stock directly. However, traders looking to target their strategies on the electric automaker, but also want additional leverage can look at the Direxion Daily TSLA Bull 1.5X Shares (TSLL) or conversely, take the bearish side with the Direxion Daily TSLA Bear 1X Shares (TSLS).
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