The byproduct of a push for more electric vehicles on the road is more lithium demand. As such, Tesla CEO Elon Musk deemed lithium as the “new oil” in a recent tweet.
“Auto makers are all in on battery capacity,” a Barron’ article noted. “Other materials, such as nickel and cobalt come from many other countries. Car companies, including Tesla, might consider investing further up the battery value chain to insulate themselves from commodity-price shocks like the one that U.S. drivers are experiencing in 2022.”
A basket of metals that go into lithium ion batteries is up about 45% year to date, adding roughly $1,500 to the price of a typical EV.
Absolutely.
And lithium batteries are the new oil.
— Elon Musk (@elonmusk) July 13, 2022
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2 ETFs to Play the Trend
An obvious demand for lithium should arise out of more electric vehicles on the road. As such, for growth potential, investors will want to look at the Global X Lithium & Battery Tech ETF (LIT).
LIT seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Global Lithium Index, which is designed to measure the broad-based equity market performance of global companies involved in the lithium industry.
LIT highlights:
- High growth potential: Lithium battery technology is essential to the rise of electric vehicles (EVs), renewable energy storage, and mobile devices.
- Advancing clean technologies: EVs produce zero direct emissions, meaning that broader adoption could result in reduced greenhouse gas emissions and improved urban air quality.
- Unconstrained approach: LIT invests in companies throughout the lithium cycle, including mining, refinement, and battery production, cutting across traditional sector and geographic definitions.
Another fund to consider is the Global X Autonomous & Electric Vehicles ETF (DRIV). DRIV seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (“EVs”), and EV components and materials, including companies involved in the development of autonomous vehicle software and hardware, as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt.
DRIV seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Autonomous & Electric Vehicles Index.
DRIV highlights:
- High growth potential: While global EV registrations increased by more than 40% in 2020, EVs still accounted for less than 5% of new cars sold, highlighting substantial room for further adoption.
- Advancing clean technologies: EVs produce zero direct emissions, meaning that broader adoption could result in reduced greenhouse gas emissions and improved urban air quality. Further advances in autonomous driving could also enhance roadway safety.
- Unconstrained approach: This theme is bigger than any single company. DRIV invests accordingly, with global exposure across multiple sectors and industries.
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