The default play to get exposure to the hot electric vehicle (EV) market would be to target the automakers like Tesla, but there are other options for investors wanting indirect exposure.
“Many investors these days want to add exposure to the burgeoning electric-vehicle industry, but finding the right option can be difficult,” The Street says.
One way is through ETFs that cater to lithium. Getting exposure via the confines of an ETF wrapper can help investors limit the price volatility that could come with trading the metal directly.
“An underrated way to play the EV revolution is through lithium stocks, as this scarce metal is critical to manufacturing the batteries that power these cutting-edge cars,” The Street adds. “Demand for EVs is sharp and all the major manufacturers are investing heavily to increase production. That translates directly to demand for the metal that powers their rechargeable batteries.”
It’s not just the EV market that benefits from lithium, which is praised for its use in high efficiency and high durability applications. The alkali metal is used in a plethora of applications that span across various industries, including healthcare and, of course, technology.
A Growing Market
One way to capitalize on the growth potential of EVs is with the Global X Lithium & Battery Tech ETF (LIT). The fund 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 broad-based equity market performance of global companies involved in the lithium industry.
LIT gives investors:
- High growth potential: Lithium battery technology is essential to the rise of electric vehicles (EVs), renewable energy storage, and mobile devices.
- Advancement of 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.
“According to Grandview Research, the global lithium market size was valued at $2.7 billion in 2020 and should grow at a compounded annual rate of 14.8% from 2021 to 2028,” The Street says. “All this taken together, investors might see a number of long-term lithium winners over the next few years.”
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