The Inflation Reduction Act that just passed through Congress contains various tax credits for electric vehicles, which should help give the industry a lift. This also puts investment opportunities for electric vehicles in focus as well.
Per a CNBC report, the act will include “a tax credit worth up to $7,500 for buyers of new all-electric cars and hybrid plug-ins would be extended through 2032. The bill would also create a separate tax credit worth a maximum $4,000 for used versions of these vehicles.”
The caveat, however, is that there are certain price and income restrictions. As such, it’s difficult to tell whether this will actually increase the number of electric vehicles on the road given these restrictions.
For example, the price of sedans is capped at $55,000, and vans are limited to a price of $80,000. Furthermore, the credit is not available to single tax filers whose modified adjusted gross income exceeds $150,000 or to couples whose combined income exceeds $300,000.
An All-Inclusive Electric Vehicle ETF
Nonetheless, the act is still a push forward for the electric vehicle industry, which bodes well for exchange traded funds (ETFs) that focus on this market. One such fund to consider is the all-inclusive option of 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. This includes 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. The fund offers:
- High growth potential: DRIV enables investors to access high growth potential through companies critical to the development of autonomous and electric vehicles — a potentially transformative economic innovation.
- An unconstrained approach: DRIV’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging technological theme.
- ETF efficiency: In a single trade, DRIV delivers access to dozens of companies with high exposure to the autonomous and electric vehicles theme. Having the disruptive automotive industry in an ETF wrapper also gives traders access to short-term market maneuvers within the sub-sector.
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