Tesla (NASDAQ: TSLA) is the clear captivating name in the electric vehicle space once again this year, but the Global X Autonomous & Electric Vehicles ETF (NASDAQ: DRIV) is performing admirably even with a light Tesla weight, proving broad exposure to the electric vehicle ecosystem can benefit investors.
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 ETF is up more than 6% to start 2020.
Global automotive industry observers believe electric vehicles will reach comparable price points to traditional internal combustion engine vehicles sometime in the next several years, making it more compelling for drivers to make the switch to electric vehicles.
“Tesla is ramping up in its electric vehicle production with new factories in China and Europe. The company’s capacity expansion is also good news for battery manufacturers who play a critical role in the supply chain,” said Global X in a recent research report.
Hitting The Road With DRIV
EV adoptions are likely to accelerate as a result of EVs becoming more economical than gas-powered cars and as a result of pro-climate regulatory changes pushing to ban gas-powered cars. However, snafus in battery production must be addressed in order for the EV boom to continue blossoming.
“The potential for bottlenecks in battery production has been a concern with the company. Elon Musk admits that the battery module assembly line is responsible for past slowdowns in the company’s Gigafactory in Nevada,” according to Global X.
The automotive industry is constantly innovating whether it’s the rise of electric vehicles, autonomous self-driving transportation and organizational initiatives to drive more innovation in the sector. DRIV enables investors to access high growth potential through companies critical to the development of autonomous and electric vehicles – a potentially transformative economic innovation.
“Thus, the more batteries, the better. Panasonic, which makes batteries with Tesla in the U.S., recently announced that its battery business turned profitable,” notes Global X. “Tesla’s current installed EV capacity in the U.S. is now about 490,000, which could require approximately 27 GWh of lithium-ion battery capacity. In Shanghai, CATL and LG Chem will work with Tesla to produce batteries for the company’s Model 3s and, eventually, Model Ys.”
For more thematic investing ideas, visit our Thematic Investing Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.