Falling oil prices mean lower prices, a scenario some may view as detrimental to electric vehicle adoption. However, the long-term outlook for EV sales and investment assets, such as the Global X Autonomous & Electric Vehicles ETF (NASDAQ: DRIV), remains compelling.
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’s index “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,” according to Global X.
Some industry observers say investors should not be overly concerned by last year’s tepid EV sales data.
“After a large increase in 2018, EV sales as a share of the overall US passenger vehicle market barely grew in 2019, to 2.5 percent,” reports Ars Technica. “A recent consumer survey from Cox Automotive found demand for EVs barely budged between 2016 and 2018. Automakers not named Tesla, whose Model 3 represented more than half of US EV sales in both 2018 and 2019, are still struggling to make inroads in the US market.”
Put DRIV Into Gear
Electric vehicles are in the early innings of development and there are signs that there is a lot of pent up demand among consumers who want to embrace the technology. In 2017, electric vehicle sales represented 1.7% of all vehicle sales globally, exceeding 1 million for the first time and rising 51% year-over-year. The rate could continue 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.
“Transportation eclipsed the energy sector with the largest share of US carbon emissions produced for the first time in 2016, and, justifiably, climate advocates turned their attention to vehicle electrification as an urgent concern,” according to Ars Technica. “Automakers met those demands with a series of multi-billion-dollar investment commitments, and expectations are now sky-high that those investments will translate to rapid EV adoption domestically.”
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.
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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.