Already hot, the Global X Autonomous & Electric Vehicles ETF (NASDAQ: DRIV) has more tailwinds, including improving electric vehicle (EV) infrastructure that could lure more buyers to this automobile segment.
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.
One of the primary hurdles in luring drivers away from traditional cars to the EV segment are fears of running out of charge and lack of charging stations, but those scenarios are improving for the better.
“The electric vehicle sector has been stuck for years with a chicken-and-egg problem,” reports Bloomberg. “Until there were extensive networks of public charging stations, a critical mass of people would never feel comfortable driving EVs—but until a critical mass of people were driving EVs, there was no sense in investing in extensive networks of public charging stations.”
Good Timing
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, addressing charging infrastructure is pivotal to the industry’s fortunes.
“EVs and the infrastructure needed to charge them have also been a part of many of the stimulus packages announced by European and Asian governments,” according to Bloomberg. “Just in the past few weeks, Germany included chargers in its €2.5 billion proposed economic package, and the European Union announced that it’s aiming to have 1 million public chargers by 2025, from fewer than 200,000 today.”
Currently, electric vehicles represent a small percentage of new automobiles sold around the world and cars on the road, but that percentage is expected to increase in a big way over the next several years, but massive growth is coming for the industry. Increasing battery life and power is essential to converting more drivers to electric vehicles. Interestingly, there are some surprise beneficiaries of a more robust EV charging market.
“Oil companies and utilities especially are well positioned to dominate the EV charging market. Oil suppliers already operate strategically located fueling stations for internal combustion vehicles, and utilities control electricity production and distribution networks,” according to Bloomberg.
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