The Brave New World of EV Investing

The Brave New World of EV Investing

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While we have yet to realize the dreams of the environmentally friendly flying cars popularized in the Jetsons, the EV (electric vehicle) market has certainly come a long way baby. Huxley would certainly be very proud of this brave new EV world.

Tesla is currently the king of the EV market, with a whopping 70% market share in 2021, and its market share dominance should continue for another few years at least. Still, numerous EV options abound for investors looking beyond Tesla with the likes of Rivian, Nio, and Hyzon as some of the more notable EV brand names.

Beyond these EV-only companies, nearly every legacy automaker is throwing their hat into the EV ring. The initial results, while encouraging, have been mixed. While GM has elicited a lot of buzz with their upcoming EV version of its Corvette, and Ford’s EVs continue to see extremely high demand, this excitement has not yet translated into stock or financial performance for most, there is a bigger picture to consider.

The S&P 500 has dropped nearly 25% since January, and many experts are expecting a recession in 2023. Additionally factoring in supply chain issues, it’s understandable that you are pessimistic and perhaps are fearful to be involved in the stock market now. However, the legendary investor Warren Buffett reminds us to be “...greedy when others are fearful.”

Widespread market pessimism, while understandable, should not scare you away from seeking and finding incredible discounted opportunities that currently exist in the market, especially in the EV space. Counterintuitively, the environment surrounding rising oil prices can be seen as good signs for the future of EV.

Despite incredible global demand, major oil companies are generally eschewing increasing production output, largely due to necessary investment expenditures that they don’t believe will pay off in the long run. As we transition to greener, cleaner automobiles, companies understand that significant investments of monies and time devoted to projects ‘soon to be obsolete’ are a waste of those precious resources.

Political, financial, societal, and environmental concerns and pressures seem to be converging to usher in this green new world of automobiles more quickly. The timeline for universal adoption of EVs is nebulous, but myriad investors will profit handsomely from the transition from fossil fuel based automobiles to this brave new EV world.

The biggest remaining question is: “Will you be one of those investors?”

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*Image above courtesy of John Cameron