EV ETFs to Consider as a Turnaround Looks Likely

The EV market has been volatile since the start of the year, with the S&P Kensho Electric Vehicles Index falling about 11.9% year to date. However, the recent surge in EV sales in the United States, along with the market's approach to a significant milestone, reinforces a positive outlook, signaling strong potential for the anticipated boom in markets.

According to Cox Automotive’s Kelly Blue Book (KBB), as quoted on Yahoo Finance, EV sales jumped 11% year over year, marking 5% growth from Q2, and surpassed 346,000 units sold. Additionally, compared to last year, the EV market share in the United States increased to 8.9% from 7.8%.

Optimistic September Signals Turnaround for Global EV Market

As EV sales in the United States show signs of gradual improvement, global EV sales are experiencing a remarkable surge. According to market research firm Rho Motion, as quoted on Reuters, sales of fully electric and plug-in hybrid vehicles witnessed a 30.5% annual surge in the month of September, with China surpassing its record figures from August and Europe experiencing a resurgence in growth.

Per data from Rho Motion, EV sales in China surged by 47.9%, totaling 1.12 million vehicles, while the United States and Canada saw a 4.3% increase to 150,000 units. In Europe, EV sales rose by 4.2% to 300,000 units, bolstered by a 24% jump in the United Kingdom and gains in Italy, Germany and Denmark, taking the total EV sales to 1.69 million units globally.

Accelerating Adoption to Fuel the Path to 30 Million EVs by 2027

With governments increasing their efforts toward the goal of net-zero emissions and advocating for more sustainable energy solutions, the global EV market is set to grow. This is highlighted by the fact that nearly one in five passenger vehicles sold globally last year was an EV, according to BloombergNEF, as quoted on EV Market Reports.

Robust manufacturing capabilities, government incentives and an increasing number of affordable EV models help in the swift adoption of EVs globally. Europe can be a good example of the global transition, with EVs projected to account for approximately 41% of all new car sales by 2027.

A substantial increase in investments by Clean Energy Ministerial (CEM) countries is fueling the forecast for EVs to account for one-third of all new passenger car sales by 2027, with global sales projected to reach 30 million units. Spending by the CEM countries increased by 32% in 2023 from 2022.

Per EV Market Reports, interest in emerging nations like India and Brazilis on the rise, with sales in these regions expected to triple and quintuple, respectively, by 2027. However, infrastructure development and affordability still pose challenges for emerging economies.

Improving Affordability Is Another Catalyst

Expanding production capacity and decreasing prices for essential materials such as lithium, cobalt and nickel result in falling costs for batteries, making EVs more affordable.

Declining battery costs, expanding infrastructure and supportive policies are all driving the transition, with about 20% of all new cars sold in CEM countries being an EV, according to EV Market Reports.

ETFs to Consider

Given the uncertainties posed by the upcoming U.S. presidential elections, forecasting the short-term trend in the EV market can be challenging. However, the Fed’s shift to a dovish stance following its first rate cut in four years and increased focus on clean energy by global economies have made the long-term outlook for the EV market promising.

Investors can keep a watch on the below-mentioned funds. These have a longer investment horizon and tap the optimistic surrounding the long-term outlook of the EV market. The inevitable global shift toward electric vehicles positions it as a key growth opportunity for the future.

Global X Autonomous & Electric Vehicles ETF (DRIV)

Global X Autonomous & Electric Vehicles ETF has gained 3.47% over the past month and 1.55% over the past year.

KraneShares Electric Vehicles & Future Mobility ETF (KARS)

KraneShares Electric Vehicles & Future Mobility ETF has gained 20.92% over the past month but has fallen 14.42% over the past year. Since early March 2024, the fund had fallen about 22% till mid-August, when the fund regained momentum, surging about 40% till early October.

iShares Self-Driving EV and Tech ETF (IDRV)

iShares Self-Driving EV and Tech ETF has gained 8.79% over the past month but has fallen 12.61% over the past year. From March 2024, the fund fell about 19% but regained momentum in early August, surging about 18% till mid-October.

Simplify Volt RoboCar Disruption and Tech ETF (VCAR)

Simplify Volt RoboCar Disruption and Tech ETF has gained 5.14% over the past month and 32.05% over the past year.

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Global X Autonomous & Electric Vehicles ETF (DRIV): ETF Research Reports
 
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS): ETF Research Reports
 
iShares Self-Driving EV and Tech ETF (IDRV): ETF Research Reports

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