It seems that the verdict is already out. Electric Vehicles (EV) will replace Internal Combustion Engine (ICE) vehicles in time to come. EVs are viewed as more energy efficient, more environmentally friendly and cost less to maintain.
Although EVs get a lot of attention, they are still a relatively small portion of the overall vehicle market, currently estimated at around 6% globally, with penetration higher in China and Europe than in the U.S.
A greater proportion of the cars existing now are ICE vehicles. Over the next 30 to 40 years, that equation is going to flip with EVs making up the vast majority of vehicles on the road as ICE vehicles are faced out and greater proportions of EVs are sold.
Countries like Norway is set to ban sales of new gas-powered cars in 2025, and its adoption is running ahead of schedule. Current estimates show about 80% of cars sold in Norway use EV technology.
China imposed a mandate on automakers requiring that electric vehicles (EVs) make up 40% of all sales by 2030. Due to China accounting for a large proportion of demand, this move will expand the production of EVs and EV batteries enough to bring down the worldwide cost of both.
Over time, as technology is expected to improve, this will bring down overall costs. Battery costs, which make up 30-40% of the cost of an EV, have come down 80% over the last six to seven years and this has fuelled a lot more innovation in that space as people attempt to find new and innovative ways of building batteries in a way that makes them a lot cheaper and makes the car cheaper.
To obtain exposure to EVs, one approach is via an EV themed ETF which will include not only EVs but also companies who are in batteries, other EV components, mining of critical minerals, hydrogen and even in charging stations and autonomous vehicles.
A couple of years ago, we would have said that if one wants to get exposure to this theme, buy an EV ETF as we wouldn’t know who would survive. Now, buying into an EV ETF allows investors to get the broad based exposure required to an important macro trend.
There are also ETFs focusing on other parts of the supply chain such as Battery, Self driving, EV minerals. Here we look at 4 EV focused ETFs.
Best EV ETFs
Some of the most popular and largest EV thematic ETFs are listed in the table below
| ETF | Global X Autonomous & Electric Vehicles | KraneShares Electric Vehicles and Future Mobility Index | iShares Self-Driving EV and Tech | Global X China Electric Vehicle and Battery |
| Exchange | Nasdaq | NYSE | NYSE | HKSE |
| Ticker | DRIV | KARS | IDRV | HKD:2845; USD:9845 |
| Inception date | 3/4/18 | 18/1/18 | 16/4/19 | 16/1/20 |
| Denomination | USD | USD | USD | USD |
| Expense ratio | 0.68% | 0.70% | 0.47% | 0.68% |
| Fund size | 0.93b | 0.24b | 0.44b | 0.65b |
| No. of holdings | 74 | 68 | 119 | 19 |
| Top 10 holdings weighting | 25.98% | 39.61% | 40.24% | 80.12% |
| Top 10 holdings | Tesla, Apple, Microsoft, Alphabet, Qualcomm, Nvidia, Toyota, Intel, Honeywell, Ford | Tesla, Albemarle, Nio, CATL, Plug Power, Aptiv, BYD, Nidec, Samsung SDI, Sociedad Quimica y Minera | Tesla, Apple, Alphabet, Ford, Qualcomm, Toyota, Eaton, GM, Samsung Electronics, ABB | Eve Energy, Shenzhen Inovance, CATL, BYD, Ganfeng Lithium, Tianqi Lithium, Guangzhou Tinci, Shanghai Putailai, Sunwoda Electronic, Gotion High-Tech |
Here we have 2 US centric ETFs, namely DRIV & IDRV, 1 Global ETF (KARS) and 1 Chinese centric ETF.
Comparing the Top 10 holdings across the first 3 ETFs, obviously the one mainstay would be Tesla. Toyota also features on 2 ETFs. FAANG stocks such as Apple and Alphabet also feature on 2 ETFs. Semiconductor themed companies such as Qualcomm and Samsung also feature on 2 ETFs.
Global X Autonomous & Electric Vehicles (DRIV)
The Global X Autonomous & Electric Vehicles ETF (DRIV) seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (“EVs”), and EV components and materials.
It 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.
This ETF tracks the Solactive Autonomous & Electric Vehicles Index which tracks the price movements in shares of companies which are active in the electric vehicles and autonomous driving segments. This particularly includes electric vehicle manufacturers, electric vehicle component producers, companies that mine or produce raw materials that are relevant to the electric vehicle and autonomous vehicle technology segment, companies that build autonomous vehicles, and suppliers of autonomous vehicle technologies.
The top 10 holdings in DRIV as of 31 Jul 2022 are as follows:
The industry and country breakdown are as follows:
As the Global X Autonomous & Electric Vehicle ETF is actively managed and aims to track the Solactive Autonomous & Electric Vehicles Index, Do also check out the latest developments of the Global X Autonomous & Electric Vehicle ETF at their website here before an investment is made.
KraneShares Elecric Vehicles and Future Mobility Index (KARS)
KARS has positions in global companies that operate in all areas of new transportation methods, passenger, and freight, including electric vehicles, autonomous vehicles and shared mobility.
KARS provides exposure to companies that lead the development of vehicle connectivity like Internet of Vehicles (IoV) and Intelligent mobility and to the potential growth brought on by increased demand for lithium-ion battery and non-ferrous metals like lithium due to electric vehicle adoption. It also has access to equities listed in Mainland China, which is currently the world’s largest electric vehicle market.
KARS seeks to measure the performance of the Bloomberg Electric Vehicles Index. The Index is designed to track the performance of companies engaged in the production of electric vehicles and/or their components or engaged in other initiatives that may change the future of mobility. The Index includes issuers engaged in the electric vehicle production, autonomous driving, shared mobility, lithium and/or copper production, lithium-ion/lead acid batteries, hydrogen fuel cell manufacturing and/or electric infrastructure businesses.
Here are the Top 10 holdings in KARS as of 8 Sep 22:
The industry and country breakdown are as follows:
Do also check out the latest developments of the KraneShares Electric Vehicles and Future Mobility ETF at their website here before an investment is made.
iShares Self-Driving EV and Tech (IDRV)
The iShares Self-Driving EV and Tech ETF tracks the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. The index comprises of developed and emerging market companies that benefit from growth and innovation in EV, battery technologies and autonomous driving technologies.
Hence, investing in IDRV provides access to companies at the forefront of self-driving and EV innovation These companies are globalised and capture the full value chain for self-driving and EV industries across sectors and geographies and will provide long-term growth
The top 10 holdings in IDRV as of 8 Sep 2022 are as follows:
The sector and country breakdown are as follows:
Do also check out the latest developments of the iShares Self-Driving EV and Tech ETF at their website here before an investment is made.
Global X China Electric Vehicle and Battery (HKG 2845 / 9845)
The Global X China Electric Vehicle and Battery ETF enables investors to access high growth potential through companies critical to the development of electric vehicles in China.
It seeks to invest in companies at the forefront of cybersecurity innovation, gaining exposure to stocks across the full value chain of cybersecurity and tech industries globally. These companies should have long term growth that can shape the global economic future.
Here are the Top 10 holdings as of 8 September 22:
The ETF’s geographic exposure is 100% in China and all underlying holdings are listed in China.
Unlike the other ETFs, this ETF has a broader industry spread with only 10% exposure to automobile companies with the remaining exposure.
As this ETF is listed in Hong Kong, it provides for easy access to investors globally. There is also an option of either investing in HKD or USD. However, as a 100% China-centric ETF, the prevalent risks associated with China are worth noting.
Do also check out the latest developments of the Global X China Electric Vehicle and Battery ETF at their website here before an investment is made.
Closing statement
Electric Vehicles are likely to replace ICE vehicles in the long term, supported by longer term government policies across the world, we have shared with you 4 ETFs you can consider if you wish to bet on EVs.
The 2 US centric and 1 Global ETFs are quite varied, with Tesla as the only company present across all 3 ETFs The ETFs also have a certain degree of industry diversification as some chips companies and FAANG companies have also been included.
For investors who are keen on getting exposure to China, a country with a 1.5 billion population and strong government support for EVs, there is also an ETF available that is listed in Hong Kong and traded in both HKD & USD.