Key takeaways: 

• Electric vehicle (EV) adoption is forecast to rapidly grow over the next decade, which should mean increased demand for EV parts and inputs within the battery supply chain, and the charging infrastructure needed to support uptake. 

• While the above areas offer specific investment opportunities, investors can also access ETFs targeting the broader EV investment thematic. 

• It is important to do your own research before making decisions to invest. 

• Past performance is not an indicator of future performance. 

With climate change prompting a focus on decarbonisation and net zero, electric vehicles (EVs) have taken centre stage in the automotive industry in recent years.  

Across the world, governments are increasingly setting EV targets, mandates, and incentives to support uptake. Today, there are record numbers of EVs on the road as EV adoption grows. Traditional automakers, once hesitant to embrace EVs, are now going head-to-head to outdo each other and build a competitive advantage, knowing the future of the industry is set for a major shake-up.  

Amid this backdrop, investors have an opportunity to gain exposure to a market expected to see rapid growth over the coming decade and beyond. In fact, the International Energy Agency forecasts that global EV sales could reach 60 million by 2035, or around 55% of light-duty vehicles. 

Perhaps contrary to expectation, the investment opportunities in this space are rather diverse, extending beyond car manufacturers to the rest of the battery supply chain, and providers of energy storage solutions. 

Today we’re looking at where investors can explore opportunities for exposure to EVs. 

EV manufacturers 

The natural starting point for exposure to the EV theme is the manufacturers responsible for bringing them to market.  While companies such as Tesla (NASDAQ: TSLA), BYD (HKG: 1211), Nio (NYSE: NIO), and Rivian (NASDAQ: RIVN) are among those with a head start in this field, today we are also seeing traditional Internal Combustion Engine (ICE) car manufacturers get in on the act.  

This includes the likes of Toyota (NYSE: TM), Ford (NYSE: F), and General Motors (NYSE: GM). Since the ASX is not currently home to any specific EV manufacturers, or auto companies for that matter, each of the three car companies mentioned can be traded on the US share market. 

Between the two cohorts, it is worth noting that some specialist EV manufacturers have yet to prove their business models are financially sound, while more established ICE manufacturers provide investors with business models that include revenue from various sources. 

Battery supply chain 

While investors may automatically think of car manufacturers when it comes to EVs, every automaker deals with the battery supply chain. In this respect, investors can attain indirect exposure to the EV industry through the technology underpinning it. 

This includes mining companies that supply critical minerals like lithium, nickel, and cobalt, among others, as well as battery manufacturers. Ultimately, both are considered essential inputs to provide the source of power to operate electric vehicles.  

With continual research and development focusing on extending the driving range of EVs and improving charging times, these inputs are intertwined with technological advancements expected to accompany the next generation of EVs. 

The ASX is home to a long list of resources companies supplying EV manufacturers, including the likes of Pilbara Minerals (ASX: PLS) and Arcadium Lithium (ASX: LTM), as well as US-listed giants like Albemarle (NYSE: ALB) and Sociedad Química y Minera (NYSE: SQM). 

On the other hand, as far as battery technology, key players that have played a role in the EV industry to date, and expected to continue to fuel EV growth, include established tech companies such as CATL, LG Energy Solution, and Panasonic. 

Charging infrastructure and storage providers 

With EV charging networks set to expand to support the adoption of this vehicle class, there is reason to believe there are compelling investment opportunities relating to charging infrastructure and storage solutions. 

These opportunities are also exposed to the broader tailwind that relates to decarbonisation, with energy grids expected to see significant investment over the coming decades as renewables gain global acceptance. 

Many of the shares in this space relate to small-cap US-listed businesses, highlighting the opportunities that come with diversification away from the ASX into international shares.  

Some examples of charging infrastructure businesses include Ads-Tec Energy (NASDAQ: ADSE), EVgo (NASDAQ: EVGO), ChargePoint (NYSE: CHPT), Wallbox (NYSE: WBX), and Blink Charging (NASDAQ: BLNK).  

 ETFs offering exposure to EVs

There are also numerous ETFs that offer diversified exposure to the broader EV thematic. 

The advantage of such funds is that investors can gain access to a diverse basket of holdings, all through one low-cost efficient instrument. In turn, this reduces risk exposure to the segment on account of diversification across various sub-industries. 

An example, which hails from the US, is the iShares Self-Driving EV and Tech ETF (NYSE: IDRV). This fund tracks companies positioned to benefit from the growth of electric vehicles, battery technology, and self-driving cars. 

Investment opportunities 

With a backdrop that centres on increasing EV adoption, the industry offers astute investors various long-term growth opportunities supported by government initiatives, changing consumer behaviours, technological advancements, and extensive investment in infrastructure. 

On this point, investors can gain exposure to this segment not only through EV manufacturers, but also the battery supply chain, charging infrastructure and storage providers, as well as ETFs targeting the EV industry. 

Please undertake your own research and note that past performance is not an indicator of future performance.