The shift toward adoption of electric vehicles (EV) is happening faster than expected globally and before long, investors could be looking at the mass adoption of these. In fact, as technological advancement and affordability of these cars substantially increase, one could consider investing in the growing global EV market to make the most of this revolution.
Automakers Investing Heavily in Fully Electric Vehicles
To begin with, automakers have already turned their attention to fully electric vehicles and taken key positions to invest in the segment. After all, the auto industry isn’t unaware of the popularity of electric vehicles, which is increasing because of rising demand for fuel-efficient vehicles and constantly mounting concerns over the emission of greenhouse gases.
In fact, Continental Aktiengesellschaft CTTAY, a leading auto parts supplier, is already slashing its investments in conventional engine parts. The move comes because of a more-than-expected slump in demand for traditional engines as the industry moves toward electric vehicles.
The move isn’t limited to Continental Aktiengesellschaft alone. According to General Motors’ (GM) Chief Executive Mary Barra, over the next five years, the automaker expects to spend more on developing and selling EVs than gasoline-powered cars.
The EV Market is Expanding Faster Than Expected
The electric vehicle market is expected to witness a CAGR of 25.6% during the forecast period 2019-2026. By 2026, the market is estimated to reach more than $567.2 billion, according to Acumen Research and Consulting. In the EV market, hybrid electric vehicle is the largest segment that could witness maximum gains by 2026.
Secondly, the United States is a major shareholder in the EV market, owing to its high spending power, faster adoption of innovative technology and being home to the leading players in the concerned market.
After all, electric mobility is a fast-growing space. In 2018 alone, the global electric car fleet increased more than 5.1 million from the prior year, marking a steep rise of 2 million new vehicle sales, per an IEA report. Given the demand for electric vehicles, key players in the EV market are definitely well poised for gains.
So How Do Investors Benefit?
In order to make solid investments in the global EV market, one needs to look beyond automakers. Investors should also consider companies that manufacture vehicle components and supply key equipment to automakers. These include battery makers, power component suppliers and lithium suppliers.
For example, the most vital component of an electric vehicle is the battery. Therefore investing in Panasonic Corporation PCRFY, which is one of the largest producers of lithium batteries globally, could be prudent. Similarly, one could invest in Albemarle Corporation ALB, which is also a manufacturer of lithium compounds.
Stocks in Focus
We have selected four stocks that are the key players in the EV market.
Tesla, Inc.’s TSLA journey in the EV market, which began in 2008 with the launch of the world’s first highway-legal electric car Tesla Roadster, is commendable. Four years later, in 2012, the company launched Tesla S, which was its first all-electric sedan and very well received. More than 500,000 units of the model have been sold to date. In fact, Tesla Model 3 was recently approved as the first all-electric car to be used as an official New York City yellow cab.
The company carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has risen 78.7% over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphenol Corporation APH, headquartered in Wallingford, CT, offers vital technology solutions for hybrid-electric vehicles. The company manufactures sensors, antennas, electric wiring interconnect systems, light assemblies, infotainment, switches and power management products for automakers.
The company carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its current-year earnings has risen 1.7% over the past 60 days.
Aptiv PLC APTV is a major auto components supplier. The company manufactures and assembles a vehicle's electrical architecture. This includes working on wiring assemblies, connectors, electrical centers, engineered component products, cable management products, hybrid high voltage and safety distribution systems etc.
The company carries a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has risen 0.6% over the past 90 days.
Albemarle Corporation is a manufacturer of engineered specialty chemicals. The company’s Lithium segment offers lithium compounds and reagents, some of which are crucial components for applications in lithium batteries of electric vehicles.
The company carries a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has risen 0.5% over the past 90 days.
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Click to get this free report Panasonic Corp. (PCRFY) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report Albemarle Corporation (ALB) : Free Stock Analysis Report Amphenol Corporation (APH) : Free Stock Analysis Report Continental AG (CTTAY) : Free Stock Analysis Report Aptiv PLC (APTV) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research