How to Play the EV Revolution and the Tesla-rizing of America
I want you to tell me what the following automobile manufacturers have in common. Audi. BMW. Cadillac. Chevrolet. Fisker. Ford. Genesis. GMC. Hummer. Hyundai. Jaguar. Kia. Lexus. Lucid. Mazda. Mercedes. Nissan. Polestar. Porsche. Rivian. Subaru. Tesla. Toyota. Volkswagen and Volvo.
What do they all have in common? All of them are making electric vehicles. Everybody's making electric vehicles these days. And the White House says that it wants half of all the cars sold by the end of this decade to be electric vehicles. The global electric vehicle marketplace is going to reach nearly $1 trillion by 2030. That's 18% annual growth. So far, only 3% of new cars sold are electric vehicles. But it was a jump of 40% over the past year. Very few cars are EVs, but it's growing incredibly rapidly. And we're talking 18% annual growth rate. And by the way, guess who else is rumored to be launching an electric vehicle? Apple. The Apple car is rumored to be coming onto the market in 2024. So if this marketplace is growing at an exponential rate, that's the whole idea of exponential technologies, right? With strong double digit annual returns projected, how can you capitalize on this as an investment strategy?
Well, I'm going to give you three ideas. First, the Global X Autonomous and Electric Vehicles ETF, the symbol is DRIV, like “Drive”. This is the largest pure electric vehicle ETF on the market. It's got $1 billion in assets already, demonstrating how popular it is among investors. Its top holdings include Apple, Toyota, Alphabet, Tesla, Intel, Honeywell, Qualcomm, NVIDIA, Microsoft and Allegheny Technologies, technology stocks as well as automotive stocks.
But Where Will Get 600,000 Metrics Tons of Lithium?
But here's the thing. Not only is the growth in electric vehicles and autonomous vehicles going to grow dramatically, but there’s also another growth area on top of that, and that is the fact that we're going to need 600,000 metric tons of lithium to power all of those vehicles by 2030.
We're going to need 3 million metric tons, five times more than our current needs, because there are going to be so many more electric vehicles on the road. Lithium is a rare earth metal. It's not readily available like sand. And as a result, with the limited availability, the limited supply with an increased demand, the marketplace is widely expecting lithium prices to rise significantly over the next decade.
So how can you capitalize on that? If you believe in investing in electric vehicles, then you have to, by definition, believe in investing in lithium. How? The Global X Global Lithium and Battery Technology ETF, the symbol is LIT. It's one of the country's first thematic ETFs and by far the largest pure play lithium ETF on the market. This fund was launched back in 2010. It's 12 years old now. It has $5 billion in assets under management, demonstrating for you the broad array of people who own it, and it gives you exposure to the full lithium cycle companies involved in mining it, refining it, as well as battery production on a worldwide scale. So you've got the electric vehicles and autonomous vehicles. That's one ETF - DRIV. Now you've got the lithium ETF - LIT, which allows you to invest in the pure lithium itself that allows those electric vehicles to operate.
And finally, the third ETF, what are all those cars going to drive on? Roads.
Well, traffic congestion costs our economy $120 billion a year. 25% of our bridges are deficient. 14% of them are functionally obsolete. 20% of our flights were delayed last year. Overall, the American Society of Civil Engineers gives our nation's infrastructure a grade of C-minus. Well, coming along is the Infrastructure Investment and Jobs Act providing $1.7 trillion in new funding for roads, bridges, power grids, passenger and freight rail, broadband water infrastructure, airports, ports and waterways. Half of this money, half of this $2 trillion is going to be dispersed within the next four years. So as an investor, how can you capitalize on that? And here's the third investment opportunity that I suggest, the Global X US infrastructure development ETF the symbol is PAVE.
Pretty clever names - DRIV, LIT, PAVE. PAVE is the largest pure play US infrastructure ETF on the market, $4 billion in AUM. Its top holdings include John Deere, CSX, Union Pacific, Nucor, Alcoa and U.S. Steel. If you are interested in investing a portion of your portfolio in the concept of transportation, investing in electric vehicles, the lithium that powers them and the roads they'll drive on, those three ETFs - DRIV, LIT, and PAVE are three ETFs from Global X that I think have good exposure to this sector of the marketplace.
Jean and I own all three of these ETFs, and we believe it makes sense as part of a diversified portfolio. And so I wanted to mention them all to you. You can go to GlobalXETFs.com to learn more about them or talk to your financial advisor about the Global X Autonomous and Electric Vehicles ETF, symbol DRIV, the Global X Global Lithium and Battery Technology ETF, LIT, and the Global X US Infrastructure Development ETF, PAVE. I'm Ric Edelman and transportation innovation is in our future. And that's the truth about your future.