Roughly half of stocks within the automotive industry are made up by Tesla and 15 top electric vehicle (EV) makers, reports Barron’s.
This dichotomy is at odds with the breakdown in actual sales of cars, with more traditional companies such as Toyota and General Motors currently accounting for roughly 99% of car sales worldwide.
Top EV manufacturers Tesla, still-privately owned Rivian, BYD, and Nio are all within the top 10 auto makers globally. 16 EV manufacturers account for $1.4 trillion in value, while over 50 traditional combustion engine manufacturers — including Toyota, Volkswagen, Diamler, and GM — make up a comparative $1.42 trillion.
This split by investors from traditional car manufacturing into the EV market is one that is forward-looking and anticipates a world in which traditional combustion engine vehicles are phased out.
“The thinking, of course, is that pure-play EV vendors will ultimately come to dominate the automotive world,” wrote Bernstein analyst Toni Sacconaghi in a report. It falls back on a belief that traditional manufacturers will not be the leaders of the future when it comes to EV offerings, Sacconaghi explained.
EV maker Tesla’s stock has increased 34% in the previous three months and is due to report earnings on Wednesday night.
KARS Captures the EV-lution
The KraneShares Electric Vehicles and Future Mobility ETF (KARS) invests in Tesla, BYD, Nio, and many of the global leaders in the electric vehicle industry, including some in China, where the electric vehicle industry is booming.
KARS measures the performance of the Bloomberg Electric Vehicles Index, which tracks the industry holistically, including exposure to electric vehicle manufacturers, electric vehicle components, batteries, hydrogen fuel cells, and the raw materials utilized in the synthesis of producing parts for electric vehicles.
The index has strict qualification criteria. Companies must be part of the Bloomberg World Equity Aggregate Index, have a minimum free float market cap of $500 million, and have a 90-day average daily traded value of $5 million.
Tesla (TSLA) is carried at a 5.92% weight, Nio (NIO) at 4.65%, and BYD at 2.38%.
The ETF has an expense ratio of 0.70%.
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