With the interest rates of UK banks declining year on year, some paying just 0.5% annually, many people are starting to look at alternative ways to invest their income.
The stock market was once deemed a “rich man’s” game, a privilege only available to high net worth individuals, city investment bankers and large corporations.
It’s 2021 now and things have changed. Thanks to modern-day technology, you do not have to be a suited and booted millionaire to access the markets, you just need to own a smartphone.
One of the questions I hear most often is “what stocks should I invest in?” and it’s a fair thing to be asking. There is a lot of money to be made in long term investing, but you have to make the right choices.
Right now, I believe one of the best areas to be investing in is the EV sector and I am about to tell you why.
More than 14 countries plan to ban the sale of fossil fuel-powered vehicles. Yeah, you read that right – the list includes the UK, United States, Canada, China, South Korea, Japan, Sweden, Norway, Denmark, Iceland, France, The Netherlands, Spain, Germany, Portugal and many more.
Many of these countries plan to start executing this ban in 2030, just 9 years away. In 2020, over 50% of cars sold in Norway were EVs, an incredible number, seeing them well ahead in the EV race right now, which has led to big EV brands such as Tesla ($TSLA) and NIO ($NIO) setting up shop here.
To put things into perspective, the Biden administration plans to invest $7.5 billion in EV infrastructure. EV sales made up only 2% of total US car sales in 2020. As this is just the beginning, investing in the EV industry now can benefit portfolios due to the projected growth journey.
Enough stats, let’s talk about investing here. It’s easy to think about buying an EV related stock and end up purchasing Tesla let’s say, but there is a bigger picture. There are a number of core areas making up the EV sector that provide fantastic earning potential from an investment standpoint if you are picking the right companies.
3 areas to capitalise on:
As we progress further into our global goals of a “zero-emission society” the pressure placed on the mass manufacturing of electric vehicles is going to be huge. There is one hurdle in the way of this plan though – lithium.
These electric vehicles are powered by precious metals, in the form of lithium-ion batteries which is a step in the right direction away from the current focus on Oil. However, as the demand increases for these metals, the material becomes very expensive and scarce in supply as like other commodities these battery metals are not of infinite supply and value inflation will occur, which in the long run will become a problem for the sector.
Think back to the mad oil rush of the early 2000’s – “lithium is the new oil”. One company with a solution to this is American Battery Technology Company $ABML who has built a clean recycling and extraction technology platform that increases the production of primary metals used in EV car batteries, that is extremely efficient and not damaging to the environment. We will soon be writing a more in-depth article on these guys, so keep your eyes peeled.
US president Joe Biden plans to spend $7.5 billion on EV infrastructure, of which billions are said to be going towards charging station networks. It is said that effective legislation and investment in charging infrastructure in urban areas will help provide consumers with the needed confidence to go electric. Whilst Tesla’s supercharging network has given it an initial competitive edge, there are other companies also building out charging networks across the US, some key examples being Blink Charging $BLNK, ChargePoint $CHPT, EVgo $CLII.
As of May, there were just 42,000 charging stations in the United States compared to the 800,000+ that China boasts, but Biden knows that something needs to be done about this and the race is on for companies looking to lead this push.
3. Battery Manufacturing
With reference to the man himself once again, Biden is looking to turn around the current US dependence on battery imports, an area in which as it stands, China is the main player. The US Department of Energy (DOE) recently said that they believe dependence on imports leaves the country open to vulnerability, though also presents an opportunity to invest in what could be one of the biggest drivers of economic growth in this coming decade – a “secure and diversified supply chain”.
One company that we know the DOE loves is Microvast $THCB – Founded in 2006, they are a market leader in the design, development and manufacturing of ultra-fast charging, long-life battery systems with superior safety for electric vehicles. Some of its prominent customers include Porsche and Oshkosh, whilst they also have R&D partnerships with BMW.
Given its position in the sector, in comparison to competitors such as Quantum Scape $QS who will not be revenue-generating for a number of years, it’s evident to see, that is an undervalued stock right now – perhaps partially down to the fact they are still under the “SPAC radar” until they officially go public.
Thank you for taking the time to read this article – investing alongside the EV sector is something that I am extremely passionate about and I look forward to providing more insightful content for you all!
Published by Josh Craven
@bvllish_trader on Twitter.