Investing in the electric vehicle (EV) industry

Electric vehicles are gearing up to be the future of transportation. They're more efficient, produce zero emissions, and are quickly becoming more affordable. 

But if you're looking to invest in this growing industry, it can be tough to know where to start. In this blog post, we'll break down how EVs work, the different companies involved, and discuss the best ways to invest in EV companies. 

Let's get started.

How do electric vehicles work?

EVs have been around for over a century (amazing, right?), but they’ve only recently begun to gain mainstream attention. 

So how do they work? 

EVs get their power from batteries, which store energy in the form of electricity. When the driver presses the accelerator, that electricity is sent to the motor, which powers the car. 

Unlike traditional gasoline engines, electric motors are very efficient, so EVs don’t generate as much pollution. And because they don’t have any moving parts, they’re also much quieter. As battery technology continues to improve, EVs are only going to become more popular. 

What makes the electric car industry different? 

There are a few reasons that make the EV industry unique. For one, EVs have yet to achieve mass adoption, and research has shown that industry experts don’t see it happening anytime soon. 

For example, Jabil’s “Managing Automotive Technology Trends survey found that 60% of executives in the automotive industry think EVs won’t achieve widespread appeal until 2030.

While this may sound like a bad thing, it could be viewed as a positive one. If the industry still has a lot of room to grow, that’s a good sign for investors. 

To back up this point, McKinsey & Company found that major automotive manufacturers are moving quickly to bring roughly 600 EVs to market by 2025. 

This is a promising sign for the future of the industry and poses exciting opportunities for companies operating in the space.  

Secondly, the barriers to entry are relatively low, so anyone with a good idea and some funding can get started rather easily. 

The biggest challenge is developing a product that meets consumer needs and finding a way to mass-produce it efficiently. But even that is becoming easier as the market for EVs grows and component suppliers expand their offerings. 

So there’s no reason why the EV market shouldn’t be open to new entrants who are willing to invest the time and money needed to develop a successful product.

Finally, the potential for disruption is huge. The automotive industry is at a crossroads. For more than a century, gasoline-powered cars have been the gold standard, but that is changing. 

Electric vehicles are becoming increasingly popular thanks to advances in technology and growing concerns about climate change. They’re also more efficient than gasoline-powered cars, and they produce zero emissions. 

As a result, EVs are seen as a cleaner and more sustainable option for transportation. The rise of electric cars could upend the entire automotive industry, from the way that vehicles are manufactured to the way that gas stations operate. 

In order to stay competitive, automakers will probably need to adapt—and fast. The future of transportation is likely going to be electric.

Electric vehicle sectors

Major industries like the EV market don’t ever get off the ground without the collaboration of various types of companies that aid in the production, operation, and distribution of their products. 

Here are the three main sectors of the electric vehicle market:

1. Car manufacturers: Traditional car companies such as Ford, General Motors, and Toyota are all investing heavily in electric vehicles. They are motivated by both government regulations and consumer demand, and they have the financial resources to make a significant impact in the market.

2. Technology companies: Tesla is the most well-known example, but there are also many other companies (more on these later) that are developing innovative electric vehicle technologies. These companies often partner with car manufacturers to bring their products to market. 

3. Utility companies: Electric utilities see electric vehicles as both a potential threat and an opportunity. On the one hand, EVs could result in lower electricity sales; on the other hand, they could provide a new revenue stream for utilities through charging fees. Utility companies are also working to develop infrastructure such as car charging stations that will be necessary for the widespread adoption of EVs. Duke Energy, Dominion Energy, and American Electric Power are just a few of the utility companies that are proponents of EVs.

How to invest in EV technology

As the world moves away from fossil fuels, investing in electric vehicle technology is becoming increasingly important. 

Here’s what to look for in EV technology companies.  

First, look for the companies supporting electric vehicles. The ones that are committed to making the switch to EVs. These could be manufacturers who are planning to produce EVs or suppliers who provide parts and components.

Second, consider which companies are leading the way in EV technology. This could include firms that are developing new battery technologies or working on self-driving features. 

Finally, keep an eye on government incentives. Many countries are offering subsidies and tax breaks to encourage the uptake of EVs, so this is a good indicator of where the market is headed.

Now that you have a strategy in place let’s look at some of the companies to keep an eye on in 2022. 

New EV companies to invest in 2022

Tesla's entry into the EV market has been a game-changer, and other auto companies are scrambling to catch up. But Tesla is not the only player in town. 

Here are a few electric vehicle stocks that are growing rapidly in the EV space, broken down by sector.

Manufacturers

• Rivian is an electric vehicle and outdoor adventure gear company based in Plymouth, Michigan. Founded in 2009, Rivian is one of the oldest EV startups and has secured $10.7B in funding from investors like Amazon and Ford. With a range of over 400 miles per charge, Rivian's vehicles could be a major force in the EV market.
• Lordstown Motors is an Ohio-based EV manufacturer that was founded in 2018 with the mission to build "the world's first resilient truck." This electric pickup company has already secured over $915M in funding from investors like GM and Steve Burns, the former CEO of Workhorse Group.

Infrastructure 

• ChargePoint is a California-based electric vehicle infrastructure company that operates the world's largest online network of independently owned EV charging stations in 14 countries. They have raised over $1.3 billion in funding from major VCs like Kleiner Perkins Caufield & Byers, Siemens Venture Capital, and Braemar Energy Ventures.
• Blink Charging is a Florida-based EV charging station company that is a provider of hardware and software products to the EV industry. Blink has raised over $800k from investors like Blackrock, Vanguard, and SSgA.

Battery and power

• QuantumScape is a California-based company that develops solid-state lithium-ion batteries. These types of batteries have the potential to revolutionize the electric vehicle industry by offering far superior performance to the current lithium-ion battery technology. They have raised over $1.2B from investors like Fidelity Management and Qatar Investment Authority.
• Ballard Power Systems is a Canadian developer of proton exchange membrane (“PEM”) fuel cells. Fuel cells are devices that convert chemical energy into electrical energy, and they offer a number of advantages over traditional power sources like engines or batteries. Ballard has raised $1.2B from investors like Weichai Power and Zhongshan Broad-Ocean Motor Co.

 The future of the electric car industry 

The electric car industry is rapidly evolving, and the future looks bright for the companies operating in the space. 

Electric cars are becoming more affordable and efficient, and the infrastructure for charging them is rapidly improving. In addition, recent advances in autonomous driving technology hold the promise of making electric cars even more convenient to use. 

As a result, it is likely that electric cars will play an increasingly important role in the automotive market in the years to come. 

There are still some challenges that need to be addressed, such as range anxiety and the cost of batteries, but the potential for electric cars is vast. 

With continued advancements in technology and increasing consumer demand, the electric car industry is poised for significant growth in the years ahead.

If you’re looking for EV companies to invest in on Republic, keep an eye out for new deals here.

The content herein is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.