EV Sales Are Hitting Record Highs: 3 ETFs That Can Benefit

Key Points

• Electric vehicle sales in many Chinese and U.S. companies recently hit record highs.
• Still, fears in the United States market persist due to expected regulatory changes. The outlook in China is more positive.
• These three ETFs offer different types of exposure to the EV market.

The electric vehicle market appears to be gaining momentum. Outside of the leader in the market, Tesla NASDAQ: TSLA, EV firms are posting new records in sales. Six Chinese EV makers fall into this category. This includes the country's leaders in the space, like BYD OTCMKTS: BYDDY and several smaller Chinese players. Even U.S. automakers like Ford Motor NYSE: F saw its electric vehicle sales hit all-time highs recently.

Still, investment in this space warrants caution. In the United States, the recent rise in EV sales was likely due to expected regulatory changes the Trump Administration will make. Many expect Trump to end the $7,500 EV tax credit that makes the cars more price-competitive with their gas-powered counterparts. But, even if this hurts the competitiveness of U.S. EVs, forecasters still see strong EV sales growth in China. Fastmarkets sees growth slowing marginally from its 31% clip in 2024. Considering China still accounts for the vast majority of EV sales, the industry can push forward. Below, I’ll detail three ETFs that may be able to benefit.

FDRV: EV ETF With Significant China Exposure

First is the Fidelity Electric Vehicles and Future Transportation ETF BATS: FDRV. As of Nov. 30, 2024, the company’s top holding is Tesla. It accounts for 6% of the portfolio. Following the China EV story, Tesla also saw its sales in China hit a record high in 2024. They increased by nearly 9% and made up nearly 37% of the company’s total vehicle sales. The ETF also includes the largest player in China, BYD, making up nearly 4% of the portfolio. Many smaller Chinese firms are also included.

The only other U.S.-based automaker in the portfolio is Rivian NASDAQ: RIVN. The company recently posted higher-than-expected production numbers, which sent shares soaring. At least for now, the company has made good on its promise to fix production issues. The rest of the portfolio is largely made up of EV suppliers in the semiconductor industry, as well as ride-sharing companies. The fund’s 0.4% expense ratio makes it a relatively inexpensive way to gain targeted exposure to a portfolio of companies in the EV market.

EVMT: Investing in Metals Used Inside EVs

The Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF NASDAQ: EVMT is a bit more unique. Like many capital-intensive technologies, EVs use many natural resources to make them. As such, this strategy invests in a variety of base metal commodity futures contracts. As EV production and demand increase, so will the demand for the metals used to make the cars, increasing their prices. Allocations to nickel, copper, and aluminum futures comprise over 78% of the portfolio.

The fund looks to outperform the S&P GSCI Electric Vehicle Metals Index. This index looks at the percentage of each type of metal used in a typical EV to determine its portfolio weights. It updates these metal usage percentages twice a year. Since its inception in Apr. 2022, the fund has been able to achieve its goal of beating out the index by 1%. However, overall performance has been dreadful, down 47% as of the Jan. 7 close. Falling metals prices have plagued it since their peak in Mar. 2022. However, some see prices of key metals like nickel recovering significantly in the coming years.

CARZ: Diversified Across EVs, Big Tech, and Autonomous Driving

Last is the First Trust S-Network Future Vehicles & Technology ETF (CARZ). This fund is significantly more diversified than the other two, with 100 stock holdings. Its largest holding is also Tesla. However, unlike FDRV, it also has large allocations to several Magnificent Seven stocks. Larger semiconductor firms are also a key difference.

FDRV focuses its automaker holdings mostly on Chinese firms. CARZ, however, invests in EV automakers from many regions. This includes big players in the United States, Europe, Japan, Korea, China, and the United Kingdom. Aside from simply being an EV fund, it also invests significantly in companies involved in autonomous driving. It also has some exposure to lithium mining companies, as the element is important in EV battery manufacturing. The fund returned 10% over the past year, largely held up by its allocation to big tech companies.