UKRAINE – 2021/10/06: In this photo illustration Amphenol Corporation logo seen displayed on a … [+] SOPA Images/LightRocket via Getty Images Our theme of Electric Vehicle Supplier Stocks has done well, rising by about 30% year-to-date, outperforming the S&P 500 which was up by about 20% over the same period. The theme was also up by about 77% since the end of 2019, compared to the S&P 500 which was up by roughly 41% over the same period. There are multiple trends that are leading to the outperformance of this theme.

Firstly, the transition to EVs is likely to accelerate with President Joe Biden indicating that he wants half of all new car sales in the U.S. to be electric, fuel-cell electric, or plug-in hybrid by the year 2030. Major automakers have also doubled down on their EV commitments with Ford recently indicating that it would invest about $11 billion on an EV assembly plant and three new battery factories, while GM indicated that it would spend $35 billion on its EV transition and autonomous driving through 2025. We are also likely to see more government regulation and incentives favoring this transition, considering that just about 2% of cars solid last year were EVs. This should translate into higher demand for the supplier stocks in our theme.

Moreover, the EV sector has remained resilient despite the ongoing semiconductor shortage and logistical issues. For example, Tesla delivered a record 241,300 vehicles in Q3, marking a year-over-year increase of almost 73%, while Chinese EV majors such as Nio and Xpeng also saw similar gains. While this is partly due to the relatively low volumes and high margins of the sector, EV players have also likely been able to adapt more quickly.

Within our theme, Albemarle , one of the largest producers of lithium which is used in EV batteries, has been the strongest performer, with its stock up by about 61% year-to-date driven by higher lithium prices and a faster than expected pivot to electric vehicles, amid major commitments by mainstream automakers. On the other side, Amphenol , a company that makes electrical, electronic, and fiber-optic connectors, has underperformed, with its stock up by about 19% year to date.

[8/31/2021] Half Of All Cars Sold by 2030 Could Be Electric. Which EV Supplier Stocks Stand To Gain?

Our theme of Electric Vehicle Supplier Stocks has fared well, rising by about 27% year-to-date, outperforming the S&P 500 which was up by about 21% over the same period. The theme was also up by about 77% since the end of 2019, compared to the S&P 500 which was up by roughly 41% over the same period. The transition to EVs is likely to gather pace, with President Joe Biden indicating that he wants half of all new car sales in the U.S. to be electric by the end of this decade. The move is also being backed by the largest U.S. automakers. This shift would give EV suppliers big room for growth, as electric vehicles accounted for just about 2% of all cars sold last year. Now, although competition in the component space is also likely to intensify considerably in the coming years as the EV market expands, companies in our theme should benefit from an early mover advantage.

Within our theme, Albemarle , one of the largest producers of lithium which is used in EV batteries, has been the strongest performer, with its stock up by about 60% year-to-date driven by higher lithium prices and a faster than expected pivot to electric vehicles, amid major commitments by mainstream automakers. On the other side BorgWarner , a company that sells electrical products such as inverters, which are key to making drivetrains for electric vehicles, has been the weakest performer, with its stock up by just about 11% this year to date.

[7/23/2021] EV Supplier Stocks To Watch As Mercedes Plans $47 Billion Electric Drive

Our theme of Electric Vehicle Supplier Stocks has fared well this year, rising by about 18% year-to-date, marginally outperforming the S&P 500. We believe the theme stands to outperform in the years to come, as the transition to EVs gathers pace, leading to the growing demand for components. Last week, the European Union proposed an effective ban on the sale of new gasoline and diesel cars as of 2035, in a move that could accelerate this shift to electric vehicles. Major car brands are also doubling down on their commitments to electrification. For instance, Volkswagen recently indicated that half of its sales were […]

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