How Can You Invest in Electric Vehicles?

How Can You Invest in Electric Vehicles?

How can you invest in electric vehicles? Today we discuss:

  • the two ways you can do this
  • the difference between the two
  • and a valuable lesson we can learn from one of the best-performing stocks over the last quarter-century, Amazon.

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How Can You Invest in Electric Vehicles

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How Can You Invest in Electric Vehicles?

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How Can You Invest in Electric Vehicles?

This is a hot topic right now. More people are wanting to know how they can take part in this new and emerging technology.

Individual Stocks

The first way to invest in electric vehicles is to buy individual stocks. The most popular is Tesla. They have been making electric vehicles for a few years. The other major auto manufacturers are also getting involved in this. Both GM and Ford are committing billions of dollars to this technology. GM is also challenging Tesla on the battery front.

There are other companies in this industry. Nikola is developing battery-powered semi-trucks. And there are companies working on charging and battery components. Examples of those include Blink Charging and Plug Power.

There are also companies that manufacture the technology for the cars. Intel and Nvidia will also have a role in this emerging industry.

You can also look for investments in companies who focus on lithium. Batteries are a major component.

Mutual Funds or Exchange Traded Funds

The other way to invest in this industry is to use an exchange-traded fund or a mutual fund. The financial industry has been very innovative over the years. When industries like this emerge, they create a fund to focus on these companies. You can buy the fund instead of trying to pick individual stocks.

The Difference Between Using Stocks and Funds

The big difference between the two is the potential risk and reward.  Both ways of investing offer the opportunity to benefit from the growth of the industry. Both also experience a lot of volatility.

An individual company offers the potential for more reward, if you choose a good one. But when you pick the wrong one, you could lose more.

Using a fund reduces the potential gains. When you buy funds, you make smaller bets on a larger list of companies. Not all of them will be the big winner. You own shares of Tesla, GM, and Ford. You also may own shares of Nvidia and Intel.

The Lesson From Amazon

Amazon went public in May of 1997 in the middle of the dot-com boom. Since its offering, it has been one of the best-performing stocks over the last quarter-century. But early on, there was a lot of volatility.

In its first five years of existence, Amazon suffered significant price drops.

  • It fell more than 20% twice.
  • There were two 40% price drops.
  • One price drop exceeded 60%
  • And one time the price declined 90%!

Withstanding that much volatility takes a strong stomach and nerves of steel. Emerging technologies are not for the faint of heart.

Talk to a Certified Financial Planner™ Professional

If you would like to consider an investment in electric vehicles, talk to a financial planner. They can help you understand how it fits within your plans and your goals.


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About the Author

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors.    He specializes in helping hard working, middle class families plan for retirement.

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