If you have been following the news lately, you may have noticed that the share prices of electric vehicle (“EV”) companies have taken a hit. However, this doesn’t mean that you should engage your parachute and bail out, as this price correction doesn’t necessarily mean the bull run of these stocks is over. Here are key reasons why the outlook is still bullish for EV stocks, according to a leading global wealth management firm.
The market share for EVs is increasing
Mark Haefele, a chief investments officer at UBS Global Wealth Management, points out that globally, sales of electric vehicles have been gaining steam. For example, the pandemic caused car sales to slump by 15% by the end of 2020, but that same year saw sales of EVs increases by 43%.
This increase gave EVs a 4.2% share of the global vehicle market, and this figure means that the EV sector can only climb higher and claim a larger share of the market.
For an investor, this means that the party isn’t over yet for the electric vehicle industry.
Vehicle electrification is still in its early stages
Never before has the automotive industry been faced by a disruption such as the current one which has seen governments around the world impose strict emissions controls as a way to slow down climate change.
Electric vehicles look set to take over the roads, and the strict timelines set by authorities in different jurisdictions to phase out traditional fuel-guzzling automobiles mean that the EV industry is just getting started. Price correction or no price correction, Haefele sees no reason for investors to alter their outlook for the EV industry.
For example, if Volkswagen plans to invest more than EUR 50 billion in electrifying its lineup of vehicles, there is no reason why any investor should think shares of EV makers won’t enjoy a good run for years to come.
The changes go beyond changing drivetrains
Haefele also points out that the changes taking place go beyond switching a diesel or petrol drivetrain for an electric one. In fact, several parallel innovations are taking shape as vehicle electrification is implemented.
An example is the development of autonomous driving coupled with the evolving preferences of younger drivers who aren’t interested in owning a vehicle. These two changes alone favor vehicle electrification as the cars of the future will be able to drive themselves to a pickup point indicated by a user.
The parallel changes, in effect, mean that vehicle electrification is almost certainly here to stay — a good sign for those interested in investing in this sector for the long term.
The options available to investors are likely to get even more exciting as they will have a wider pool to select from due to the entry of new players. For instance, global financial technology firm Net Element (NASDAQ: NETE) is awaiting the execution of a definitive agreement as well as shareholder approval before its planned reverse merger with fully electric vehicle maker Mullen Technologies Inc. is finalized. The new entity created will most likely be one to watch.
NOTE TO INVESTORS: The latest news and updates relating to Net Element (NASDAQ: NETE) are available in the company’s newsroom at http://ibn.fm/NETE
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