Electric vehicle companies have been somewhat controversial in recent times.
Ever since Elon Musk entered the political arena, there's been a lot of attention on EVs.
And lately, Elon Musk's company Tesla Inc (NASDAQ: TSLA) has been just about as controversial as it gets. To protest Elon's political involvement and right-wing affiliation, progressive voters have been offloading their vehicles in record numbers.
On Thursday, the US House of Representatives sent a bill to US President Trump's desk that eliminates tax credits of up to $7,500 for EV customers. This tax credit had originally been part of the 2022 Inflation Reduction Act, which was former President Joe Biden's legislation.
This incentive had aided the EV market by making the cars more affordable. Repealing them is likely to negatively affect EV sales.
However, according to Bloomberg:
The Trump administration's plan to scrap federal incentives for electric vehicles will be a major speed bump for battery-powered transportation in the US, but not a brick wall.
Image source: Getty Images
Is the EV market attractive?
Despite the slowdown in the US, Bloomberg expects electric vehicle sales to continue growing globally. Consumers are being drawn to the benefits of EVs, including running costs and maintenance, as well as environmental advantages such as less air pollution.
According to the International Energy Agency, global EV sales continue to grow at a healthy rate. Global EV sales surpassed 17 million in 2024, representing around 20% of new vehicle sales. This represented a 25% increase from 2023.
Former General Motors economist and current Harvard University's Salata Institute for Climate and Sustainability expert expects 37% of new cars bought in 2030 to be electric.
Evidently, despite the controversies surrounding the sector, EV adoption is projected to remain robust for the next 5 years.
How to invest in the EV sector?
Australian investors have two options when it comes to investing in electric vehicles.
They can buy individual shares. For example, Tesla is listed on the NASDAQ exchange. Despite being one of the most controversial companies out there, Tesla shares are up around 25% over the past year and nearly 300% over 5 years.
For more diversified exposure to the EV market, ASX investors can buy the BetaShares Electric Vehicles and Future Mobility ETF (ASX: DRIV), which invests in 50 of the world's leading automotive technology companies. It charges an annual management fee of 0.67%, and as of 30 May, its top five holdings were Tesla (8.9%), Volvo AB (8.3%), BYD Co (8.1%), Paccar (6.8%), and Volkswagen (5.3%).
