BNEF estimates that there’ll be around 116 million EVs driving around in 2030. But the impact of this will be felt way beyond those firms involved in their production.

For starters, all those EVs need to be charged. This calls for two main types of company: electric utilities to generate and distribute the power, and firms to build and operate EV charging stations. Interestingly, BNEF only expects EVs to increase global electricity demand by 5.2% by 2040. But as well as selling electricity, utilities make money from building infrastructure – and all those charging stations will need hooking up to the grid.

You can play this sub-theme by way of ETFs such as the US-focused Utilities Select Sector SPDR Fund (ticker: XLU) or its transatlantic cousin the iShares STOXX Europe 600 Utilities UCITS ETF (ticker: EXH9). In terms of individual utility stocks, seek out those operating in areas with increasing EV penetration and generating most of their electricity from renewable sources.

Prominent companies building and operating EV charging stations include Blink Charging, EVgo, Alfen, ChargePoint, and EVBox. All of these firms are either publicly traded or are, at the time of writing, currently on their way to becoming so via “reverse mergers” with special purpose acquisition companies (SPACs). Not all of them are profitable, however – so be sure to study their future trajectories carefully before investing.

It’s also worth thinking about what happens to EV batteries when they reach the end of their life. Safely disposing of the chemicals present is tough, and that all-important lithium is really too useful to go to waste – so battery recycling firms have sprung up looking to recover the metal and sell it back to producers. In fact, the global industry is expected to be worth as much as $18 billion by 2030.

There are a number of recycling startups worth having on your radar, namely Northvolt, Li-Cycle, Lithion, and Redwood Materials – this last one run by one of Tesla’s co-founders. As for stocks you can actually invest in right now, there’s China’s GEM and materials company Umicore, although neither are pure-play battery recycling companies.

It’d be remiss not to mention here one final way to profit from more EVs hitting the road. This involves shorting – or betting against – investments that are likely to suffer as a result, such as oil stocks or even oil itself. BNEF, after all, estimates that EVs will displace almost 18 million barrels per day of oil demand by 2040.

For reference, total oil demand in 2019 was approximately 100 million barrels per day – so a one-fifth reduction could hurt the price of both the commodity and its producers. You might therefore conclude it’s a good idea to short either an exchange-traded product such as the United States Oil Fund (ticker: USO) or else a basket of stocks like the SPDR S&P Oil & Gas Exploration & Production ETF (ticker: XOP).

Conclusion

As we said at the start, the drive towards EVs is one of the biggest trends of our time. But there’s a lot more to the phenomenon than just a handful of much-hyped manufacturers’ stocks.

To make the most of the opportunity afforded by this seismic shift, consider investing in baskets of shares from across the entire value chain instead of just one or two companies. By adding lithium producers, battery manufacturers, electric utilities, recyclers, and EV charging station operators to your portfolio, you should benefit regardless of which automaker comes out on top. And it’ll likely be considerably cheaper…

In this Pack, you’ve learned:

🔹 The move from petroleum-powered vehicles to EVs should see the latter represent the majority of new car sales by 2040.

🔹 Lithium is the key ingredient in EV batteries – and 75% of global production is controlled by just five firms. Battery production, meanwhile, may soon be revolutionized by solid-state tech.

🔹 EV manufacturers’ shares are expensive, and incumbent automakers may yet come to dominate the market. This should encourage investors to explore the supply chain and related industries.

🔹 Battery recyclers and EV charging station operators are examples of the latter, but electric utilities have more established track records. You could also bet against oil.