How to invest in electric cars from stocks to ETFs

The electric vehicle market has grown significantly over the past decade. In 2012, only 120,000 electric vehicles were sold globally, according to the International Energy Agency. In 2024, global EV sales reached more than 17 million vehicles and sales are expected to top 20 million vehicles in 2025.

As government regulations limiting carbon emissions increase, automakers have been forced to shift their attention to electric cars. Many companies are vying to get a piece of the EV market, from the automakers themselves to those that supply parts and components used in EVs. The potential for growth makes the EV industry attractive to investors, but success is far from guaranteed. The EV industry faces challenges from a few angles.

• Volatile commodity prices could cause the price for EVs to rise, potentially impacting demand. Prices for lithium, cobalt and copper have seen big swings in recent years, and they are key inputs into electric vehicles and their prices could impact how fast the industry grows.

• Infrastructure for charging EVs will also need to be built out so that travelers can recharge their vehicles quickly, similar to the way gas stations exist today.

• Future regulation and insurance costs could also impact the ultimate path of the EV industry.

Still, investors looking to capitalize on the growth of the EV industry can invest in two ways: buying individual stocks of companies involved with EVs or buying funds that hold a variety of EV stocks, such as through exchange-traded funds, or ETFs.

Electric vehicle stats

• U.S. sales of electric vehicles topped 310,000 during the second quarter of 2025, according to Cox Automotive.

• The average price of a new electric vehicle was $56,910 in June 2025, according to Kelley Blue Book (KBB), down 2.8 percent from June 2024.

• Tesla had the highest EV market share during the second quarter of 2025 at 46.2 percent, according to KBB.

Investing in electric vehicle companies

Top 5 EV companies in the United States:

• Tesla (TSLA)

• General Motors (GM)

• Ford (F)

• Hyundai (HYMTF)

• BMW (BMWKY)

All five of these companies offer electric vehicles, with Tesla being the clear market leader. Tesla held a 46.2 percent market share of EV sales during the second quarter of 2025, according to Kelley Blue Book. Its Model 3 and Y vehicles combine to account for more than 40 percent of EV sales in the U.S.

Tesla is unique in that it focuses on electric vehicles exclusively, whereas other automakers, such as Ford and General Motors, still produce gas-powered vehicles. These legacy manufacturers are looking to ramp up their production of EV vehicles in the coming years in order to meet regulatory requirements and capitalize on growing demand for EVs.

Other EV manufacturers include BYD (BYDDY), Rivian Automotive (RIVN), NIO (NIO) and Li Auto (LI).

The stock prices of EV makers will ultimately be driven by the results of their underlying businesses. If these companies can grow sales profitably, they’ll likely see their stocks rise over time. But keep in mind that stock prices today reflect future growth expectations, so paying a high price today means you expect and need high growth for the investment to be successful.

The auto industry has historically been a cyclical business, meaning the industry’s sales and profits rise and fall with the overall economy. Buying these companies during cyclical downturns may be a better strategy than buying them when sales and profits are hitting records.

While the potential for future growth is attractive to investors, the EV industry is not without risks. High-growth industries often attract lots of competition that can hurt the returns investors ultimately earn. Stock prices can also be overpriced in exciting new industries, causing investors to overpay for growth that may or may not materialize. Be sure to understand the companies you’re investing in before making a purchase, or consider choosing a more diversified portfolio available through an electric vehicle ETF.

Investing in electric vehicle ETFs

Electric vehicle ETFs to consider:

• iShares Self-Driving EV and Tech ETF (IDRV)

• Global X Autonomous & Electric Vehicles ETF (DRIV)

• Amplify Lithium & Battery Tech ETF (BATT)

If you’re interested in investing in the EV industry, but don’t want to choose individual stocks to buy, an EV-focused ETF may be what you’re looking for. ETFs hold baskets of stocks, so they’re more diversified than if you were just holding a single company. Keep in mind, however, that an ETF focused on a single industry isn’t broadly diversified, which means it still could see significant declines if something impacts the industry directly.

Pay attention to an ETF’s holdings, past performance and expense ratio before making a purchase. Fund companies often launch trendy ETFs to capitalize on investor interest in a certain industry and charge high fees to take advantage of the euphoria.

Investing in electric vehicle suppliers

Companies to consider:

• BorgWarner (BWA)

• BYD (BYDDY)

• Albemarle (ALB)

• Aptiv (APTV)

Another way to invest in the EV market is to focus on companies that supply a number of different EV makers, which means you don’t have to predict which manufacturer will be the ultimate champion. Companies such as BorgWarner and Aptiv supply different components used in EVs, while BYD produces rechargeable batteries in addition to making EVs themselves. Albemarle, on the other hand, is a specialty chemicals company that produces lithium compounds used in lithium batteries, which are used in EVs, among other products. These companies should see their sales tied to EVs grow as the overall level of demand for EVs continues to increase.

Just as with the pure EV makers, suppliers to EV companies can get bid up to prices that make it difficult for investors to earn attractive returns. Growth doesn’t always materialize as quickly as investors hope and there can be bumps in the road. Shortages that lead to high prices for components today can shift to periods of oversupply and falling prices.

Pros and cons of investing in electric vehicles

Pros

• Growing industry

• Declining manufacturing costs over long-term may lead to more affordable pricing

• Government regulations supporting EV industry growth

Cons

• Consumers unfamiliar with product

• High prices for investors

• Limited charging stations nationwide could hurt EV sales

One of the major benefits of investing in the EV industry is the tailwind provided by changing government regulations that limit carbon emissions and push automakers to focus on electric vehicles. This will likely lead to growth for the overall EV market over the long term.

Though recently in the U.S., the Trump administration has been less friendly toward the EV industry. The recent tax bill signed into law on July 4 eliminated a tax credit of up to $7,500 for purchases of electric vehicles.

A 2023 survey by Consumer Reports revealed that about 70 percent of Americans said they’d have at least some interest in buying or leasing an electric vehicle. The interest was mostly driven by potential cost savings, either on gas or maintenance.

However, some consumers are skeptical of electric vehicles and are hesitant to purchase one. People have been driving gas-powered vehicles for a long time, so it could take years before they’re comfortable with an EV.

There’s also the challenge of where to charge an EV if you drive on a long trip. While many people will charge their EVs at home during the night, longer trips will require a large network of recharging stations to be built similar to the way gas stations exist today. How quickly this network can get built may go a long way in determining how quickly EVs are adopted by consumers.

Be sure to research any EV investments thoroughly before making a purchase and consider using ETFs that allow for a more diversified portfolio.

FAQs about investing in EV investing

• What are the risks of investing in electric car companies?

  Investing in the EV industry comes with several risks. Here are some of the major ones to consider.

  • Competition: The EV industry is extremely competitive with several well-financed companies vying to become industry leaders. Competition often limits the returns that investors can earn in an industry.

  • Valuation: The EV industry has high growth potential, which has led investors to bid up the stock prices of companies in the industry. This creates the risk that investors will overpay for a company’s stock, leading to disappointing or even negative returns.

  • Commodity prices: The EV industry could face pressure due to volatile costs for certain commodities used in EV manufacturing such as lithium, cobalt and copper. Also, a decline in oil prices could make gasoline more affordable, potentially limiting demand for EVs.

  • Economic risk: The auto industry has historically been cyclical in nature. The purchase of a new car is discretionary and often easy to delay if there’s an economic downturn. The EV industry could see a slowdown if the economy were to enter a recession.

• What is the minimum investment required to invest in electric car ETFs?

  The minimum investment required to purchase an electric vehicle ETF is usually the cost of a single share. However, many online brokers now allow customers to purchase fractional shares of ETFs, so you may be able to invest with smaller amounts of money.

• Are electric car ETFs suitable for long-term investments?

  Whether or not electric vehicle ETFs are suitable long-term investments will depend on how the industry develops as well as the goals and risk tolerance of the individual investor. Investing in the EV industry comes with several risks, so it may not be suitable for all investors. On the other hand, investors looking for industries with significant growth potential may find electric car ETFs to be an attractive opportunity.

• Should I invest in electric car companies?

  The unique circumstances of an individual investor will dictate whether it makes sense to invest in electric car companies. Some investors may decide they’re comfortable with the industry’s risks and think its growth potential outweighs them, while others may be turned off by the high valuations and amount of competition. These are the issues investors will have to consider before deciding whether they’d like to invest in the EV industry.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.