The transition to electric vehicles (EVs) is well underway, with nearly all the world’s automakers pledging to transition their fleets to battery power by 2030 or sooner. This transformation represents a huge opportunity for investors. While the individual stocks of electric vehicle companies can be risky, there is a fairly safe way to play the rise in EVs. We’re talking, of course, about exchange-traded funds (ETFs) that offer investors broad exposure to the global electric vehicle sector while minimizing risks. Specialized ETFs such as ones that target the electric vehicle space can also be an affordable way for investors to capitalize on the boom of emerging technologies. Here are the three best electric vehicle ETFs to buy for the future of transportation.
| DRIV | Global X Autonomous & Electric Vehicles | $22.88 |
| BATT | Amplify Lithium & Battery Technology | $12.14 |
| IDRV | iShares Self-Driving EV and Tech ETF | $36.67 |
Global X Autonomous & Electric Vehicles ETF (DRIV)
First, we have the Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV). This exchange-traded fund aims to give investors broad exposure to the entire electric-vehicle industry and help them capitalize on its future growth.
The DRIV ETF currently holds the stocks of 75 companies. Many of them are actively involved in electric-vehicle manufacturing , developing components of EVs, or enabling self-driving vehicles.
The top holdings of the DRIV ETF include automakers such as Tesla (NASDAQ:TSLA) and General Motors (NYSE:GM), along with tech giants Alphabet (Nasdaq:GOOG,NASDAQ:GOOGL), Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL).
The ETF’s expense ratio is a little high at 0.68%, but that is comparable to similar ETFs. A nice feature of this ETF is that it pays a quarterly dividend of 13 cents a share for a yield of 0.70%.
In terms of performance, the DRIV ETF is up 15% so far in 2023 and has gained 49% over the past five years.
Amplify Lithium & Battery Technology ETF (BATT)
Of course, it is not just automakers that play an integral role in the electric-vehicle transformation. Lithium suppliers and battery manufacturers are also helping to propel the industry forward. And the Amplify Lithium & Battery Technology ETF (NYSEARCA:BATT) is an exchange-traded fund that targets leading lithium miners and battery technology stocks. Specifically, the BATT ETF tracks the EQM Lithium & Battery Technology Index.
The top holdings of this ETF include the large lithium miner, Albemarle (NYSE:ALB), Panasonic (OTCMKTS:PCRFY), and the global mining giant Glencore (LON:GLEN).
The BATT ETF is skewed towards stocks with high market capitalizations, as 75% of its holdings have a market cap of $10 billion or more. The expense ratio is a little cheaper at 0.59%, and it pays a dividend that is higher at 48 cents a share per quarter. The returns have been subpar due to market volatility, with the share price up 2% so far this year but down 40% over the last five years.
But the need for lithium and batteries is only going to grow as the EV sector matures.
iShares Self-Driving EV & Tech ETF (IDRV)
The iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV) is the most inexpensive ETF on this list, with an expense ratio of 0.47%.
The IDRIV ETF is another passively managed fund as it tracks the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. As a result, the ETF offers investors international diversification, with less than 30% of its holdings based in the U.S. The majority of the companies whose stocks it holds are based overseas, in countries such as China, Germany, and South Korea.
Its top holdings include Li Auto (NASDAQ:LI), Volkswagen (FRA:VOW3) and Renault (EPA:RNO). Also among the ETF’s notable holdings are U.S. automakers such as Tesla (NASDAQ:TSLA), but they constitute a smaller percentage of the ETF than foreign stocks.
In terms of its performance, this ETF has been doing well, having gained 8% in 2023 and risen 40% over the last five years. The fund pays a semi-annual distribution to shareholders of about 43 cents a share, which is decent. This fund is a good choice for investors who want international exposure and diversification.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
