A very global trend, a recent report suggests that the number of electric vehicles will increase from 11 million currently to 145 million in 2030.1 This in turn will stimulate various segments of the market.
Here are four sample stocks of elite fund managers looking to capitalize on that drive.
Sumitomo metal mining
Stock selection at Baillie Gifford Japan Trust
Sumitomo Metal Mining is a top 10 holding by the Baillie Gifford Japan Trust. Manager Andy Brown says the company is exposed to nickel and copper mining, both of which are an integral part of the electric vehicle industry in terms of the cars themselves and the batteries that power them.
He says, “They have a materials business and they make a component called lithium nickel oxide. This feeds into the cathodes of electric batteries and key customers for this business are Tesla and Toyota. We believe it has fantastic growth prospects. “
Wuxi Lead Intelligent Equipment
Stock picking at Ninety One Global Environment
Wuxi Lead Intelligent Equipment mainly develops, manufactures and sells battery production equipment and services to leading EV battery manufacturers in China. The company participates in the Ninety One Global Environmental Fund.
Manager Deirdre Cooper says: “Sustainable decarbonization requires a swift transition to a greener, lower carbon transport system. Wuxi is directly exposed to one of the largest EV markets in the world, putting it at the forefront of decarbonization.
“It is also expanding sales internationally, with new customers like Northvolt.”
Aptiv plc
Stock selection at the Rathbone Global Sustainability Fund
Did you know that there are more than 8,000 connection points in a typical electric vehicle? When something goes wrong it can range from minor to major inconveniences.
Aptiv provides fuse links to ensure that the battery is disconnected if a current surge reaches a potentially dangerous level, thereby preventing a potentially catastrophic event
The company participates in the Rathbone Global Sustainability Fund. Manager David Harrison says: “We have held Aptiv in the fund since it was launched. It is, so to speak, the nerve center of an electric vehicle.
“We think that it is well positioned for the long term and has a management team that is very future-oriented.”
Infineon
Stock selection in the Liontrust Sustainable Future Global Growth Fund
The German manufacturer plays a key role in providing chips for car security systems as the semiconductor content in cars and other modes of transport continues to grow.
Liontrust Sustainable Future Global Growth Manager Peter Michaelis says: “Infineon is the market leader in chips that power semiconductors in electric vehicles.
“The company completed the acquisition of Cypress Semiconductor Corporation in April 2020, which is a milestone in its strategic development to offer the industry’s most comprehensive portfolio for linking the real and digital worlds and for shaping digitization.”
1Source: Clean Technica – Report of the International Energy Agency
2Source: aptiv.com
See also: Investing in Electric Vehicle Technology to Recharge Your Portfolio – The world is on the threshold of a major upheaval in the automotive industry and the cause of this are lithium-ion batteries. Donald Maxwell-Scott of Rowan Dartington on investing in electric vehicle technology.
Past performance is not a reliable indicator of future returns. You may not get back the amount you originally invested and tax regulations may change over time. The views expressed are those of the fund managers and do not constitute financial advice.
