EV Supplier Stocks Outperform As Automakers Invest In The Electric Future

EV Supplier Stocks Outperform As Automakers Invest In The Electric Future

Our theme of Electric Vehicle Supplier Stocks has done well, rising by about 30% year-to-date, outperforming the S&P 500 which was up by about 20% over the same period. The theme was also up by about 77% since the end of 2019, compared to the S&P 500 which was up by roughly 41% over the same period. There are multiple trends that are leading to the outperformance of this theme. Firstly, the transition to EVs is likely to accelerate with President Joe Biden indicating that he wants half of all new car sales in the U. S. to be electric, fuel-cell electric, or plug-in hybrid by the year 2030. Major automakers have also doubled down on their EV commitments with Ford recently indicating that it would invest about $11 billion on an EV assembly plant and three new battery factories, while GM indicated that it would spend $35 billion on its EV transition and autonomous driving through 2025. We are also likely to see more government regulation and incentives favoring this transition, considering that just about 2% of cars solid last year were EVs. This should translate into higher demand for the supplier stocks in our theme. Moreover, the EV