Rising consumer interest in electric vehicles (EV) due to their cost-efficiency and government incentives led the EV industry into a bubble last year, with many small- and large-cap participants becoming overvalued. Surging oil and natural gas prices because of the Russia-Ukraine war, support from President Biden’s $5 billion EV plan, and U.S. EV tax credits should boost the EV industry’s growth further. Moreover, EV manufacturers’ efforts to develop innovative fleet designs and improved battery technology should bode well for the industry. The global EV market is expected to grow at a 15.4% CAGR to $187.94 billion by 2026.
Despite the global chip shortage and input price inflation, which are keeping EV makers under pressure, EV sales rose significantly in February 2022. Efforts made to ease these supply chain issues and increased focus on domestic production should help EV makers overcome the challenges in the coming months. Investors’ interest in this space is evident from the Global X Autonomous & Electric Vehicles ETF’s (DRIV) 7.7% returns over the past month.
