Electric Vehicles

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What was once (not too long ago) a niche sideshow in the automotive market is poised to take over the whole thing, with electric vehicles anticipated to dominate car sales by 2040, according to BloombergNEF’s Electric Vehicle Outlook 2020.

But is the mass adoption of electric vehicles really as far off as 2030, when some projections anticipate that battery-powered cars will start to outsell conventional combustion engines? Or, is the electric vehicle revolution already here?

Right now, the prices of electric vehicle stocks are jumping. Tesla, which is expected to announce new battery technology in September, jumped 13% in one morning in June to an all time high of $1,746.69.  Now, it’s as high as $1,835.64 and looking at the next milestone of $1,900. 

Workhorse, a maker of electric vans, also jumped after it cleared the next hurdle to participation in California’s zero-emission subsidy program. These, in addition to a jump for the Chinese electric vehicle maker NIO, the Chinese electric scooter maker Niu, show the enthusiasm for the EV market. 

And there should be. Here’s why. 

What Are Electric Vehicles? 

All-electric vehicles (EVs) are cars and trucks  equipped with an electric motor rather than a traditional internal combustion engine. The electric motor is powered by a large traction battery pack which requires a charging station or wall outlet to charge. 

Because EVs are powered by electricity, they don’t have the tailpipe that emits exhaust as is typical of internal combustion engines. EVs also do not require liquid fuel components, including a fuel pump, fuel line, or fuel tank. Hybrid vehicles, however, still do have these components, as they typically switch over to an internal combustion engine when the electric battery becomes depleted. 

Why Invest in Electric Vehicles? 

Simply put, electricity is the future of transportation.

EVs have the potential to help slash carbon emissions and lower costs for drivers, which is why public utilities such as Xcel Energy are pushing to get 1.5 million electric cars on the road by 2030.

When investing in EVs, it’s more than a matter of purchasing pricey Tesla stock or not. Lots of companies stand to benefit from the adoption of electric vehicles, from battery manufacturers to companies thinking creatively about how to charge electric vehicles. 

These companies are trying to solve the biggest challenges for electric vehicles that have been stumbling blocks to their mass adoption. Namely, the production of batteries that hold a greater charging capacity for a longer period and the accessibility of charging opportunities. 

For example, a new type of battery—solid-state electrolyte— is scheduled to enter the commercial market in 2023. Solid-state batteries are generating major excitement for electric vehicle makers. The solid version of the battery can hold three times more energy than its traditionally liquid counterpart, not to mention it can hold that energy more efficiently and ultimately last longer. Battery prices are expected to fall as their energy density improves, making electric vehicles increasingly more affordable. 

EVs continue to become more mainstream as they become more affordable and charging equipment becomes more widely available.  Blink Charging, for example, designs, manufactures, and operates an electronic vehicle charging network that is managed by cloud software. According to the company, its EV charging equipment sales increased by more than 350% and its revenues for just the first six months of 2020 surpassed its total revenues for all of 2019. 

But, there’s more to all-electric vehicles than batteries and charging stations. 

Specifically, the list of key components in electric cars is long. In addition to the usual wheels and tires, you also need:

  • A charging port
  • A DC/DC converter
  • An electric traction motor to drives the wheels
  • An onboard charger that accepts energy from the charge port and converts it to charge the battery
  • A power electronics controller to “manage the flow of electrical energy delivered by the traction battery”
  • A thermal system to maintain an appropriate temperature range
  • A traction battery pack to store electricity for the motor
  • An electric transmission 
  • And more…

In other words, a shift from conventional combustion engines to all-electric means a shift to makers of these parts for suppliers. 

For example, Aptiv develops safety systems for electric vehicles. Safety systems are crucial considering the high voltage that powers electric vehicles and the “more than 8,000 connection points in a typical electric vehicle.”

Delphi offers automakers powertrain, electrical and battery management solutions for components including inverters, high-power electrical centers, high-voltage connection systems, combined inverter DC/DC converters (CIDD), high-voltage shielded cables, on-board and plug-in chargers and charging inlets.

Magna offers complete vehicle manufacturing, producing vehicles for BMW, Daimler, Jaguar Land Rover and Toyota. Magna was selected by the Beijing Automotive Group Co., Ltd. (“BAIC Group”) in 2019 to “produce up to 180,000 electric vehicles per year in China…starting in late 2020.”

Amphenol develops and supplies advanced interconnect systems, sensors, and antennas for hybrid and electric vehicles. 

These and other companies are poised for growth and are ripe for investment. 

How to Invest in Electric Vehicles

Electric vehicles will outnumber traditional fuel-powered cars before we know it. Now is the time to get ahead of the curve, before affordable, little known stocks rise to the heights of Tesla. A search on Magnifi indicates that there are a number of ways for investors to access this fast-growing segment via ETFs and mutual funds, rather than focusing only on individual companies.

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The information and data are as of the August 25, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi. 

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