Friday, April 12News That Matters

Investment in Electric Vehicle themed Mutual Funds

Electric vehicles is one of the major trends in the auto sector across the Globe.  India wants to achieve 100% electrification by 2030. EV market in India will be $200 billion. EV market will grow at CAGR of 36% till 2026.

Few months back, I wrote an article around various stocks in Indian Market that will get benefit from electric vehicles growth. Read Article.

Now, there are mutual funds being launched to focus on Electric Vehicles theme.

Navi Electric Vehicles and Driving Technology Fund of Fund:

  • This EV fund aim o track the performance of the STOXX Global Electric Vehicles & Driving Technology NET Index. This index comprises companies that are involved in the production of electric vehicles and assisted driving technologies. The index was launched in 2012.
  • Currently, the STOXX Global Electric Vehicles & Driving Technology NET Index comprises 90 companies including Tesla, Garmin, Samsung, Toyota, Intel Corp, Maruti Suzuki, Nissan, Honda Motor, Daimler, BMW, Ford Motor, General Motors and Volvo among others.

Mirae Asset Electric Autonomous Vehicle ETF Fund of Fund

  • The will invest in
    • Global X Autonomous and Electric Vehicle ETF – DRIV (launched in 2018). The Global X Autonomous & Electric Vehicles ETF (DRIV) seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (“EVs”), and EV components and materials.  This includes companies involved in the development of autonomous vehicle software and hardware, as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt.  It has invested in 75 companies (60% in US companies) and the top constituents are Tesla, Nvidia, Alphabet, Microsoft, Apple, Intel, Toyota, Qualcomm, General Electric, Honywell.
    • Global X Lithium and Battery Tech ETF (launched in 2010): The Global X Lithium & Battery Tech ETF (LIT) invests in the full lithium cycle, from mining and refining the metal, through battery production. It has invested in 35 companies and the top constituents are ALBEMARLE, YUNNAN, GANFENG, CONTEMPORARY, EVE ENERGY with 50% investment in China and 20% is US companies.
    • may also deploy sums in Global X China Electric Vehicle and Battery ETF (launched in 2020).  It has invested in 20 companies in China and intend to track Solactive China Electric Vehicle and Battery Index NTR.

Nippon India S&P EV Index Fund 

  • The fund will track S&P Kensho Electric Vehicles Index, which invests in US-listed companies that are part of the EV industry. The index could invest in companies that are involved in manufacturing of electric road vehicles, EV engine systems, energy storage systems, charging infrastructure, and clean energy technology such as hydrogen fuel cells. It is a new index launched in 2018.
  • S&P Kensho Electric Vehicles Index was launched on 17 September 2018 and delivered an annualized return of about 40% over the past three years.
  • The index intends to represent companies that are focused on producing electric road vehicles and associated subsystems, powertrains, energy storage systems, clean fuel technology (such as hydrogen fuel cells) and charging infrastructure.
  • Out of the 44 companies in S&P Kensho Electric Vehicles Index, the top five constituents are Aspen Aerogels Inc (6.37%), Li Auto Inc (3.75%), XPeng Inc (3.45%), Fisker Inc (3.22%) and Tesla Inc (3%). From India, only Tata Motors Ltd forms part of the index. Country-wise, the US has the biggest weightage at 30%, followed by China at 5%, Canada at 3% and Japan at 2%.

Summary: As funds are following different index/ ETF and may have different bias on technology and selection criteria, so investors should look as the underlying index and portfolio.

News relevant to EV:

  • Apple iPhone maker Foxconn is joining the EV market. Foxconn said it has plans to manufacture EV  in India, Europe and Latin America.
  • Rakesh Jhunjhunwala is betting on Tata Motors. Tata Motors has raised $1billion from investors including TPG to boost EV production locally.
  • In Oct 2021, TVS Motor board approved the incorporation of subsidiary to undertake EV business
  • Bajaj Auto is also setting up a subsidiary for its electric and hybrid vehicle business
  • US based Tesla has urged government to slash import duties on EV.
  • BP Ventures, the investing arm of British oil and gas giant BP has made $13 million investment in integrated electric vehicles (EV) ride-hailing and charging company BluSmart.

  • On September 15, 2021, the government approved a Product Linked Incentive (PLI) scheme for the automobile and drone industry. It is for ACC battery storage manufacturing to promote domestic production of batteries and reduce dependence on imports. This will support the domestic Electric Vehicle Industry with the required infrastructure to produce electric vehicles in India.

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