Market Overview

A Third Electric Vehicle ETF Charges Up

A Third Electric Vehicle ETF Charges Up

And then there were three: the Global X Autonomous & Electric Vehicles ETF (NASDAQ: DRIV) debuted Tuesday.

The new ETF, the latest in a long line of thematic funds from Global X, tracks the Solactive Autonomous & Electric Vehicles Index. DRIV features 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,” according to Global X.

DRIV will compete directly with the KraneShares Electric Vehicles & Future Mobility ETF (NYSE: KARS) and the InnovationShares NextGen Vehicle and Technology ETF (NYSE: EKAR). KARS and EKAR debuted in January and February, respectively.

EV Opportunity

Electric vehicles are obvious competitors to automobiles powered by internal combustion engines. Declining production costs could increase EV adoption in coming years, powering ETFs related to the EV theme.

“Presently, EVs remain more expensive than ICEs, but many analysts believe this will change within the next 10 years as battery costs continue to rapidly decline,” according to Global X research. “In the three-year period from 2014 to 2016, battery costs fell over 50 percent from process improvements and scale effects, bringing EVs significantly closer to parity with ICE costs.”

DRIV holds 75 stocks. About 76 percent, on a combined basis, hail from the technology and consumer discretionary sectors. Materials is the new ETF's third-largest sector weight at 14.92 percent.

Familiar Fare

None of DRIV's holdings exceed weights of 3 percent. The new ETF is home to some familiar stocks, including Apple Inc. (NASDAQ: AAPL), Microsoft Corp. (NASDAQ: MSFT), Intel Corp. (NASDAQ: INTC), Cisco Systems Inc. (NASDAQ: CSCO) and NVIDIA Corp. (NASDAQ: NVDA).

DRIV is a global ETF with exposure to 15 countries, but the U.S. accounts for over 52 percent of the new ETF's geographic exposure. The new Global X fund charges 0.68 percent per year, or $68 on a $10,000 investment.

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