| Hi Taylor:
I feel like I'm supposed to be investing in electric cars but I'm
not sure what that looks like. Do I have to buy Tesla stock or is
there a sneaky up-and-comer? - Bruce
Hi Bruce: Your feeling is correct, there's a lot of money moving
toward the electric car market and those vehicles aren't a passing
trend. How you invest, however, is a tougher question to answer.
up-and-comers. If you bought Tesla stock in 2013, that worked
out pretty well for you. Unfortunately, the Tesla boom has everyone
looking for the next electric vehicle jackpot and you probably
aren't going to find it within the same industry. Instead, you
have opportunities to buy shares of existing companies
like Ford or GM who are entering the market that Tesla
helped create. While there are a lot of emerging companies, especially
in the electric truck department, I'm not going to encourage you
in that direction unless one of those manufacturers has a product
you really love. At this point, we still have to see if these
unknowns have the capacity to deliver a vehicle the public wants
2. The macro view. To start, think of the electric car market
as a whole entity. Between 2020 and 2021, sales of electric vehicles
doubled. During that same time span, automobile sales fell overall.
People clearly trust the new cars hitting the market and are choosing
to head in that direction. A lot of countries have implemented
penalties for manufacturers who don't move toward zero-emission
vehicles, pushing the needle even further from gas toward electric.
All of this is to say, you can find existing companies with solid
reputations who have skin in the electric vehicle game and put
your money there. Companies that make computer chips and charging
stations will be part of this rising tide. You don't have to forecast
the hottest EV of 2023 in order to make a smart investment.
3. Research. You're already on the right track, Bruce. If
you have the feeling, "maybe I should be investing in this," the
first step is to do research and ask questions. When you worry
other investors know something you don't, see if you can do a
little sleuthing and find out what they know. Either you'll decide
electric vehicle investing isn't your cup of tea, or you'll discover
a company you fall in love with and become a happy shareholder.
Don't fall victim to the belief that there's some magic trick
to investing-find companies you like and go from there.
| Electric cars
seem to be the future. I don't know exactly which companies will have
the most success, but I'm excited to find out with the rest of you.
© Taylor Kovar
February 8, 2022
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before implementing any strategy discussed herein. To submit a question
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