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Time for Electric Vehicle ETFs Instead of Rivian & Tesla?

Wall Street is abuzz with the tale of two electric vehicle (EV) stocks – Rivian RIVN and Tesla TSLA -- lately. Rivian Automotive, the electric-vehicle company backed by Amazon.com Inc. AMZN (which has 20% stake in the automaker) and Ford Motor went public on Nov 10, 2021 through a high-profile IPO. As many as 153 million shares were sold at an initial offering price of $78.00, valuing the company at $66.5 billion. The shares of Rivian jumped 48.3% since the debut.

On the other hand, the EV-king Tesla is slumping as its chief (one of the world’s richest men) Elon Musk is trolling for one of his tweets. Tesla’s Elon Musk tweeted recently that "I keep forgetting you're still alive," in response to Bernie Sanders tweeting that the extremely rich people should pay their fair share of taxes, as quoted on CNN.

Against this backdrop, if you are confused about cherry-picking the right EV stock, you can always bet on the EV ETFs like Global X Autonomous & Electric Vehicles ETF DRIV, iShares Self-Driving EV and Tech ETF IDRV and Simplify Volt RoboCar Disruption and Tech ETF VCAR. In fact, EV ETFs look better bets currently. We’ll tell you why.

Why EV ETFs Are Better Bets Than Tesla & Rivian?

While Rivian’s rally seems to be not knowing any halt, many analysts are wary of the initial excitement which may fail to hold over the long term. David Trainer – a writer on Seeking Alpha indicated that about $67 billion valuation that Rivian has is well below the $80 billion valuation the company originally wanted, but the current one is also too high.

“Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months,” the analyst noted.

Per the skeptical analyst, Rivian has yet to manufacture a considerable number of vehicles and lacks the infrastructure and experience than its big-shot competitors as well as incumbents like General Motors (GM) and BMW. The two auto behemoths have “decades of experience and multi-billion dollar plans to expand EV production” pet the seekingalpha article.

Meanwhile, Tesla shares are falling as Musk is selling shares to cover stock option tax. Few days back, a bizarre Twitter poll demanded from Musk that read “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?” caused a massive slump in Tesla (which is now down 16.2% from Nov 1) (read: ETFs in Trouble as Tesla Takes the Hit of Musk's Twitter Poll).

This, in a way, is opening up a buying opportunity for Zacks Rank #1 (Strong Buy) Tesla. But if you are unnerved about the occasional Tweet-induced slump, EV ETFs appear to be better bets. The basket approach always minimizes the company-specific risks.

Right Time to Buy Electric Vehicle ETFs?

The ongoing global push for restoration of climate, President Biden’s inclination for the same, emerging countries’ pledge for being carbon-neutral in the COP-26 Glasgow and the higher demand for alternative energy amid the fossil fuel rally are great for electric vehicle’s future. Most big-shot companies, including Apple are also eyeing the space.

Simplify Volt Robocar Disruption And Tech ETF VCAR

Simplify Volt Robocar Disruption and Tech ETF (VCAR) is active and does not track a benchmark. The fund VCAR looks to concentrate in those few disruptive companies poised to dominate autonomous driving and then enhance the concentrated exposures with options.

Tesla (18.4%), Nvidia (10.6%) and Vale (5.54%) are the top three holdings of Simplify Volt Robocar Disruption And Tech ETF (VCAR). The ETF VCAR charges 95 bps in fees.

Global X Autonomous & Electric Vehicles ETF DRIV

The Global X Autonomous & Electric Vehicles ETF seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Autonomous & Electric Vehicles Index. The index tracks the price movements in shares of companies which are active in the electric vehicles and autonomous driving segments.

The fund DRIV charges 68 bps in fees. Tesla (4.10%), Nvidia (3.99%) and Microsoft (3.14%) hold the top three spots in the fund DRIV.

iShares Self-Driving EV And Tech ETF IDRV

The iShares Self-Driving EV and Tech ETF seeks to track the investment results of the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. The index comprises of developed and emerging market companies that may benefit from growth and innovation in and around electric vehicles, battery technologies and autonomous driving technologies.

The ETF IDRV charges 47 bps in fees. Advanced Micro Devices (6.44%), Nvidia (6.14%) and Tesla (6.13%) round out the top three positions of iShares Self-Driving EV And Tech ETF (IDRV).


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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Global X Autonomous & Electric Vehicles ETF (DRIV): ETF Research Reports
 
Tesla, Inc. (TSLA): Free Stock Analysis Report
 
iShares SelfDriving EV and Tech ETF (IDRV): ETF Research Reports
 
Simplify Volt Robocar Disruption and Tech ETF (VCAR): ETF Research Reports
 
Rivian Automotive Inc. (RIVN): Get Free Report
 
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