Rising Gas Prices Drives Demand for Electric Vehicles

With gas prices averaging at around $5 a gallon, electric vehicles are looking more appealing to consumers. The Environmental Protection Agency estimates the annual cost to fuel a 2022 BMW 430i sedan at around $2,900 a year for the average American. By comparison, the estimated cost to fuel a 2022 BMW i4 eDrive40, which is essentially the same car powered by electricity, is about $600 a year, or roughly a fifth of the cost.

On a cents-per-mile basis, EVs are significantly less expensive than gas cars, in part because electric motors are more efficient than gasoline engines. More than 85% of the energy that goes through an electric motor is converted into movement. For a gasoline engine, that figure is around 40%. Even if electricity and fuel costs were equal, an EV would be cheaper to own than a gasoline-fueled vehicle.

CNN Business quotes Chris Harto, a senior policy analyst for Consumer Reports, as saying: "Most of our analysis has shown that, from a financial perspective, if you're buying a new vehicle, it makes a lot of sense for most people to at least strongly consider an electric vehicle if it fits their lifestyle.”

And as the growing demand for electric vehicles spurs automobile manufacturers such as Ford, GM, Volvo, and Honda to ramp up EV production, the need for related metals is growing. According to research from Invesco, “automotive manufacturers and suppliers have been allocating resources to the development of EVs to meet consumer demand and government initiatives. By 2035, some of the largest auto markets… are expected to be fully electric, a reflection of the ongoing shift to decarbonize transportation worldwide.”

The actively managed Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMT) is designed to provide economic exposure to the commodities widely used in the production of electric vehicles. Debuting in late April, EVMT looks to top the S&P GSCI Electric Vehicle Metals Index, which is home to metals essential in the production of EVs. These metals currently include aluminum, cobalt, copper, iron ore, nickel, and zinc.

This approach allows investors to focus solely on industrial metals, rather than a midstream investment in companies that manufacture batteries and electric vehicles. Plus, EVMT’s active structure gives it the potential to expand both the number and type of metals included in the ETF as electric vehicle production and technology evolve, according to a statement from the firm.

EVMT has an expense ratio of 0.59%.

For more news, information, and strategy, visit the Innovative ETFs Channel.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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