Thursday 5th August 2021 signalled a significant day in American policy, with Biden signing an executive order calling for half of new vehicles sold in the US to be electric by 2030 as part of plans to slash transport emissions. Not only do we believe this is a step in the right direction for the planet, but the additional investment into the green sector and job creation could also be the triple win we all need right now.
The US is currently the world’s second largest greenhouse gas emitter and has lagged China and Europe in the take-up of electric vehicles (EVs). In the US EVs comprise about 2 per cent of the market and Tesla dominates sales, against about 6 per cent in China, 10 per cent in Europe and 11 per cent in the UK.
What targets are being set for the auto industry in other parts of the world?
Globally, transport accounts for about 29 per cent of US emissions, more than any other sector, making it a key element to any plan to cut greenhouse gases. The EU also toughened its emission standards in its latest policy announcement, amounting to an effective ban on sales of all new diesel and petrol cars by 2035. The UK aims to end the sale of all new petrol and diesel cars by 2030.
What could these policies mean for the EV investing theme?
With a huge gap to be closed based on the current percentage of EVs sold globally versus the target of 50-100% of sales by 2035, governments are likely to increase the amount of spending and subsidies available to this sector over the coming decade. More money will likely be spent by these major car companies in R&D, and the resources needed to build EV charging stations could become an investable theme.
Where do the individual car brands stand when it comes to these targets?
Tesla is already producing 100% of its fleet as electric vehicles, so it is strategically set up to meet these future policy targets. GM said in January that it would aim to stop manufacturing petrol powered cars by 2035, the first of the big carmakers to set a target. Ford said in May 2021 that 40 per cent of its global car sales would be electric by 2030. Tesla, GM and Ford are all components of the S&P500 Index, and IVV, the Blackrock Australian Listed ETF tracking the S&P500, is in seven Raiz Portfolios. This means that if you have a Raiz portfolio containing the IVV ETF, you are already investing in some companies who are striving to cut emissions relating to transportation.
Ford is also in the ETHI ETF, available in our socially responsibly themed Emerald Portfolio, meaning all Raiz Portfolios have some available exposure to companies looking to move the transportation dial in the correct direction.
Does it matter to investors where the electric vehicles are produced?
Biden framed his electric vehicle push as a matter of winning the market back from China, which produces triple the number of electric vehicles as the US each year. “We’re in competition,” he said. “To win, we’re going to have to make sure the future is made in America.” But from a green investor point of view, it does not really matter which country wins. In a perfect outcome, this investment will generate billions of dollars in cashflow, job creation, and lead to better environmental outcomes. That would be the win, win, win.
Don’t have the Raiz App?
Download it for free in the App store or the Webapp below:
Important Information
If you have read all or any part of our email, website, or communication then you need to know that this is factual information and general advice only. This means it does not consider any person’s particular financial objectives, financial situation, or financial needs. If you are an investor, you should consult a licensed adviser before acting on any information to fully understand the benefits and risk associated with the product. This is your call but that is what you should do.
You may be surprised to learn that RAIZ Invest Australia Limited (ABN 26 604 402 815) (Raiz), an authorised representative AFSL 434776 prepared this information.
We are not allowed, and have not prepared this information to offer financial product advice or a recommendation in relation to any investments or securities. If we did give you personal advice, which we did not, then the use of the Raiz App would be a lot more expensive than the current pricing – sorry but true. You therefore should not rely on this information to make investment decisions, because it was not about you for once, and unfortunately, we cannot advise you on who or what you can rely on – again sorry.
A Product Disclosure Statement (PDS) for Raiz Invest and/or Raiz Invest Super is available on the Raiz Invest website and App. A person must read and consider the PDS before deciding whether, or not, to acquire and/or continue to hold interests in the financial product. We know and ASIC research shows that you probably won’t, but we want you to, and we encourage you to read the PDS so you know exactly what the product does, its risks and costs. If you don’t read the PDS, it’s a bit like flying blind. Probably not a good idea.
The risks and fees for investing are fully set out in the PDS and include the risks that would ordinarily apply to investing. You should note, as illustrated by the global financial crisis of 2008, that sometimes not even professionals in the financial services sector understand the ordinary risks of investing – because by their nature many risks are unknown – but you still need to give it a go and try to understand the risks set out in the PDS.
Any returns shown or implied are not forecasts and are not reliable guides or predictors of future performance. Those of you who cannot afford financial advice may be considering ignoring this statement, but please don’t, it is so true.
Under no circumstance is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.
This information may be based on assumptions or market conditions which change without notice and have not been independently verified. Basically, this says nothing stays the same for long in financial markets (or even in life for that matter) and we are sorry. We try, but we can’t promise that the information is accurate, or stays accurate.
Any opinions or information expressed are subject to change without notice; that’s just the way we roll.
The bundll and superbundll products are provided by FlexiCards Australia Pty Ltd ABN 31 099 651 877 Australian credit licence number 247415. Bundll, snooze and superbundll are trademarks of Flexirent Capital Pty Ltd, a subsidiary of FlexiGroup Limited. Lots of names, which basically you aren’t allowed to reproduce without their permission and we need to include here.
Mastercard is a registered trademark and the circles design is a trademark of Mastercard International Incorporated.
Home loans are subject to approval from the lending institution and Raiz Home Ownership makes no warranties as to the success of an application until all relevant information has been provided.
Raiz Home Ownership Pty Ltd (ABN 14 645 876 937), an Australian Credit Representative number 528594 under Australian Credit Licence number 387025. Raiz Home Ownership Pty Ltd is 100% owned by Raiz Invest Australia Limited (ABN 26 604 402 815).
