The Inflation Reduction Act just passed through Congress contains various tax credits for electric vehicles, which should help give the industry a boost. This also puts the focus on investment opportunities for electric vehicles.
According to a CNBC report, the law will include “a tax credit of up to $7,500 for buyers of new all-electric vehicles and plug-in hybrids that will be extended through 2032. The bill will also create a separate tax credit of up to $4,000 for used versions of these vehicles.”
However, the caveat is that there are certain price and income restrictions. As such, it’s hard to know if this will actually lead to an increase in the number of electric vehicles on the road given these limitations.
For example, sedans are priced at $55,000, and trucks are limited to $80,000. Furthermore, the credit is not available to individual tax filers with an adjusted gross income greater than $150,000 or to spouses whose combined income exceeds $300,000.
All-inclusive electric car ETF
However, the law is still a boost for the electric car industry, which bodes well for exchange-traded funds (ETFs) focused on this market. One such box to consider is the overall choice of Global X Foundation for Autonomous and Electric Vehicles (DRIV).
DRIV seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (EVs), and EV components and materials. This includes companies involved in developing autonomous vehicle software and hardware, as well as companies that produce electric vehicles and electric vehicle components such as lithium batteries, and critical electrical materials such as lithium and cobalt.
DRIV seeks to provide investment results that are generally consistent with price and return performance, before fees and expenses, for Solactive Autonomous and Electric Vehicles. The fund offers:
- High Growth Potential: DRIV enables investors to access high growth potential through companies that are critical to the development of autonomous and electric vehicles – a potentially transformative economic innovation.
- Unconstrained Approach: DRIV’s composition transcends classic sectoral, industry, and geographic classifications by tracing an emerging technological topic.
- ETF Efficiency: In a single transaction, DRIV provides access to dozens of companies with a high exposure to the topic of autonomous and electric vehicles. The presence of the disruptive auto industry in the ETF shell also gives traders access to short-term market maneuvers within the sub-sector.
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