What kind of investor are you? Are you attracted solely by the innovation or stability of automotive stocks? Is it possible to earn a stable income from trending products of car companies? Are you trying to generate additional income from a stable portfolio of investments?
An investor in the car market of any experience asks these questions. Let’s break down what you can qualify for in 2022 by investing in trending cars. And, most crucially, why?
How car investments work
The most popular types of rentals are
- renting a car for a certain period of time, which is negotiated with the intermediary/lessee;
- car rental with subsequent repurchase;
- leasing several cars at once, which guarantees a higher income.
Profitability will depend on the following factors
- the way the car was purchased (with your own money or on credit);
- car class: economy or business (business class cars are more expensive but also rent at a higher price);
- the number of cars for rent.
The benefits of buying stocks of green car companies
Almost all major automakers are planning to completely stop producing gasoline cars by 2030 — Mercedes, Toyota, Honda, BMW, and others. By then, the shares will be quite cheap and will bring more profit to the investor — both in dividend yield and price appreciation. Because when a new phase of the economic cycle begins, cars will be in demand again and carmaker stocks will start to rise.
There are favorable conditions today for the growth of the value of shares of electric car companies. There is a great opportunity for long-term investments in these companies.
You only need to understand what level of risk you are comfortable with in your investment strategy.
Are you a risky investor?
You probably do most of your investment from a short-term perspective. You are tempted to add something fancy to your investment portfolio.
A recent study by Gainy showed and analyzed many companies, except the famous Tesla, which is the current market leader and has good financial performance. Moreover, with regards to Tesla, it should not be forgotten that its prices are inflated, largely due to the personality of Elon Musk. In addition, it is unclear whether the company will be able to maintain its position at the expense of new competitors entering the market.
Are you a reasonable investor?
If impulse investing is popular, it is usually the reliability of the investment that matters for potential returns. Are you willing to sacrifice them so that you don’t lose stable financial flows, more likely for all, will you turn your attention to Toyota? The Japanese have built a stable company with good financial performance that leads the watercraft market. And what is encouraging, it is well-positioned to increase its value in the medium term.
The rise of automotive stocks and the hydrogen engine
There is an opinion that the rapid transition to electric cars will be bad for the environment. It is worth considering not only the operation but also the full cycle of production and disposal of electric cars. Instead of completely abandoning electric cars, it is necessary to invest in their environmental modifications. For example, hybrid engines are less harmful to the environment than all-electric ones.
An advanced development in this area is the conversion of DVZs to water, which allows companies to keep the luggage lines, which employ hundreds of thousands of workers, running. In addition, water-powered cars do not produce toxic emissions into the atmosphere because water vapor escapes from the exhaust pipe.
Representatives of the Asian automobile industry Toyota and Hyundai have already presented their water-powered fuel cell cars.
How to choose hydro and electric cars for your investment
It’s best to choose companies that have the most stable financial indicators during market fluctuations. This testifies to talented risk management on the part of the company’s management and a high assessment of the company’s products on the part of consumers.
- You will be pleased to use it. Electric cars are virtually silent, accelerate quickly, and are cheaper to operate. They have fewer parts that require regular maintenance or repairs. Electricity is also cheaper than gasoline in many countries, so consumers save on that as well.
- Governments will support the demand for electric cars and hydrocars. The political factor – the trend toward green energy, legislation to limit carbon dioxide emissions, and government subsidies for the purchase of electric vehicles – is particularly worth mentioning. Such subsidies have long been enjoyed by residents of some U.S. states, regions of Canada, China, Japan, South Korea, and the European Union.
- Hydrogen fuel cell electric cars continue to be produced. The most famous model today is the Toyota Mirai. From an environmental point of view, hydrogen is a “greener” technology, because lithium is needed to produce lithium batteries, the extraction of which has a negative impact on the environment.
Make money on a separate niche: manufacturers and recyclers of lithium-ion batteries
The electric car market cannot grow without fast-charging batteries. Surveys show that charging problems remain a major obstacle to buying an electric car. Motorists worry about the run time of an already charged battery and the time it takes to recharge.
Since the battery is one of the main and most expensive parts of an electric car, its price directly affects the cost of the car itself. So far, batteries remain relatively expensive compared to the internal combustion engine, but they are getting cheaper every year. In 2019, they already cost 7.5 times less than in 2010, according to the International Energy Agency. The IEA also predicts that over the next ten years, the total capacity of electric vehicle batteries will grow by at least 9 times.
The fact that the cost of lithium-ion batteries is decreasing, on the one hand, contributes to the growth of the market. On the other hand, it can lead to a drop in manufacturers’ revenues.
The trend toward “green” energy will gain momentum in the coming years, and the market for electric vehicles will grow. However, this does not mean that any investment in this market will be successful, so it is necessary to carefully choose companies for purchase.
Conclusion
You get a guarantee, profitability, and liquidity by investing in automotive stocks. For example, buying a used car for 10 thousand dollars, for two years you can return the invested money, and then the car will work for its owner. Of course, it is better to buy a mostly new car – this allows you to save on repairs.
Your investment assistant Gainy protects you from small and large cash losses and diversifies your investment cases.
