As many as 80 million cars are sold each year. Investing in automotive stocks can be an effective way to grow your capital.
The automotive sector is one of the largest industries on the planet, weighing in at over $3.5 trillion. As a result of this scale, it is one of the most popular markets to invest in, and it continues to evolve.
An automotive company is one that works in the automobile industry, which includes car development, manufacturing, and sales.
Are automotive stocks a smart investment?
In essence, yes. People need to travel around no matter where they reside and, in most cases, cars are the most practical mode of transportation. Furthermore, there are nearly 1.5 billion vehicles in the world, with an additional 80 million sold each year. This demonstrates the size, strength, and resilience of the automobile market.
Automotive stocks frequently fall in bad economic times because consumers have less purchasing power for new cars. Yet, the impact of COVID-19 on global semiconductor supply has caused the used vehicle market to skyrocket. This demand indicates that even in difficult times, automotive stocks can grow. Furthermore, while certain budget vehicle manufacturers have experienced a drop in demand due to the lower budgets of their target population, luxury automobiles have not suffered the same fate.
The automotive industry is undergoing a revolution, with electric cars (EVs) ushering in a new ecologically conscious era. Here are two top automotive stocks.
Elon Musk launched the famed electric vehicle maker and innovator on July 1, 2003. The EV maker has gone a long way since the first Tesla Roadster rolled off the manufacturing line in February 2008. Tesla’s battery range, accelerating performance, supercharger network, and autopilot technology have all distinguished it from the competition.
No other manufacturer can compete with the company’s varied lineup of electric vehicles. This comprises an executive-focused Model S, a family vehicle called the Model X, and a supercar called the Tesla Roadster, which will be released soon. With the addition of a sport utility vehicle, the Model Y and, most critically, the more inexpensive Model 3, Tesla appears poised to cement its sky-high market capitalization with sales figures to match. In fact, the Tesla Model 3 swiftly became the world’s best-selling electric vehicle in 2020, selling well over 400,000 units.
The Tesla brand has developed faster than any other vehicle manufacturer. It is currently one of the world’s largest automotive corporations, even among ICE manufacturers. Tesla’s growth is incredible, about 3,000% in the last five years.
Ford Company (NYSE:F)
Ford is a globally recognized brand, best known for producing the first mass-produced automobile, the Ford Model T. It was founded in 1903 and is headquartered in Dearborn, Michigan. The maker of the best-selling F-Series pickup is one of the world’s leading car manufacturers and has a strong reputation for dependability and affordability.
The firm boasts a varied selection of incredibly popular automobiles, with cars for every market – from an economical hatchback in the Ford Fiesta to an American muscle car in the Ford Mustang to an all-out performance vehicle in the Ford GT. Furthermore, Ford has prepared well for the rise of EVs, planning to create 600,000 EVs by 2023, including some unique and fascinating vehicles such as the Ford Mustang Mach-E.
The price of Ford shares has risen dramatically in the last year, demonstrating Ford’s ability to pique consumer interest as COVID-19 lockdowns cease around the world. What really sweetens the bargain – and the main reason Ford is on this list – is the 2% dividend yield.