General Industry Update

The electric vehicle (EV) industry faced some headwinds in January thanks to a combination of the slowing pace of EV sales and the expiration of some tax credit incentives in the United States.¹ 2

Part of the January shake up stemmed from the industry beginning to reckon with intensified competition from Chinese rivals, particularly BYD, which outsold Tesla in the last quarter of 2023. Elon Musk acknowledged Chinese carmakers as the most globally competitive, remarking on their potential future success.³

Chinese EV manufacturers have already achieved a 2025 goal for 20% of new cars in the Chinese market to be EVs and did so three years early. Likewise, the Chinese government’s EV penetration target of 50% by 2035 is likely to be achieved next year—a full decade early.⁴ On the strength of these achievements, alongside BYD, Chinese EV makers Nio and Xpeng (all held by the Fund), amongst others, are expanding sales outside China.⁵

But there’s good news, too, for the non-Chinese EV industry.

Despite BYD surpassing Tesla in units sold, Tesla leads in revenue and profits, and industry observers anticipate the launch of lower-cost Tesla vehicles as a catalyst for the stock.⁶ At the same time, analysts are optimistic that declining interest rates will have a positive impact that will benefit both Tesla and the wider automotive sector.⁷

And while EV sales might be slowing their pace, total sales continue to rise. Cox Automotive predicts EVs will comprise 10% of the U.S. vehicle market by the end of 2024, despite the slowdown in adoption. And while some incentives on EVs have lapsed in the United States, there are still a number available through the Inflation Reduction Act that, when stacked, could bring the cost of some kinds of EVs down to as low as $10,000 US.⁸

Company Specific Updates

Volkswagen AG

In January, Volkswagen Group’s PowerCo division revealed a promising development in solid-state batteries, teasing a new battery capable of powering a vehicle for over 500,000 km with no noticeable range loss. The technology, still in its developmental stages, is a collaboration with QuantumScape, a California-based company specializing in solid-state lithium-metal batteries, which has partnered with VW since 2012.

Source Image: 2025 Volkswagen ID Buzz PHOTO BY STEPHANIE WALLCRAFT

Solid-state batteries, generally considered safer than the current EV standard of liquid electrolyte lithium-ion batteries, offer higher energy density, potentially resulting in smaller, lighter batteries. However, current challenges include longer charging times and slower energy release.

In recent testing at PowerCo’s lab in Germany, however, the QuantumScape battery retained an impressive 95% capacity after more than 1,000 charging cycles, equivalent to travel of approximately half a million kilometres, surpassing industry standards. The success addresses durability concerns, a crucial step in the technology’s advancement. While Volkswagen aims for solid-state batteries in the second half of this decade, challenges in scaling up production remain. Other industry players, including Toyota, are actively pursuing similar advancements in battery technology.9

BYD Company

BYD, the leading Chinese EV manufacturer, is aiming for a top-five market share in Europe, with plans to construct a factory in Hungary. Brian Yang, Assistant General Manager at BYD Europe, expressed the medium-term goal without specifying a timeline. The move is strategic, given BYD’s dominant position in China, holding an 11% market share and leading in electric vehicles. Europe is a prime target for expansion since the company views the United States as a challenging market due to trade tensions.

Source: STR/AFP via Getty Images

Analysts expect at least two years for construction and three for large-scale production. The Hungarian factory in Szeged, with an initial annual capacity of 200,000 vehicles, is seen as crucial for BYD’s European expansion. Localization was key to the European sales surge seen by Tesla after establishing a plant near Berlin and was also crucial to the European success of Korean manufacturers.

The Hungarian facility will help BYD avoid potential punitive EU tariffs on Chinese exports and qualify for French purchase incentives. BYD’s expectations are high for the Dolphin compact hatchback, its affordable model in Europe starting at 35,990 euros. Analysts anticipate the launch of third-generation EVs this year, offering advanced technology and positioning BYD competitively in the European market. Yang believes affordable EVs priced below 20,000 euros will drive electrification in Europe.10

CARS ETF: Investing in Future Cars, Driving Our World Forward

The auto industry is undergoing the biggest transformation in generations and there is a growing demand for ways to invest in this industry.

The Evolve Automobile Innovation Index Fund (CARS ETF), is Canada’s first automobile innovation ETF. CARS takes a diversified approach to invest in the development of electric cars, self-driving cars, and automobile innovation, including in some of the world’s leading manufacturers and automobile companies. CARS is a great way to gain access to the future of the automobile and shift your investments into gear.

For more information on the Evolve Automobile Innovation Index Fund or any of Evolve ETF’s lineup of exchange-traded funds, please visit our website or contact

Portfolio Strategy and Activity

For the month, Nvidia Corporation made the largest contribution to the Fund, followed by Advanced Micro Devices Inc and GS Yuasa Corporation. The largest detractors to performance for the month were Rivian Automotive Inc, followed by Nio Inc and XPeng Inc.



  1. McCorvey, J.J., “As EV sales growth slows, some drivers could buy one for as little as $10,000 this year,” NBC News, January 14, 2024;
  2. Shepardson, D., “More EVs lose US tax credits including Tesla, Nissan, GM vehicles,” Reuters, January 2, 2024;
  3. Kharpal, A., “Elon Musk says Chinese EV makers will ‘pretty much demolish’ most competitors without trade barriers,” CNBC, January 25, 2024;
  4. He, L. & Isidore, C., “China’s BYD is selling more electric cars than Tesla,” CNN, January 2, 2024;
  5. Kharpal, A., “Elon Musk says Chinese EV makers will ‘pretty much demolish’ most competitors without trade barriers,” CNBC, January 25, 2024;
  6. Dey, E., “Tesla Gets a $94 Billion Reality Check as EV Winter Sets In,” Bloomberg, January 13, 2024;
  7. Cooban, A., “Tesla share plunge wipes out $80 billion in market value, after dour earnings call,” CNN, January 26, 2024;
  8. McCorvey, J.J., “As EV sales growth slows, some drivers could buy one for as little as $10,000 this year,” NBC News, January 14, 2024;
  9. McIntosh, J., “VW’s solid-state battery could go 500,000 km with no range loss,” Driving, January 6, 2024;
  10. Hogg, R., “BYD is coming for Europe—but high labor costs, connectivity issues, and stubbornly loyal customers might trip up the Warren Buffett-backed EV maker that’s leaving competitors in a ‘state of shock’,” Yahoo Finance, January 28, 2024;
Header image source: Getty Images Credit: Richard Newstead
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