While the year so far has been hit-and-miss for the electric vehicles industry, there are signs that thanks to lower interest rates and the declining cost of borrowing, things may be looking up again for EVs.

Tesla’s global vehicle sales rose 6.4% in Q3, marking the company’s first quarterly increase of 2024. From July to September, Tesla delivered 463,000 cars, up from 435,000 a year earlier, signalling that demand for electric vehicles may be rebounding as interest rates decline.

The automaker partly drove sales by offering 2.5% financing to qualified U.S. buyers, significantly lower than market rates. This strategy could gain momentum as the Federal Reserve and other central banks ease monetary policy, lowering rates and reducing monthly car payments, a key factor influencing consumer decisions around the purchase of EVs.

Despite increasing competition from companies like General Motors, Hyundai, and BMW, Tesla still commands nearly half of the U.S. electric vehicle market, maintaining its position as a trendsetter in the industry.¹

Tesla shares also got a bump in September after the company announced it would be sticking to plans for the launch of Full Self-Driving (FSD) advanced driver assistance software in China and Europe, pending approval from regulators. This technology is key to Tesla’s planned robotaxi product, “Cybercab.” CEO Elon Musk said in July that regulatory approval of FSD was likely in both regions by the end of 2024. Tesla plans to launch FSD in right-hand drive markets late in Q1 2025 or early in the April-June window.²

Tesla’s sales rebound could be a harbinger of an overall uptick in sales of electric cars. General Motors reported a 60% surge in U.S. electric vehicle sales in Q3, delivering over 32,000 units, despite a 2% drop in total vehicle sales. GM’s top-selling electric vehicle, the Chevrolet Equinox SUV, moved over 9,700 units last quarter. A new entry-level Equinox, priced at $35,000 before tax credits, launched in September, undercutting Tesla’s Model Y, which starts around $45,000.

Likewise, Ford’s U.S. electric vehicle sales rose 12% to 23,500, alongside a slight 0.7% gain in overall sales for the quarter.³

NIO Inc

Chinese automaker Nio Inc secured a $1.9 billion cash injection from existing shareholders in September. The funding strengthens the company’s China unit with a combination of internal funds and investments from strategic partners.

Key investors, including Hefei Jianheng New Energy and Anhui Provincial Emerging Industry Investment Co., committed 3.3 billion yuan ($450 million) for new shares in Nio China. Nio Inc. itself will invest 10 billion yuan ($1.37 billion), reducing its stake in the unit to 88.3% from 92.1%. Strategic investors will hold the remaining 11.7%.

China’s electric vehicle market remains competitive despite heavy investment, with Nio focusing on its charging network and advanced R&D in battery-swapping technology to stay

ahead. The two-part cash infusion is expected to be completed by year-end, and Nio reserves the option to invest an additional 20 billion yuan by next year under the same terms.⁴

BYD Co

BYD Co set a record in September, delivering over 400,000 vehicles for the first time, including 164,956 battery electric cars and 252,647 plug-in hybrids. This marks a 46% increase from September 2023, underscoring the company’s dominance in China’s auto market and its growing international presence, with sales of more than 33,000 units overseas.

Year-to-date, BYD has sold 2.75 million vehicles, putting the automaker within reach of its 4-million-unit annual target. The Golden Week holiday and the upcoming Christmas season are expected to bolster sales further. Recent economic stimulus by the Chinese government meant to boost disposable income could also help BYD, already China’s top-selling car brand, finish the year strong.⁵

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 info@evolveetfs.com.

Portfolio Strategy and Activity

For the month, NIO Inc made the largest contribution to the Fund, followed by Zhejiang Leapmotor Technology Co Ltd and Polestar Automotive Holding UK PLC. The largest detractors to performance for the month were ChargePoint Holdings Inc, followed by Cirrus Logic Inc and Rivian Automotive Inc.

Sources

  1. Ewing, J. & Boudette, N.E., “Tesla Sales Increase, Suggesting Electric Car Demand Is Rebounding,” The New York Times, October 2, 2024; https://www.nytimes.com/2024/10/02/business/tesla-electric-vehicle-sales.html
  2. Sriram, A., “Tesla shares gain on plans to launch Full Self-Driving in Europe, China,” Reuters, September 5, 2024; https://www.reuters.com/business/autos-transportation/tesla-shares-gain-plans-launch-full-self-driving-europe-china-2024-09-05/
  3. Ewing, J. & Boudette, N.E., “Tesla Sales Increase, Suggesting Electric Car Demand Is Rebounding,” The New York Times, October 2, 2024; https://www.nytimes.com/2024/10/02/business/tesla-electric-vehicle-sales.html
  4. Chen, L., “Nio Surges on $1.9 Billion Injection From Parent, Investors,” BNN Bloomberg, September 29, 2024; https://www.bnnbloomberg.ca/business/2024/09/29/nio-china-unit-to-get-19-billion-from-parent-investors/
  5. Lee, D., “BYD Monthly Sales Surge Over the 400,000 Mark for the First Time,” Bloomberg, October 1, 2024; https://www.bloomberg.com/news/articles/2024-10-01/byd-monthly-sales-surge-over-the-400-000-mark-for-the-first-time

Source: Getty Images Credit: Marut Khobtakhob

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