How to profit from the EV boom

Electric vehicles are taking off – but don’t buy the car companies, writes Sam Benstead

by Hong Kongers, according to estate agency Hamptons International.

Mr Heaton said his clients relocating from Hong Kong were typically looking for properties in either prime central London or the Home Counties, with budgets ranging from £2m to £5m.

Jeremy Gee of Beauchamp Estates, the property agent, said: “If just 10pc of the top elite in Hong Kong take up the offer of residency, and buy homes in the capital, it will drive around 15,000 property deals.

“This would have a massive beneficial impact on many of the capital’s best addresses.”

Mr Gee said the growing demand would help to increase prices in prime central London by up to 5pc in 2021 – provided that international travel resumes. Mr Heaton predicted a rise of 2-3pc.

This would be a welcome boost to London’s ailing prime market. Camilla Dell of Black Brick, the buying agent, said prices in some previously soughtafter postcodes, such as Chelsea and Mayfair, were the lowest they had been since the financial crisis.

Mr Heaton said these golden postcodes were also most likely to benefit from the rebound: “Places like Chelsea and Kensington are well connected, with period properties offering quintessential Englishness.

“Hong Kong buyers often seek out an address with cache.”

Mr Gee said interest from these potential buyers had so far mainly focused on Knightsbridge, Holland Park, Notting Hill, Marylebone and Belgravia. “We have also noticed an increase in inquiries from Hong Kong buyers for country estates within easy reach of London,” he added.

Love them or hate them, electric vehicles will soon dominate British roads. The Government has banned the sale of new petrol and diesel cars from 2030, and by 2035 all new cars and vans must have zero emissions.

BlackRock, the fund manager, said there would be more changes in the transport sector in the next 10 years than there have been in the past 100, as electric cars take over and they become more connected and even autonomous. The boom has already started, with electric car sales in Britain jumping 185pc last year despite the pandemic, it said.

A colossal change like this brings investment opportunities, but predicting which car manufacturer will become the king of electric is fraught with risk as all major players are attempting to go green at the same time.

A safer bet lies in buying companies which have already established themselves as indispensable in the electric vehicle supply chain. That way, no matter which car company wins, investors can profit.

Zehrid Osmani, of investment manager Martin Currie, said: “In the 1840s gold rush, it was the sellers of picks and shovels, not the miners, that made the best returns. Similarly, for investors seeking the best returns from this monumental shift to electric, they should look past the car companies.”

Telegraph Money looks at how best to profit from the electric vehicle boom.

BATTERIES Batteries are the bedrock on which electric vehicles are built. Production and innovation is already dominated by just a few players, which makes for a great investment opportunity as car companies have no choice but to use their technology.

Asian companies dominate, according to Mr Osmani. The main players are South Korea’s LG Chem and Samsung SDI, together with the Chinese national champion CATL and Tesla’s partner, Japan’s Panasonic.

“Rechargeable lithium-ion batteries have been around for almost 40 years, but they are here to stay. Companies are creating the technologies of the next decade,” said Mr Osmani.

BATTERY RAW MATERIALS An eclectic mix of minerals and precious metals go into batteries. The most important are lithium, nickel, copper, cobalt, tin and silver, and already prices are rocketing on greater battery demand, with most up 50pc in the past year.

The frenzy for raw materials will continue, according to the World Bank, which estimated that demand for battery raw materials would increase by nearly 500pc by 2050. Lithium is the most important, accounting for around 40pc of the cost of an electric vehicle battery, according to Mr Osmani.

“Around 85pc of the lithium market is controlled by six players – most notably the American miner Albemarle, the Chilean SQM and China’s Tianqi. Albemarle is the global leader, lowest- cost producer and a consolidator,” he said.

Sue Noffke, of investment manager Schroders, said Britain’s biggest miners had a big role to play in the clean energy transition.

“Anglo American has material exposure to copper, platinum and nickel. Half of Glencore’s earnings come from copper, cobalt, zinc and nickel,” she said.

However, the best- placed company could be Rio Tinto, she argued, as 90pc of its new mines were geared towards “low carbon” metals. “The mining sector generates lots of cash today and pays generous dividends and will be a key facilitator of green cars,” she said.

CHARGING POINTS Regardless of which car group dominates, electric vehicles will depend on a comprehensive network of charging points to keep batteries topped up.

Oil and gas companies are jostling for dominance. Shell recently bought Ubitricity, the largest public charging network for electric vehicles in Britain, with more than 2,700 charge points and 13pc of the market. BP has BP Pulse, a combination of two charging companies the energy giant bought in 2018: Chargemaster and Polar.

Eoin Murray, of fund manager Federated Hermes, said the electricity grid was not currently equipped for mass electric vehicle adoption, especially during peak times. National Grid could therefore be a beneficiary. It is planning to expand its energy infrastructure along motorways to meet this demand and is also investing heavily in renewable energy.

COMPUTER CHIPS Electric vehicles will be packed with new software, such as autonomous driving programmes, which need advanced computer chips to run.

Mr Osmani said Infineon was the leader, with a wide range of products for the automotive industry. The German chipmaker recently cemented its dominant position by buying Cypress, a software company. General computer chipmakers, such as Dutch group ASML, would also be crucial suppliers, he added.

‘In the 1840s gold rush, those who sold picks and shovels won, not the miners’

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