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Buy the stock but not the car: Why Aussies are bucking the EV trend

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Australian investors remain bullish on EVs, even though car sales remain flat.

Aussie investors remain bullish on electric vehicle shares, which remain among their top holdings, even if local regulation limits the sales of these cars, new research shows.

The analysis by eToro Australia's investors and the market are telling 2 different stories.

On the one hand, Australians continue to invest in the emerging trend. On the other, we have the slowest adoption rate in the world.

Although eToro analyst Josh Gilbert believes policy changes are helping Australia catch up.

"Australia is playing catch-up and probably needs to do more to attract global EV manufacturers, given that demand for electric vehicles is soaring," Gilbert said.

What's causing the disconnect?

While investors see the trend as the future, Australia's policy settings are seeing it lag behind.

Being 1 of just 2 countries, the other Russia, that do not have an emissions standards on cars means manufacturers are ignoring the Australian market.

"Without stricter fuel-efficiency standards governing the amount of carbon emitted per kilometre, these manufacturers see no benefit in cross-subsidising EV sales to sell their more profitable combustion engine vehicles," he said.

As such, Australia's EV sales lag the world.

And this is after sales tripled in just 2 years, going from 6,900 in 2020 to 20,665 in 2022.

Overall Australia's EV sales are now 2%, significantly lower than the UK (15%), China (21%) and global sales of (9%).

Investors continue to add to their portfolio

Separate research again by eToro shows that investors remain bullish on the emerging sector.

When it comes to long-term holdings, Aussies continue to add to their EV positions.

As such, the company noted during a July quarterly update that Tesla and Nio remain in position 1 and 3.

The rest belongs to predominately big US tech firms.

"Investors Down Under are staying confident for the eventual upturn in markets as we can see from the consistency of the top 10 most held assets," Gilbert said at the time.

Outlook for the sector

Overall the EV manufacturing continues to grow.

According to Gilbert, supply chain issues are starting to subside and with the Chinese government recently handing down a huge US$150 billion infrastructure package the outlook remains bullish.

Nio for example looks set to ramp up production, which could help its deliveries soar, as it moves into Europe.

The world's most largest EV producer, Tesla, is also overcoming 2022 issues.

Its CEO Elon Musk insists that the worst was behind it and announced that June was a record month for production.

"From global delivery data, EV manufacturers don't have a demand problem but a supply and infrastructure problem," Gilbert said.

Chip shortages, lockdowns and commodity pricing have all heavily affected deliveries, as well as simply not having the infrastructure to manufacture more cars."

Gilbert also points out Australia is playing its part in this transition.

"Although Australia is playing catch-up in selling the vehicles, it could ultimately be a strong force in manufacturing. Australia has great industrial infrastructure, clean energy resources and is a leader in lithium and rare earth minerals."

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