Are Electric Cars Good Investment Vehicles?


Recorded at the BNY Mellon | Pershing INSITE 2022.  Media Center Powered by:

Advisorpedia interviewed Anthony Sassine, Director, Senior Investment Strategist of KraneShares, at BNY Mellon | Pershing INSITE in June, 2022.

Related: What Does Sustainability and Impact Mean for Advisors

Resources: Integrated Partners | Flyer Financial Technologies | KraneShares


SPEAKERS: Anthony Sassine, Matt Ackermann

Matt Ackermann  00:06

Thanks to Tesla and others, there's a lot of buzz around electric cars. But are these vehicles good investment vehicles, joined today by Anthony Sassine from KraneShares to discuss just that. Anthony. Welcome.

Anthony Sassine  00:17

Thank you for having me. . .

Matt Ackermann  00:18

Absolutely. So, talk to me a little about electric cars. Are there a lot of interest in these right now in terms of investing in them?

Anthony Sassine  00:26

Electric cars is the thing for the next 20 to 30 years. Right. So we're seeing huge momentum into car sales, specifically starting in 2020. Right. And what's driving that has been government policy. One, governments want us to do this, right. So if you go to China, you go to Europe, in the US as well. There are pushing policies and reforms that help the proliferation of electric vehicles. The second innovation, right so that we're seeing a lot of innovation in that space, that is helping electric cars become more affordable. For instance, battery cost has declined by more than 80%. Over the past five years, batteries are 30 to 40% of the car cost. So as a result, electric cars are now becoming more and more affordable, especially compared to internal combustion engine vehicles. Right. So and we're expecting to reach what we call ice parity in two, three years, which was going to trigger mass adoption, right? Also, we're seeing a big consumer adoption, right? So really Millennials Generation Z, now they're more environmentally conscious. They're looking at these designs, I think they're very cool. So we're seeing a lot more demand for these type of cars. And also, we're seeing now suppliers, get on board recently, and start investing more in that space and producing more designs that we've never seen? More than we've ever seen before? So all in all, there's a lot of focus on this. It's a long term theme, a multi decade theme, that we expect to be very good for investors.

Matt Ackermann  01:50

Then you mentioned China, you guys have more reputation with a lot of China investing. How does the electric car investment intersect with the work you guys have done with China?

Anthony Sassine  02:01

First of all, China is the biggest market for electric vehicles. Right. And the policies in China are some of the most supportive policies even more than more so than Europe for cleantech, right. So President Xi first signed the Paris Agreement 2017. And then he kept upping these commitments every year, we got a new commitment that is higher than the previous driving more demand to these sectors. Also, a few years ago, we launched our first carbon fund, and KraneShares also became synonymous or known for climate investing, right? So we partner with with big firms like CLI fi, like Bloomberg, New Energy Finance, to bring forward to clients, really innovative solutions in the climate space that helps them you know, invest in carbon allowances and electric vehicles in China, clean tech, and so forth. One of our friends recently launched as well kgg, which invest in companies that are looking to decarbonize, right. So we have the whole suite of climate as well, in addition to China.

Matt Ackermann  02:57

So with that sweet and climate, interest in electric cars, you guys clearly have taken an innovative way of looking at impact. What's on the horizon? Then for you guys? What are some other things you're thinking about as you continue to innovate to ways that people can make impact with their investments?

Anthony Sassine  03:12

We feel like now where we have a good suite, we're probably going to keep expanding on that suite, and in a way, but also we want to spread the word. You know, there's a lot of education to be made. There's a lot of conversations to be had, right? About the actual first the impact of these investments and the second how important they are for for portfolios from a diversification perspective, right. So climate risk is one of the best big risks we have today, right? Inflation too, these can be, you know, inflation, hedge supply side disruption as well. These can be very great solutions for that. On the China side, we have close to 2025 ETFs that focus on very specific sectors and the new China and also in emerging markets like China. Internet Key web is one of the biggest China funds in the US we have QR China healthcare K green China, cleantech 5g, so we covered a lot of these innovative sectors, you know, that we're trying to, to bring to investors and help them build portfolios specific within these within China,

Matt Ackermann  04:13

Well you guys are making some real noise with the innovation price, some more noise and some of those electric cars. Anthony, thanks so much for your time today. Thank you for having me. For Advisorpedia, I'm Matt Ackermann