Future Mobility and Battery Value-Chain Theme Faces Headwinds Amidst Fed Update and Goldman Sachs’ Tesla Report

In a week when tech stocks were hit from all sides, ETFs aligned to the Future Mobility and Battery Value-Chain theme were not spared. The unwelcome change of pace comes on the back of an update by the Federal Reserve hinting at a prospective interest rate hike later this year.

The themes, primarily comprising electric vehicles (EVs) and lithium miners - fundamental constituents of the battery value-chain - faced additional headwinds in the form of a Goldman Sachs report examining the repercussions of Tesla's price reductions on its share price and the ripple effects on the EV industry as a whole.

Goldman revised downward their EPS estimates for Tesla for the years 2023 and 2024 from $3.50 and $4.75 to $3.40 and $4.65 respectively. Their flagging confidence seems to be echoed by other market watchers. Cathie Wood's Ark Invest—a bellwether in determining future-forward tech trends—reduced its exposure by offloading nearly 80,000 shares.

This confluence of factors caused Tesla's share price to drop by 10.75% over the week. But the effects were not just confined to Tesla, nor were they unique to EV manufacturers, but reverberated across the future mobility space—particularly lithium miners.

For context, EVs currently account for approximately 65% of total lithium demand with several analysts projecting this figure to swell to 75% by the end of the decade as EV growth becomes more widespread due to regulatory pressures favoring low-carbon transport options. Thus, any fluctuation in EV production has significant potential implications for associated battery value-chain components—as painfully evidenced this week amongst ETFs aligned to the theme.

This interplay serves as a stark reminder of the oftentimes inherent connection between seemingly disparate elements within the financial markets.

Group Data: Future Mobility, Battery Value-Chain

Funds Specific Data: BATG, ECAR, ELCR, VOLT, XMOV