What electric cars tell us about emerging markets

We do not own BYD at the moment, though our proprietary stock screening tool flags it up as a “contender”. Given how competitive the EV market is we are ultra-selective. Arguably a better way of accessing this growing market is through parts suppliers – and again emerging markets countries offer choice.

We also own Hankook, the South Korean tyre company – the world’s seventh-largest tyre manufacturer¹³. Some electric cars have as many as 3,000 semiconductors¹⁴ – twice the number in a traditional car. And that brings us to TSMC in Taiwan and also to South Korea’s chip design company, Novatek, which specialises in LCD displays used in modern vehicles. To this we might add another company we bought in China last year, Jiangsu Pacific Quartz, which produces a variety of quartz materials used in semiconductors¹⁵.

Autos and component parts are responsible directly for 6 per cent of the Artemis SmartGARP Global Emerging Markets portfolio today, with more exposure through technology, materials and insurance. We see companies such as Gerdau (steel producer), Amara Raja Energy & Mobility (batteries), PICC (insurance) and Hon Hai (electronic components) as indirect beneficiaries.

I hope these companies will drive strong returns for us. They certainly should encourage investors who have not invested in emerging markets for some time to reconsider potentially outdated perceptions of the opportunity set in this arena.

Raheel Altaf, Manager of the Artemis SmartGARP Global Emerging Markets Equity Fund

1.  https://www.rac.co.uk/drive/news/electric-vehicles-news/chinese-car-manufacturer-byd-officially-overtakes-tesla-in-sales-of-evs/
2.  https://www.theguardian.com/environment/2024/jan/02/chinas-byd-overtakes-tesla-as-top-selling-electric-car-seller
3. https://www.economist.com/business/2023/02/02/chinas-byd-is-overtaking-tesla-as-the-carmaker-extraordinaire
4. https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=CN to 2022
5. https://www.lowyinstitute.org/publications/east-asia-s-decoupling
6. https://datawrapper.dwcdn.net/vC64H/2/
7. Apple's iPhone sales in China plunge 24% as Huawei's popularity surges | Reuters
8. https://globalcarbonatlas.org/emissions/carbon-emissions/
9. Carbon Footprint by Country 2024 (worldpopulationreview.com)
10. An energy sector roadmap to carbon neutrality in China – Analysis - IEA
11. Kia Global Media Center : 2023 CEO Investor Day : Kia accelerates EV transition with target of 1.6 million EV sales by 2030 (kianewscenter.com)
12. https://www.kianewscenter.com/events/all/2023-ceo-investor-day---kia-accelerates-ev-transition-with-target-of-1.6-million-ev-sales-by-2030/s/4432e086-3707-4026-ac57-94855cfc9a6a
13. https://www.blackcircles.com/tyres/brands/hankook
14. How Many Semiconductors Are in a Car? [Infographic] | Polar (polarsemi.com)
15. http://en.quartzpacific.com

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