Lithium ETFs are investment vehicles that give investors exposure to a range of stocks that benefit from lithium-ion battery demand.
Lithium-ion batteries are already widely used, thanks to smartphones and tablets. Now the technology is gaining ground in the automotive industry. Lithium prices have fallen dramatically in the last few years, and electric vehicles (EVs) are booming as automakers electrify their popular models.
By 2030, some estimates predict EVs will make up as many as one-half of all new vehicle sales. About 8% of all new vehicles sold in the United States were electric in 2025, so the upside for lithium and battery technology is significant for the next decade.
The lithium-ion battery industry is a complex web of suppliers of basic materials, manufacturers, and component designers. Picking the best stocks can be a real challenge.
That’s why investing in a lithium and battery technology ETF (exchange-traded fund) could be a smart way to go.
Investing in lithium and battery tech ETFs
An ETF is a basket of investments designed to give an investor diversification. In this case, it's a mix of companies from the lithium and battery tech industries.
An ETF focused on lithium battery tech will provide diversification across the industry. For example, ETFs might hold lithium mining companies, battery manufacturers, EV automakers that integrate the tech into a vehicle, and more.
Unfortunately, since this is such a young industry, there are few ETF pure plays. However, a number of ETFs bring together companies operating in industries adjacent to lithium battery tech and are worth considering as well.
Top ETFs
Fund | Net Assets (Approximate) | Expense Ratio | Description |
|---|---|---|---|
Global X Lithium & Battery Tech ETF (NYSEMKT:LIT) | $1.7 billion | 0.75% | A top ETF on the market for lithium and battery-specific stocks. |
Amplify Lithium & Battery Technology ETF (NYSEMKT:BATT) | $111 million | 0.59% | A large pure-play ETF for lithium battery technology stocks. |
iShares Global Clean Energy ETF (NASDAQ:ICLN) | $2.1 billion | 0.39% | The ETF expands beyond just batteries to encompass more aspects of the renewable energy space. |
First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN) | $606 million | 0.56% | Another ETF with a focus on everything from batteries to solar power to electric vehicles. |
ARK Autonomous Technology & Robotics ETF (NYSEMKT:ARKQ) | $1.73 billion | 0.75% | A top high-risk, high-reward bet on innovative companies, including stocks in the battery tech industry. |
1. Global X Lithium & Battery Tech ETF
NYSEMKT: LIT
Key Data Points
The Global X Lithium & Battery Tech ETF (LIT +4.48%) is one of two funds available in the U.S. that are solely focused on the lithium battery market. Created in 2010, the fund manages about $1.7 billion in investor funds. It charges 0.75% a year in fees (also known as an expense ratio) -- or $7.50 deducted from fund performance on an annualized basis for every $1,000 invested.
Global X’s ETF spans the lithium technology space. Half the funds are allocated to lithium mining companies, with top lithium producer Albemarle (ALB +4.40%) being among the largest holdings. A handful of consumer product manufacturers are sprinkled in, with EV pioneer Tesla (TSLA +3.47%) being the best-known stock in the top 10. In all, the Global X Lithium & Battery Tech ETF is made up of 41 holdings.
Although lithium battery technology is exciting for its potential, it’s important to note that the industry is volatile. Many of the stocks will fluctuate in value based on the market price of lithium. When lithium prices have rocketed higher, the ETF has performed well.
However, since its inception in 2010, the fund has produced annualized returns of 6.2%, even after accounting for dividends paid and reinvested, trailing the S&P 500 index by a wide margin.
2. Amplify Lithium & Battery Technology ETF
NYSEMKT: BATT
Key Data Points
The Amplify Lithium & Battery Technology ETF (BATT +4.48%) is the second pure-play lithium battery ETF available in the U.S. At just 0.59% per year, its expense ratio is lower than Global X’s offering. The fund is made up of 52 stocks, so it also covers more ground.
But more stocks and lower expenses have not equated to better investor returns. Since the Amplify Lithium & Battery Technology ETF launched in the summer of 2018, it has lost about 25% of its value. The fund is diversified across various metals (including cobalt, which is also used in batteries) and end markets (not just EVs but also energy grid applications for batteries). However, the stocks in this industry are volatile and young, and it’s been a rough go for investors.
3. iShares Global Clean Energy ETF
NASDAQ: ICLN
Key Data Points
NASDAQ: QCLN
Key Data Points
5. Ark Autonomous Technology & Robotics ETF
NYSEMKT: ARKQ
Key Data Points
The final option on this list comes from famous growth investor Cathie Wood’s company Ark Invest. One of its funds, Ark Autonomous Technology & Robotics ETF (ARKQ +6.16%), lists “energy storage” as a top segment it invests in. Of course, this is far from a pure play on lithium and batteries since other areas, such as 3D printing and autonomous transportation, also feature prominently here.
Stocks such as Tesla make battery technology a top mover of the Ark ETF. ARK Autonomous Technology & Robotics ETF commands $1.73 billion in assets and has done well overall since its 2014 inception with a 17.5% annualized rate of return -- by far the best of the five ETFs discussed here. It charges a 0.75% expense ratio.
Why invest in lithium ETFs?
The electric vehicle opportunity is a large one, but lithium batteries also have massive implications for energy storage for other purposes. For example, solar power installations generally require energy storage to assure uninterrupted power availability.
In fact, according to The Research Insights, the lithium-ion battery market is expected to grow at a 20.3% annualized rate through at least 2030, making it a $182.5 billion global opportunity.
Related investing topics
A portfolio energized by lithium battery technology
To be sure, some of these ETFs -- especially the pure-play examples -- haven't exactly delivered stellar returns for investors.
However, lithium battery tech and adjacent stocks hold a lot of promise in the next decade. Electric vehicles are on the rise, and many of the world’s utility companies are looking for ways to make energy distribution more efficient. Batteries are a massive growth trend that could translate to fantastic investor returns.
But bear in mind that nothing is guaranteed in the investing world, especially with new and emerging trends. Lithium and battery stocks will likely be far more volatile than the stock market overall. Plan carefully when deciding whether to include an ETF from this list in your well-diversified portfolio.
FAQ
Lithium ETF FAQ
About the Author
The Motley Fool has positions in and recommends Enphase Energy and Tesla. The Motley Fool recommends First Solar and ON Semiconductor. The Motley Fool has a disclosure policy.
