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As President Obama continues to place an importance on energy efficiency and lowering carbon emissions, demand for electric vehicles is expected to spike paving the path to prosperity for the First Trust Smart Grid Infrastructure ETF (NASDAQ:GRID), the Utilities Select Sector SPDR (NYSEARCA:XLU) and the Global X Lithium ETF (NYSEARCA:LIT).

The National Highway Safety Commission forecast that nearly 20% of all automobiles in the US will be running on some sort of a hybrid mechanism by 2015. Furthermore, Aaron Levitt of Investopedia states that the U.S. has committed $2 billion in Recovery Act spending for advanced batteries production and nearly $25 billion for programs to promote car makers to retool their production lines for production of more fuel-efficient vehicles.

As a result, many carmakers are starting to make changes to their lineups and offer these hybrid vehicles. The most recent change came from General Motors as it announced the upcoming release of the Chevrolet Volt, which is an electric vehicle that runs on a battery and electricity generated from a gas-generator. Additionally, German automaker Volkswagen plans on releasing all-electric within the next year or two.

This phenomenon of electric vehicles has already been somewhat of a hit with consumers, illustrated by the performance of Tesla Motors (NASDAQ:TSLA), which has witnessed insatiable demand for its Tesla Roadster. As a result, Tesla expects to start production of a five-seat family sedan next year to tailor to expand its lineup.

At the end of the day, as governments continue to push for cleaner energy and lower carbon emissions, electric vehicles are expected to gain popularity giving support to the aforementioned ETFs.

  • First Trust Smart Grid Infrastructure ETF (GRID) is bound to reap the benefits of the infrastructure improvements and developments that will be required to sustain an electric cat movement, such as new transmission lines, power plants and charging stations.
  • the Utilities Select Sector SPDR (XLU), which will likely reap the benefits of increased electricity consumption
  • the Global X Lithium ETF (LIT), which will likely reap the benefits of increased demand of lithium-ion batteries, which are essential in electric and hybrid vehicles

Disclosure: No positions

Source: Three ETFs to Play Electric Vehicles Growth