Investors Get Another Way to Bet on Tesla If They Can Bear Risks

Buyers of funds in less-traded commodities have faced risks from volatile markets in the past. The Uranium Participation Fund, set up in 2005 to offer exposure to physical stockpiles of the radioactive metal, is down about 80 percent from a peak in 2007. Rare earth and molybdenum funds have also seen losses.

“There are probably half a dozen examples of these types of investments ending badly,” Guy Darby, a cobalt trader at Darton Commodities, said by phone. “That being said, cobalt is perhaps a more enduring story.”

Analysts including CRU Group expect more price gains as demand from electric vehicle sales will outstrip increases in supply. The consultant sees cobalt demand growing at a rate of about 25 percent a year through 2021 as annual electric vehicle sales reach 6 million units, from less than 2 million last year. CRU sees average prices doubling this year, analyst Edward Spencer said by email. LME cobalt traded at $32,750 a ton at the end of 2016, up 36 percent from a year before. Prices have rallied 68 percent to $55,000 a ton this year.

Auto industry suppliers are adapting to the changes. Continental AG is boosting investments in electric and hybrid parts as it prepares for the eventual decline of internal combustion engines. Oil major Total SA expects electric vehicles to make up about a third of all new car sales by the end of the next decade.

https://www.bloombergquint.com/technology/2017/05/02/investors-get-another-way-to-bet-on-tesla-if-they-can-bear-risks