Tesla is a hot favorite when it comes to investing in the electric vehicle market. But rising competition is bringing the company’s continued dominance into question. Brian Arcese, portfolio manager at investment firm Foord Asset Management, said he has a “far less convicted view” in Tesla retaining its dominance than in his preferred investing route in the EV market. He told CNBC Pro Talks last week that he’s taken two “slightly untraditional” approaches to investing in that space. The first is traditional regulated utility investments. Arcese noted that for the first time since the 2008 global financial crisis, there has been “almost no volume growth” in electricity as economies have shifted from manufacturing to services. “Before the advent of data centers really taking off, you’ve had volume decline on the electricity side,” he said. “Now finally, with the advent of EVs, as they become a bigger and bigger part … you’ll have proper volume growth. So these electricity companies, regulated electric utilities that have been more or less ignored by the market and trading at quite inexpensive valuations, will now actually offer investors growth in sort of the 5% to 7% range.” Add in a 3% to 5% dividend and investors can get a consistent “double digit grower” at “far lower risk” than investing in a pure play company, said Arcese. He names one U.S. stock, Edison International , as one such U.S. regulated utility company to play the EV trend. The second way is to invest in materials needed to produce EVs, such as copper and lithium, which Arcese says he’s already invested in. But he says that within that space, he’s focused on companies that are the lowest-cost producers. “I have no idea where copper prices will be … But over the mid to long term we know that we need more copper so if you are invested in the lowest cost producer and then that is a way to participate in the space,” he said. Arcese was speaking on Nov. 22 at the first CNBC Pro Talks organized at a business school — at the Asia campus of INSEAD in Singapore. CNBC’s Tanvir Gill spoke to him and two other experts — James Sullivan, managing director and head of Asia-Pacific equity research at JPMorgan, and Jenny Zeng, CIO of APAC fixed income at Allianz Global Investors. Sullivan noted there’s been “very, very significant” volume being pushed into the the EV market. “And you’re seeing frankly designs and technology that are becoming world class very quickly,” he said. “The way we would think about it at JPMorgan is to try to understand the basic fundamentals of the business who can make money at a given price point and the answer is China and then to some degree Korea, and then really not the U.S. at a given price point,” Sullivan said. The cost of production would then become the critical variable, he added.
