A massive shift is taking place in the auto industry as companies prepare themselves for the future of electric and highly autonomous cars. Industry leaders invest billions of dollars as they look to advance their autonomous car technology to shrug off stiff competition and be market leaders amid the revolution.

Even as the transition continues to benefit car makers, investors note emerging investment opportunities in the sector. However, since the innovation in electric and autonomous cars is still in the early stages, investing in individual plays could pose some risks.

Consequently, automotive Exchange Traded Funds (ETFs) provide attractive ways of gaining exposure to the auto industry amid the ongoing transformation.

Below are some of the top Automotive ETFs.

Global X Autonomous & Electric Vehicles ETF (DRIV)

The ETF provides greater diversifications given its robust portfolio focused on industry leaders in the auto and tech industries. Some of its biggest holdings include Tesla Inc. (NASDAQ: TSLA), the largest auto company by market cap, going by the strides and milestones made in developing electric and autonomous cars. It also maintains holdings in General Motors Company (NYS: GM), a company planning to go all-electric by 2035.

The ETF also boasts holdings in Toyota Motor Corp (NYSE: TM) and Ford Motor Company (NYSE: F), some of the biggest automotive companies making big strides amid the electric vehicle revolution. It also boasts of Qualcomm, Intel, and Nvidia holdings, all of which are at the heart of semiconductors used in the auto industry.

Chart showing DRIV ETF sell-off

As one of the oldest in the market, the ETF has over $1.2 billion in assets under management. However, it comes with a much higher expense ratio of about 0.68%.

While the ETF is down by about 16%, the pullback provides an ideal entry point given that its long-term prospect remains bullish given the strength of its portfolio. In addition, the ETF comes with a solid 0.27% dividend yield which could excite any investor looking for some passive income.

First Trust S-Network Future Vehicles & Technology ETF (CARZ)

It is one of the original and oldest auto ETFs. It strives to generate results corresponding to the S-Network Electric & Future Vehicle Ecosystem Index. With over $70 million in assets under management, it provides exposure to some of the biggest plays in the auto industry.

Some of its biggest holdings include Apple Inc. (NASDAQ: AAPL) and Alphabet Inc. (NASDAQ: GOOGL), all of which are working on autonomous car driving technology to accelerate the transition into self-driving cars. In addition, the ETF also boasts holdings in Toyota, General Motors, Tesla, and Volkswagen (OTC: VWAGY), all of which are engaged in the production and sale of cars.

Chart showing CARZ ETF price action

Its holdings in Taiwan Semiconductor, Nvidia, and Advanced Micro Devices also expose investors to the development of semiconductors expected to power the electric vehicle revolution. While the ETF is down by about 16%, It is an ideal play for anyone looking for broad exposure to emerging technologies in the auto industry.

In addition, it comes with a much higher dividend yield of about 0.71%, which should excite any investor looking to generate some income on the side.

KraneShares Electric Vehicles and Future Mobility ETF (KARS)

The automotive ETF should appeal to investors eyeing exposure to electric vehicles and the technology powering them. It focuses on companies that build the cars and those that make parts for those cars. It also provides solid exposure to companies working on the future of mobility through self-driving cars and fuel cell manufacturing.

With about $300 million in assets under management, the ETF has averaged over 40% in returns over the past three years. Some of its biggest holdings are in the top auto companies, including Tesla, Ford, and GM. Its other major holdings include NIO (NYSE: NIO) and Aptiv (NYSE: APTV).

Chart showing KARS ETF pull back

With total holdings of 60 companies, the ETF comes with a much higher expense ratio of 0.70%. It is also down for the year, hurt by the semiconductor disruptions that have affected the auto industry. Despite the high expense ratio, the ETF has averaged 70.4% in returns since its inception.

IShares Self-Driving EV and Tech ETF (IDRV)

It stands out as one of the best Automotive ETFs returning a total of 81.4% since inception in 2019. With $557 million in assets under management, the ETF tracks the performance of some of the biggest companies in the auto industry. It also boasts of holdings in tech giants focused on autonomous car technology.

Its biggest holdings include Tesla, Toyota, GM, Apple, Qualcomm, and Alphabet. With a holding base of 100 companies, it currently has assets under management worth more than $560 million.

Chart showing IDRV pull back

While the ETF is down by about 20% year to date, it remains an attractive play for gaining exposure in the auto industry and other tech plays with stakes in the auto industry. Given its high 1.27% dividend yield and a low expense ratio of about 0.47%, it also stands out.

SPDR S&P Kensho Smart Mobility ETF (HAIL)

It is one of the oldest auto ETFs, holding companies engaged in smart transportation. Its holdings also included electric vehicles and transport systems. Nevertheless, 20% of its holdings are companies engaged in the actual production of cars, including Tesla and Li Auto (NASDAQ: LI).

Chart showing HAIL ETF sell-off

While a good chunk of the ETFs holdings is in electric vehicle companies, it also boasts holdings in auto parts and equipment companies. It also offers exposure to construction machinery plays and heavy trucks. With $200 million in assets under management, it comes with a low expense ratio of 0.45%. Its dividend yield stands at 0.74%.

Final thoughts

The auto industry’s future is in electric cars as a move from fossil fuels gathers steam. Companies also working on autonomous car technology should also continue to elicit interest in the market. While the focus has been pure auto-play for the longest time, auto ETFs provide some of the best and broad exposure in the industry amid the electric and autonomous car revolution.