Tesla’s stock performance—skyrocketing from under $50 to nearly $450 within a year—has tempted investors to bet on other start-ups in the electric vehicle (EV) industry, such as truck maker Nikola…Chinese electric-car company Nio…and pickup and delivery-vehicle producer Workhorse Group, all of which saw their stock prices soar even though they have little or no revenue, let alone profits. 

But be careful. Although the global EV industry is expected to grow 20% a year and hit $1.3 trillion by 2030 as it moves from a fringe technology to become competitive with conventional automobiles in price, style and performance, the battles will be fierce and chaotic. In recent months, Nikola lost 75% of its value as its founder resigned amid corporate fraud allegations. Even Tesla will find it challenging to grow fast enough to justify its sky-high market capitalization.

Smarter way to play the EV boom: Invest in companies that make electrical systems for traditional autos and have the technology and vast global supply chains to capture that market for the EV industry. They aren’t glamorous or high-profile, but they benefit no matter which company thrives among EV makers. Even better, shares of these suppliers are bargains at recent prices because their existing sales to gas-powered and hybrid-car makers have slumped during the pandemic. Two of my favorite electrical-system suppliers…

Aptiv (APTV) is a global leader in electrical distribution systems, high-voltage connectors and engineered components, all of which represent critical systems in next-generation EVs.

Lear Corporation (LEA) makes power electronics and electrical wiring that powers parts of vehicles and runs wireless sensors that interact with vehicle computers as well as audio systems and external LED lighting systems.

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