One of the strongest parts of the market has been electric vehicle (EV) stocks. Some of the biggest gainers this year have been companies like NIO (NIO  ), Tesla (TSLA  ), Workhorse (WKHS  ), and Plug Power (PLUG  ).

EVs are the Future

For years, electric vehicles have been touted as the future due to lower costs, increased efficiency, and environmental concerns. With the latest innovations, electric cars are basically at par with gas-powered automobiles, especially when taking subsidies into account.

Electric cars are starting to gain more market share. It's at a 2.5% share of new cars sold but is expected to become a bigger market within the next 20 years. The biggest cost and limitation for electric cars is batteries, but costs have been falling and storage capacity has been increasing. Another catalyst is that governments all over the world are giving incentives to purchase electric cars and investing money to improve charging infrastructure.

Invest in Batteries

For investors, they can invest in electric car companies, but there is some uncertainty as companies are going to be viciously competing for market share. Additionally, legacy car companies are not going to give up this market without a fight. There are also a number of startup companies that are working on their own concepts as well.

So, it's possible for someone to be correct on electric cars becoming more prominent but lose money because they bet on the wrong horse. One way to sidestep this dilemma is to invest in the raw materials that will be used to make batteries. Some of the most prominent examples are lithium, nickel, and cobalt.

In the same way that batteries were the limiting factor in EVs being more competitive with cars, the acquisition of raw materials could be the bottleneck in battery production especially at a massive scale which will be required for green energy to continue displacing fossil fuels.

Lithium Stocks

The best way to play this trend may be to invest in lithium stocks like Lithium Americas (LAC  ), Albermarle (ALB  ), or Sociedad Y Minera (SQM  ), or Rio Tinto (RIO  ). All of these stocks should benefit as lithium prices rise.

These stocks have been outperformers since the March bottom and are trading at multiyear highs. However, they remain attractive on a valuation basis. Lithium prices remain relatively cheap relative to the total cost of a battery, however, any company that is working on a battery is going to have to secure their own supply of lithium to ensure that they can continue producing vehicles. This dynamic has the potential to lead to a "seller's market" for lithium miners.