Did you know that the earliest automobiles were electric? In fact, at the turn of the 20th century, electric vehicles were more popular than their gasoline counterparts. Even Thomas Edison dabbled in the electric vehicle business. The introduction of the assembly line made internal combustion engine cars widely available and cheaper to manufacture, and the early electric motor run vehicles were phased out.
When energy prices started rising in the 70s and 80s, there was a newfound enthusiasm for EVs. However, the battery technology was not good enough for mainstream use. With the passing years and the development of advanced lithium-ion batteries, it became feasible to use electric vehicles, at least within the city limits. The new EV revolution took roots from here on.
The EV market – an overview
The market for electric vehicles has grown tremendously in recent years. The global electric vehicle market was valued at $162.34 billion in 2019 and is expected to reach $802.81 billion by 2027. Asia-Pacific, led by China, is expected to grow the fastest and is expected to reach $357.81 billion by 2027. The number of electric cars on the road, while still a tiny proportion of total vehicles, has nevertheless grown by a considerable amount, as seen in the chart below:
Source: Global EV Outlook 2021
Companies in the driving seat
Toyota Motors pioneered the hybrid drive system, and its Prius model was very efficient in conserving fuel usage. It was a hit model for use as taxis. However, it was Tesla Motors that provided the real impetus to the market. Its Roadster in 2008 was the first modern all-electric vehicle which, while checking all the boxes for drivability, also met aesthetic requirements. Nevertheless, it was still catering to a niche market and was too expensive for the mass market. The game changed with the announcement of Tesla’s Model 3. By this time, the average costs of batteries had fallen significantly on the back of the increased scale and incremental technology. Environmental concerns were also rising, and several governments, including some of the world's most developed nations, started setting goals to reduce carbon emissions, with a sizeable portion of that allotted to the electrification of vehicles.
This was motivation enough for some of the established automobile manufacturers to kickstart their electrification programs. An eye at the topline and bottom line proved to be a much bigger incentive as some players saw Tesla eating into their traditional market. As we speak, pretty much every major auto manufacturer has an EV program going on.
This includes the three Japanese majors, Toyota, Honda, and Nissan, the U.S majors GM and Ford, and the European manufacturers BMW, Daimler, Volkswagen, and even Ferrari.
Several new players have entered the market, both in the U.S and elsewhere, including Nio, Fisker, Nikola, Lucid, and Rivian, to name a few.
Many of these automakers have announced plans and targets for their EV goals. Let’s look at a few of these:
With its popularity among its almost fan-club-like followers, Tesla is one of the top layers in this market. Tesla has an ambitious goal of producing 20 million vehicles a year in the long run. The firm is focusing on getting its Germany and Texas, U.S, factories ready in the short term.
GM, one of the U. S’s oldest auto manufacturers, plans to launch over 30 EV models by 2025, including the iconic Hummer and Cadillac brands.
Ford, the original assembly line innovator, is not too far behind. The firm has already announced the EV version of the Mustang. Ford expects 100% of passenger vehicles in Europe to be zero-emissions capable by mid-2026, moving to all-electric by 2030, with 40% of global sales in 2030 to be battery-electric vehicles.
Toyota, the Japanese giant, and a mass-market darling expects 70% of its sales mix to come from electric by 2030. However, this number includes micro-hybrids, hybrids, and plug-in hybrids, with just 15% from pure battery-electric cars.
Honda, the other Japanese auto major, aims to have 100% of its sales from either electric or fuel cell by 2040.
Ferrari, more famous far F1 cars and stylish, expensive, and super-fast cars, is also rolling out an EV plan. The firm expects to launch its first all-electric vehicle by 2025.
Jaguar-Land Rover, owned by India’s Tata Motors, has announced that all its Jaguars would be electric-only by 2025.
Nio, the China-based EV manufacturer, is growing fast in the China market. With several new models in the pipeline, the firm is considered Tesla’s competitor in China. Nio is also a pioneer in the battery swapping business.
Fisker is another manufacturer in the Tesla mold, and its Ocean model is touted to be an attractive option in EV SUVs.
Nikola, another U.S firm, plans to make all-electric pick-up trucks and is experimenting with fuel cells, as well
Stellantis, formed from the merger of Fiat Chrysler and PSA group, is one of the largest European manufacturers. This firm is planning to offer all of its 14 brands in electric by 2025 and is also making significant investments in setting up battery factories.
While Automakers have hogged the limelight, several critical affiliated industries are crucial for EVs to become a mainstream success. Primary among them is the battery, followed by charging stations. The development of battery technology and the scaling up of manufacturing have played a crucial role in the EV revolution.
Some key players in this area include BYD, Amperex, Panasonic, and LG Chem. Mining companies involved in lithium, cobalt, and copper have also played an important role. Research initiatives are also happening at an accelerating rate in battery technology. Some of the technologies that sound promising are solid-state batteries, greener recycling of cells, and fuel cells base on hydrogen.
While early electric vehicles were primarily for city driving, the proliferation of charging stations has made it possible to drive long distances, thereby making an EV an alternative to owning a traditional vehicle outright. The following chart gives an overview of the scale of the charging station development.
Source: BloombergNEF
Some key players in this market include ChargePoint, Blink Charging, ABB, BP, Shell, Hyundai, RWE, and Siemens.
ChargePoint operates the largest network of independently owned charging stations, with a presence in 14 countries. It acquired a 9800 EV charging station from GE in 2017.
Blink is another upstart player that designs, manufactures, and operates charging stations with approximately 23000 stations worldwide.
Some top manufacturers of charging stations include European majors ABB and Siemens.
Stock performance
The pure-electric auto manufacturers that follow the Tesla route are growing in numbers, and quite a few of them trade in the U.S exchanges. The existing auto-manufacturers are also competing to prov their mettle in this area. Given the wide variety of companies in action, the stock market performance has also shown an equal amount of variance. Nonetheless, it remains an attractive area of investment with a variety of business models and operating styles. Here is the recent performance of some of the companies we have covered so far.
Source: Yahoo Finance
The future may not be flying cars, but Robo-drivers are coming
The future of driving is already going the electric path. With increasing awareness among the public about the perils of carbon emission and the health hazards caused by vehicular air pollution, EV adoption is likely to follow a hockey stick curve. One crucial driving technology that is already making waves is automation. As electric cars are already software-intensive, it is easier to automate the vehicle. Companies like Tesla, Google, Uber, and others in China, such as Baidu, have already tested several thousand miles of autonomous driving. Upstarts like TuSimple have started to make their presence felt in the self-driving long-haul trucking market. While the regulatory, insurance and other risk-oriented matters wait to be fixed, one can hypothesize that self-driving would become mainstream soon. Other ambitious technology includes all-electric airplanes and helicopters.
Investment routes
Technology has reshaped the world of driving. A segment of the world population has already experienced the benefits and joy of driving an EV. In terms of investing, it is one of the popular themes as many investors believe in the potential for EVs to transform the industry as we know it. To garner exposure to this theme, buy any stocks mentioned above with a trading and brokerage account with Globalise. ETFs such as the Global X Autonomous & Electric Vehicles (DRIV) also provide exposure to the EV market. Globalise clients also have access to Next-Gen Tech, a curated portfolio where EV ad autonomous driving is central.
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