Carmakers are rushing to compete in the electric vehicles (EVs) market, and investors have been plowing dollars into the cars and the batteries that power them. Ford, for example, has released an all-electric version of their F-150, a modern take on what has been far and away the biggest selling vehicle in America for decades. It even can power job sites, campsites or your house in a power outage. The company also recently launched the Mach-E, an all-electric version of their iconic Mustang.
Lest you question the strategy, Ford just beat analyst estimates for Q2 2021 and raised its guidance for the rest of the year.
Purchases of EVs have been growing rapidly over the last decade, with 2020 being a record year for the registration of new EVs across the globe. Tesla CEO Elon Musk predicts that their Model Y will become the world’s best-selling car in 2022 — not the best-selling EV, the best-selling car. Period. Sure, Musk is known for hyperbole, but I wouldn’t doubt him on this one.
Swiss-bank UBS says there will be a worldwide penetration of EVs topping 80% by 2040, and the global demand for the batteries increasing 60% by 2025.
Last year, roughly 3.2 million new electric cars were registered globally, with almost 1.4 million in Europe, over 1.3 million in China, and a distant 328,000 new EV registrations in the US, where the US market continues to lag behind other regions despite the popularity of Tesla and other models. Overall, there are currently over 10 million electric cars on global roads, with almost half of this number (4.5 million) in China and another 3.2 million across Europe.
What is accounting for this growth in electric car sales?
Intense heatwaves and spreading wildfires in the Pacific Northwest of the United States and Western Canada. Massive flooding across Europe and China. Melting permafrost in Siberia. The global awareness of the impacts of climate change is growing and many want to do their part to minimize our carbon footprint.
EVs are becoming more affordable.
The total cost of EV ownership has been declining over time as battery prices decline, with predictions that EV purchase prices may soon equal those of petrol-powered vehicles. And many governments continue to offer or extend subsidies and other financial incentives to purchase electric cars.
Going the distance.
The range of electric cars is improving, with many EVs now able to travel over 400 kilometers on a single charge and the Tesla Model 3 peaking at over 600 kilometers per charge.
More charging stations.
Although EV infrastructure is still lacking, plans to build more charging and fast charging stations means that the convenience of owning and operating an EV will improve as well.
More EV brand options.
In terms of personal preference, the number of EV models available to consumers is expected to more than triple in the next three years.
Uncertain gas market.
In 2021, a ransomware attack brought down the Colonial Pipeline and Americans up and down the east coast struggled to find gas to fuel their cars. With growing concerns about cybersecurity on the US infrastructure, Americans are looking for other options.
There are many challenges and competing technologies to consider before the market for traditional combustion powered officially goes into reverse. But I am hopeful that we are driving down the road to a more sustainable, EV future.
Danilo Diazgranados is an investor, collector, and lover of fine wines and a member of the prestigious Confrérie des Chevaliers du Tastevin, a fraternity of Burgundy wine enthusiasts.