What’s next for the automotive industry? Enter the era of electric vehicles (EVs). While we would not be expecting flying cars soaring through our skies, rechargeable cars roaming our streets would be a pretty big upgrade. You might be wondering, “Is the switch from gas and diesel-fueled vehicles to EVs worth it?”.
The Role of EVs in Decarbonizing the Planet
An analysis by the International Council on Clean Transportation (ICCT) says that the shift to battery electric vehicles (BEVs) can reduce around 65% of total lifestyle CO2 equivalent emissions and up to 83% if we entirely utilize green electricity. Unfortunately, producing EVs today generates almost 80% more emissions compared to internal combustion engine (ICE) vehicles because of battery production and the higher composition of aluminum.
According to McKinsey & Company, if we want to reduce material emissions we should consider using recycled materials in making EVs and use high-grade materials produced in low carbon or carbon-free processes. This means exploring more environmentally-friendly technologies and EV manufacturing and production processes that utilize renewable electricity. It may be a big investment for companies and consumers but it will allow us to achieve sustainability and fulfill the Green Deal aspiration.
Governments and Industries Advancing the Global EV Revolution
Governments and cities show their support for the upcoming transition to electric vehicles by introducing incentives, subsidies, and regulations to advance sustainable mobility. Countries are focusing on hitting their emission targets now more than ever. The European Union introduced its “Fit for 55” program which aims to reduce gas emissions by at least 55% by the year 2030. US President Joe Biden also set a 50% EV target by 2030.
Tesla has been dominating the EV market for years and it is an exciting time for the electric vehicle industry because famous automakers are joining the great electric car race. Audi and Volkswagen released new models with the same luxurious look and powerful engine but electric. Audi, Volkswagen, General Motors, Porsche, Bugatti, Skoda, Lamborghini, and SEAT expressed their commitment to creating new electric-powered models or making electric or hybrid versions of their vehicles.
Car rental companies are also making their move in preparation for the great EV transition. Hertz Global Holdings reportedly made a billion-dollar deal with Tesla, with the plan to purchase 100,000 EVs by the end of 2022. Hertz wants to target companies that want to reduce their greenhouse gas (GHG) emissions and achieve their environmental, social, and corporate governance (ESG) objectives.
EV Market Growth & Industry Outlook
The demand for EVs continues to grow in Europe, with the regulations implemented and high subsidies. Although there are reduced incentives for China’s EV industry, consumer pull is seen to be very strong. With the new regulations under the new US administration, EV sales are expected to grow.
McKinsey & Company predicts EV adoption to rise to 45% however, it might still not be enough to achieve net-zero emissions. Europe is expected to reach up to 75% EV market share by 2030, while China is expected to reach up to 70% of EV sales. The US is anticipated to follow Europe and China and is expected to reach 65% of EV sales by 2030, with the Biden administration setting a 50% electrification target by 2030.
In order to fully achieve our net-zero target, it is also important to decarbonize the full lifecycle of vehicles. So we then move on to the production of EV components. This shift will disrupt not just the automotive industry but also the entire supply chain. It will bring a surging demand for batteries, electric drives, and sensors. With this, Europe also plans to step up its EV battery production capacity to meet the demands.
Europe and other countries like the US want to secure a steady supply of EV battery metals like nickel, cobalt, lithium, and graphite while ensuring that companies mine and produce these metals sustainably following certain ESG goals. They are focused on securing domestic sourcing for these important metals and minerals as the EV market gains momentum.
The main goal of governments, cities and companies now is to find ways to address environmental concerns while we advance the EV transition. Imagine industries working hand in hand to secure the minerals needed to power up this shift while staying true to sustainability, ethics, environmental values and priorities, and ESG goals.
Ways to Invest in the EV Market
As the EV market continues to rise, you might be wondering how to ride its wave as an investor. So how can you trade or invest in EVs?
- Invest in EV stocks or electric car manufacturers
- Invest in auto–parts manufacturers
- Invest in mining companies or producers of battery metals and other important metals needed for EV production
- Invest in EV charging-station stocks
The information and content mentioned in Global One Media’s blog are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. The content found in this blog is for general information only and was created for exclusive distribution on Global One Media’s network. Global One Media presented information that was available to them at the time of writing, for informational purposes only and is not intended as investment advice. Global One Media has no investment relationship at all with any entities discussed in the blog. Investors should seek financial advice before making any investment decisions.