With the unstoppable growth of electric cars, what is the way to go?
- 29 Marzo 2024 (7 min read)
The electric vehicle revolution is in full bloom, transforming the automotive industry and redefining the mobility of the future. With more than three million electric vehicles already on U.S. roads and unstoppable growth, the outlook could be promising and full of protentional opportunities.
Policy changes in this important industry have been key in the process, driving manufacturers to innovate and build infrastructure. Tax credits have also played a key role in increasing consumer enthusiasm. According to statistics, four out of ten Americans1 are considering an electric vehicle for their next car, showing a clear shift in preference toward this technology.
In terms of sales, a record of 1 million electric cars sold is expected to be reached in 20232 . Currently, electric vehicles account for 8 % of the market2 and this share is projected to increase to 31 % by 2040.3 Investment in electric vehicles in the United States has exceeded $120 billion4 and is expected to reach $210 billion by 20305 , reflecting the commitment and confidence in this technology.
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Automakers want to be seen as part of the future. They will continue to look for ways to produce electric vehicles in greater numbers and at lower cost. We are also at a tipping point where consumers are asking why they would buy a car with an internal combustion engine when it is not going to have any residual value
Head of Thematic Equity Strategies, AXA IM Core
The automotive industry is rapidly evolving to meet the growing demand for electric vehicles. Companies are investing in infrastructure and technology, taking advantage of advanced robotics, and the latest innovations. However, the electric vehicle market also faces challenges, such as price volatility due to changes in material costs and public policy, as well as supply chain vulnerabilities.
Despite these challenges, the viability of electric vehicles is becoming increasingly evident. Consumers are opting for electric options, due to price parity with gasoline-powered cars and significant maintenance savings. In addition, the charging infrastructure is growing rapidly, increasing consumer confidence in the technology.
For the next few years, the revolution of electric vehicles is looking like it could take over the automotive industry. Investments in electric vehicle and battery startups are increasing, reshaping the industry in the long term.
In particular, the charging infrastructure for electric vehicles is experiencing rapid growth, with over 130,000 chargers currently available6 . This increase in the availability of charging points is boosting consumer confidence in the practicality of electric vehicles, as it is now more convenient and accessible to recharge their vehicles. In addition, smart cities are adapting their infrastructure to better integrate with electric cars, using smarter technologies to optimize charging and energy management.
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The big trends around electric cars
Innovation and technological development are unstoppable with the consolidation of the automotive industry. The following are the major trends around this innovative and unstoppable sector7 :
Robotics:
- Robotics is widely used in automotive manufacturing to meet the demand for electric vehicles and batteries, potentially reducing costs.
- Robots can handle heavy components needed for electric vehicles and make assembly more efficient and accurate.
- AI-driven robotics offer autonomous or collaborative operation.
- Companies such as FANUC America and Symbio, offer automation and collaborative solutions, respectively.
- ABB launched new robots specifically for electric vehicle battery production in 2022, increasing speed and flexibility.
- Omron specializes in sensor and control technologies for automated assembly, and Rockwell Automation offers control systems for electric vehicle production.
Technological advances:
- Chipmakers are experiencing growth thanks to the adoption of electric vehicles, needing semiconductors for chargers, batteries, and cabin systems, among others.
- Companies such as Wolfspeed supply silicon carbide semiconductors for faster charging times and greater autonomy.
- Analog Devices supplies battery management systems and NXP Semiconductors are used by Volkswagen.
- Companies such as Honeywell, AllegroMicroSystemsm, and PCB, develop sensors for electric vehicle systems.
- Companies such as ChargeLab offer backend EV charging software, and Geotab and Fleetio offer EV fleet management solutions.
Relocation trends:
- Driven by supply chain vulnerabilities and favorable policies, U.S. manufacturing companies are choosing to build new fabs or increase production on U.S. soil.
- The CHIPS and Science bill is spurring investment in the domestic semiconductor industry.8
- If trends continue, relocation to the U.S. could bring back 40% of previously offshored jobs and revitalize domestic electric vehicle and battery manufacturing.9
- Ford Motor has moved product development to the United States, and received a $9.2 billion federal loan to build three battery factories in the US.10
- LG Energy Solution has invested $3 billion in its Michigan battery facility to supply electric vehicles to Toyota and General Motors.11
- The US is home to three of Tesla's Gigafactories, which produce electric motors, energy storage systems, vehicle propulsion systems, and batteries in high volume.
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In the face of this growth, companies are increasingly adopting electric trucks in their fleets to meet their carbon reduction targets and take advantage of the benefits of tax credits. This transition to electric commercial vehicles is contributing significantly to reducing emissions and driving sustainability in freight transportation. In addition, although electric and autonomous vehicles are distinct technologies, their futures are interconnected. Electric vehicle buyers are showing interest in semi-autonomous driving functions, indicating a gradual convergence toward fully electric autonomous vehicles.
Electric vehicles are going to take over. The only question is when
Head of Listed Impact Equity
Disclaimer
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