Originally written by Tom Wickenden, 16th February 2022
The still nascent electric and autonomous vehicle industry is in the early stages of what may represent the most significant transformation in the automobile industry since the birth of the internet combustion engine (ICE) – with changing consumer preferences and government proposals to limit sales of ICE cars forcing a shift in major global automakers’ development plans and bringing ICE vehicles closed to being phased out.
Below we
Below we highlight some of the recent developments in EVs and key tailwinds which could see EVs emerge as one of this decade’s major structural investment themes.
EV Sales Accelerate
Globally EV sales doubled in 2021, from 2m in 2020 to an estimate of 4.4 million and around 6% of total car sales. While ICE sales actually fell over the same period from 69m to 65m, and from 90% to 82% of total car sales, which includes hybrid and plug-in hybrid electric vehicles[1]. Under their hyper adoption scenario, Goldman Sachs estimates that EVs could reach 109mn units, at an 82% weighting of total car sales by 2040[2].
Government Policies Driving EV Transition
As governments globally attempt to facilitate the shift to net-zero economies, many have recently implemented policies aimed at phasing out the sale of ICE cars and driving increased adoption of EVs through investments in EV infrastructure.
- Europe: In July 2021, the EU announced a proposal to only allow the sales of zero-emissions cars by 2035.
- US: In August, President Biden signed an executive order that sets a target for half of all new vehicles sold in 2030 to be zero-emissions capable (including battery electric or BEV, plug-in hybrid or PHEV, and fuel cell electric vehicles or FCEV) The bipartisan infrastructure bill, which was signed into law in November, further includes US$7.5bn in funding for a nationwide network of EV charging stations.
- China: The Chinese government’s New Energy Vehicle Development Plan (2021-2031) and Technology Roadmap 2.0 for energy saving and new energy vehicles, aims to have EVs account for 40% of new car sales by 2030. This will be achieved by imposing mandates on car manufacturers requiring increasing percentages of cars sold to be electric year on year, and implementing plans to shift support to the construction of charging infrastructure.
- COP26: The COP26 declaration on accelerating the transition to 1–% zero emission cars and vans, was signed by over 30 governments including the UK and India, as well as 6 of the world’s largest auto manufacturers (incl. Ford, GM, VW and Mercedes-Benz). It represented a commitment that all sales of new passenger cars and vans will be 100% zero-emissions by no later than 2035 in developed markets, and 2040 for emerging economies.
Automakers commit to EV strategies
With recent and forecast growth of EV sales dramatically outstripping traditional ICEs, combined with increased regulatory pressure, almost all of the world’s leading incumbent automakers are significantly increasing their commitments to EV strategies. Some of the major strategies are highlighted below:
- GM: Plans to sell only zero emission vehicles by 2035 and recently announced the imminent arrival of electric Hummers and their Silverado truck.
- Ford: Recently announced a $22 billion dollar commitment to EV and is electrifying most of its iconic products including the Mustang and the F-150, America’s highest selling vehicle, for 2022. Have stated they aim for EVs to make up 40% of global sales by 2030.
- Honda: Will sell only EVs and hybrids in Europe after 2022. By 2030, Honda says 40 percent of its North American vehicle sales will be either battery electric or hydrogen, and by 2040 all ICE cars will be phased out.
- VW: Have said that battery EVs will be 70% of its sales in Europe in 2030, and for the U.S. and China, the goal is more than 50% full-electric vehicles sales by 2030.
- Toyota: Recently raised its 2030 global target for battery-electric vehicles, plug-in hybrids, and fuel cell electric vehicles to 3.5mn units to 2mn units, and aims for Lexus to be an exclusively EV brand in the US, Europe, and China by 2030.
- Mercedes-Benz: From 2025 onwards, all newly launched vehicles will be electric-only, meaning customers will be able to choose an all-electric alternative for every Mercedes-Benz model.
BetaShares Electric Vehicles and Future Mobility ETF (ASX:DRIV)
The BetaShares Electric Vehicles and Future Mobility ETF (DRIV) provides exposure to a portfolio of global companies at the forefront of innovation in automotive technology and a convenient, cost-effective way to access the growth potential of the electric vehicle and automotive technology thematic. This includes companies that produce EVs and EV/smart auto components, as well as, companies involved in charging infrastructure, innovative driving technology and shared mobility.
Companies currently in DRIV’s portfolio include:
- Volkswagon: World’s largest car manufacturer by 2020 revenue, it sells more EVs in Europe than any other car company (25% market share in 2021).
- APTIV: Leading smart auto component manufacturer of advanced safety, user experience, autonomous mobility, signal and power solutions. Aptiv appears well placed to capitalise on growth in EVs and autonomous driving.
- Infineon: Semi-conductor manufacturer considered to be market leader in microcontroller units, which are critical for the development of autonomous driving technology.
Investment risks associated with DRIV include market risk, sector risk, international investment risk and concentration risk. For more information on risks and other features of the Fund, please see the Product Disclosure Statement.
[1] Source: Goldman Sachs: Global Automobiles Outlook: 2022 Outlook
[2] Source: Goldman Sachs: Electric Vehicles: Impact of EI ICU Ban in 2035
xcvgv
This document has been provided to you for your general information and does not take into account your objectives, financial situation and needs and must not be relied upon by you as personal financial product advice that has been provided to you by iInvest. If you require advice regarding any aspect of the information and statements of opinion set out in this document, particularly as to whether you should base an investment decision upon the information or statements of opinion set out in this document, please contact your financial adviser.
Distribution
The material contained in this communication is prepared for the exclusive use of clients of iInvest. iInvest is an Authorised Representative (#431611) of Zodiac Securities Pty Ltd (ABN 76142982554) (AFSL #398350).
The information contained herein is confidential and may be legally privileged. If you are not the intended recipient, confidentiality is not lost nor privilege waived by your receipt of it. Please delete and destroy all copies. You should not use, copy, disclose or distribute this information without the express written authority of iInvest.
Disclaimer & Disclosure
iInvest, its related companies, officers, employees and agents may have a relevant interest in some of the securities mentioned but those holdings are not material unless disclosed in this communication. These holdings (or absence of holdings) may change at any time after publication of this communication, without notice.
iInvest, its related companies, officers, employees and agents may earn income, fees, brokerage or commissions or other benefits as a result of recommendations, dealing or transactions in the securities mentioned in this communication. These interests do not influence iInvest in giving the general advice contained in this communication. iInvest, its related companies, officers, employees and agents may trade in financial products which is contrary to the recommendations given in this communication.
You should not act on any recommendation made in this document without first consulting your investment adviser in order to ascertain whether the recommendation (if any) is appropriate, having regard to your investment objectives, financial situation and particular needs. Nothing in this communication shall be construed as a solicitation to buy or sell a financial product, or to engage in or refrain from engaging in any transaction. We cannot guarantee that the integrity of this communication has been maintained, is free from errors, omissions, misstatements, virus interception or interference.
Copyright © iInvest Securities, All rights reserved.
