Sales of electric vehicles (EV) are powering ahead. In fact 9% of all passenger vehicles sold today are EV’s – double the number just 12 months ago. But where do the opportunities lie for investors and what might put the brakes on this relentless growth?
The world is rapidly moving towards electric vehicle adoption with almost 7m units sold globally in 2021. This is good news for the environment, particularly with transport now the world’s largest carbon emitter. But impressive as this growth is, the migration towards EV’s could, and should, be greater. So what is holding car purchasers back? In a word, infrastructure. More specifically, the lack of it.
Build it and they will come
Ask potential EV purchasers what stops them buying an EV and the answer is almost universal. Lack of charging infrastructure is quoted by 70% of potential purchasers as the prime reason they will not buy. Led by range anxiety, charge time or lack of charging stations, the relative lack of charging facilities is the biggest obstacle to even wider EV adoption.
With estimates suggesting EV’s will account for between 60-80% of all new cars sold within the next 20 years, this is an issue which needs to be addressed.
The investment opportunity
For investors, opportunities range from vehicle and battery manufacturers through to miners of key minerals such as lithium and nickel. However, with emergent EV technologies, picking the winners is risky. The certain beneficiaries however will be providers of the infrastructure required to fuel this transport revolution. Indeed, it is estimated $1.4 trillion of investment will be needed to electricity grids and build-out of EV charging infrastructure.
We believe the EV revolution presents compelling opportunities for infrastructure investors, particularly within regulated utility and electricity distribution networks. Additionally, there is an expectation the electricity required to power EV’s will be green, opening up further opportunities for investment in renewables. Overall, the future is bright, not only for transport but also for investors who have a critical role in making this revolution a reality.
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