There’s no denying that the electric vehicle (EV) space is one of the hottest out there.
Headlines like these are becoming the norm…
“EV charging network ChargePoint to go public via SPAC”
“GM unveils ‘Factory Zero’ as it embarks on electric vehicle push”
“Nikola And Hyliion Partner With SPACs; What’s Next For EV Trucks?”
As an angel investor, it’s an industry and trend you simply can’t ignore.
At this point, it’s clear, the future of cars, trucks, buses, trains…the transportation world as a whole…is electric.
And I’ve spent the last few months really immersing myself in this space.
I’ve looked at the catalysts driving the push to electric…explored the related developments with battery technology, charging, manufacturing…and identified some of the fastest-growing verticals in this sector.
Things change rapidly in the EV market and it can be hard to keep up. That’s why I’d like to show you the latest game-changing trends and developments so you can understand the immense potential in this space.
2019 was a great year for electric passenger cars. Around 2.1 million units were sold, surpassing the previous record from the year before — a 40% compound annual growth rate. This puts the global stock of electric cars at around 7.2 million.
The top markets for electric cars are China, the U.S., and Europe, with China leading the trio. Both China and Europe have led regulatory initiatives to decrease the use of internal combustion engines (ICEs) in lieu of electric vehicles. China has gone as far as to restrict the registration of new ICE vehicles.
The U.S., while lacking in such government intervention, has seen greater adoption of EVs mostly due to the growing popularity of EV brands like Tesla Motors as well as ever-growing environmental concerns among citizens.
Moving into 2021, it appears the electric car market will only grow stronger. Sales are set to jump another 36%. This should break the record for most units sold in a year, around 3 million vehicles, putting the total global stock at around 10 million electric cars.
Electric Transit Buses
Transit buses have switched over to EV technology extremely quickly. Already, 43 states have invested in electric buses. These vehicles are already fully available at the commercial level. By 2040, 80% of all transit buses globally will be electric.
Meanwhile, other similar classes of electric vehicles like school buses, delivery trucks, electric shuttles, and garbage trucks are in the early stages of commercialization.
For electric buses, an important part of the story is the Volkswagen settlement. In short, VW cheated emissions regulations and was forced to settle in court for $14.7 billion. As a part of the settlement, much of that money has been invested into zero-emission vehicle infrastructure, programs, and public awareness. Another chunk of that money was made into a trust that will fund projects that reduce diesel emissions.
The electric bus industry has benefited greatly from funding paid for by the settlement. Government agencies have received large sums to invest in zero-emission initiatives. For example, the state of New York will receive $127 million from the settlement that will be invested into electric buses and EV charging infrastructure. This is helping the U.S. push forward EV initiatives without the strict regulation used in other countries.
Electric transit buses have caught on because of their relatively low up-front cost compared to trains and the clear long-term efficiency in terms of energy and repairs.
Electric Freight Trucks
The process of commercializing electric trucks has been slow. But now, with pressure from regulators, advancing technology, and huge investments from major EV players, the time seems right for trucks to swing in the favor of electrification.
Tesla, VW, Daimler, and Volvo have invested heavily in all-electric trucks. And, after years of technological advancement, come all-electric trucks can finally beat diesel in terms of ownership costs.
Here’s the problem with diesel trucking — medium- and heavy-duty trucks only represent 9% of the global vehicle stock and yet they create 39% of the transport sectors’ greenhouse gas emissions. Most trucks are powered by large, highly-polluting diesel engines and clock high annual mileage.
We are in luck because by 2030, electric trucks are expected to have 9.4% market penetration globally. This modest growth surely won’t be the end, as innovation in electric trucks continues pushing overhead down and long-term benefits up.
Countries like Japan, Switzerland, Italy, the Netherlands, Sweden, Germany, China, India, and Russia have all made significant investments in electrifying their railway systems, all benefitting from large investments made by their emissions-conscious governments.
The U.S. has not made much progress with electric trains, mainly because most of our train systems are private, and making huge EV investments just isn’t viable for them. While it’s up for debate if the U.S. will move towards electric trains any time soon, the technology is still highly in demand globally.
Electro Diesel trains already hold the largest shark in the market as of 2019, and Hybrid trains are predicted to grow over 6% each year between 2020 and 2025.
For electric trains, the economic incentive is as clear as the environmental one. Regular trains are already 1.9 to 5.5 times more efficient than trucks at moving freight with fewer labor costs and less pollution. On top of that, electric trains are far more efficient than diesel trains. With diesel, around 30 to 35% of generated energy is transferred to the wheels, whereas electric trains can transfer upwards of 95% of energy to the wheels.
Furthermore, the cost of electric train engines is about 20% less than its diesel counterpart while electric maintenance costs are 25 to 35% cheaper than maintenance on diesel trains.
If the expensive initial infrastructure investment can be met, electric vehicles can win in the long run.
Powersports, E-Scooters, E-Bikes
Powersports are vehicles like motorcycles, scooters, all-terrain vehicles, snowmobiles, and personal watercraft.
Between 2019 and 2027, the global market for electric motorcycles and scooters is predicted to grow to $14.29B — a 7.1% compound annual growth rate.
Companies like Polaris, BRP, Harley Davidson, and Kawasaki are pushing U.S. growth of Powersports and are heavily investing in electric vehicles. Also, Tesla recently demonstrated its new all-electric ATV that comes with the infamous Cybertruck. This all comes as the demand for recreational vehicles rises in the U.S. as does the demand for cleaner, eco-friendly vehicles.
Another important part of the EV market is micro-mobility vehicles. These bring EV technology into the sharing economy. E-scooters and e-bikes are shared electric vehicles perfect for high-congestion urban areas. These are currently available in over 600 cities across the world, and already, 25% of all two- and three-wheeled vehicles are electric.
EV Charging Technology
One of the most important parts of the entire EV ecosystem is charging stations. They are the gas stations of electric vehicles. An essential factor in convincing consumers to adopt EV technology is the availability of charging stations.
Luckily, charging infrastructure is one of the fastest-growing areas of EV technology, with a projected 32% compound annual growth rate from 2020 to 2027.
Governments know that the growth of electric cars hinges on these charging stations. A few years ago, the California Energy commissions gave $4 million in funding to ChargePoint Inc. to install charging stations across California highways. Meanwhile, major car manufacturers are working on charging solutions like autonomous park-an-charge, ultra-fast direct-current charging networks, and wireless charging.
We’re just scratching the surface of EV technology and its capabilities. What are some of your favorite areas for electric vehicle technology? Have you made any investments in this sector?
Let me know in the comments below!