Why Electric Vehicles Will Soon Dominate the Road

The EV market is poised to explode in the coming decade given strong government support and private interests.

Ryan Kendall
Aug 18 · 5 min read

Last Thursday, US President Joe Biden signed an executive order that calls for half of all new vehicles sold in the US to be fully electric by 2030. This momentous action folds into the Biden administration’s greater plan of reducing US carbon emissions by 50 to 52 percent before 2030, and pushing the US to be net-zero by 2050 altogether. As it stands, only 2% of all vehicle sales in the US are electric vehicles (EVs), but one US senior administration official remarked that “it’s a central element of [Biden’s] economic agenda to help us grow our leadership in electric vehicles.” The developing economic interest of EVs in the United States is only one part of the story of a greater global trend in EV funding and market growth, and this impending expansion of this market could quite possibly be one of the greater technological paradigms that occur in the 21st century — something that is worth keeping a close eye on as both a consumer and investor.

Despite the COVID-19 pandemic, global EV sales & registrations reached an all-time high in 2020, seeing a 70% increase from 2019, with no signs of slowing. Through 2027, the global EV market is expected to grow at a CAGR of 33.6%, reaching a total valuation of $2.5 trillion USD. For perspective, the entire automobile industry is estimated to be valued at $2.7 trillion this year. To suggest that the EV market alone could be worth nearly 10x its value today within seven years is an astounding economic and environmental promise. Across the globe countries are poised for expansion in the EV market, with Europe as the current leader by market share, followed closely by China. Though the US saw EV sales and manufacturing slump since last year, decreasing nearly 20% since 2019, the new action from the Biden administration is also set to rally registrations and sales.

Global government initiatives and funding are one of the primary factors for the bullish outlook on the EV market, which is spurring significant interest from institutions and individuals alike. The EU for example recently announced in July a de facto ban on all diesel and petrol cars by 2035, and nearby the UK is aiming to stop the sale of cars that use fossil fuels by 2030. With similar pledges being made around the world, it is no wonder that governments spent $14 billion on direct purchase incentives & tax deductions for EVs last year — up nearly 25% from the year prior. This public investment is significant in places like Europe and China, where a price cap has been set on EVs if their manufacturers want to receive a subsidy. The impact of this initiative alone has seen EV prices fall by 3% and 8% in China and Europe, respectively. While the pandemic has forced some governments to curtail their spending war against combustion automobiles for the purposes of economic growth, we can expect to see government capital injection and price incentives grow heavily in the next decade.

On the other side of this growing government action is the private sector, which is making a significant effort to capitalize on EVs expected growth. Currently, 18 of the 20 largest Original Equipment Manufacturers (OEM) like BMW Group, Toyota Group, Ford, and Honda have each committed to rolling out a significant EV fleet within the next decade. In March, Ford pledged that by 2030, 40% of their automobile sales would comprise EVs, while General Motors announced in January that they would stop selling petrol-powered vehicles altogether by 2035. It is the aggressive targets being set by both public and private entities alike that are shepherding in the next era of automobiles.

Along with net zero pledges & obligations, OEMs are making rapid advancements in EV model availability, fueling further consumer demand. It will likely be said that one of the greatest achievements by the automobile industry was the electrification of the SUV. With the SUV being the fastest-growing auto segment in both Europe & China and already the largest share of automobile sales in the US, OEMs are cashing in big-time by introducing more electric SUV models to their fleets. Because of this, more than 55% of new EV models in 2020 were SUVs. Not only are there advancements being made in personal transportation, but also with heavy-duty vehicles (HDVs) like busses and tractor-trailers. We are now seeing a diverse spectrum of electric HDVs like medium to heavy freight trucks, garbage trucks, and commuter busses hit the market. EVs are no longer relegated to just daily personal vehicles and will come to permeate all facets of transportation.

Beyond this extension of available EV models, recent advancements in battery technology and other electric fueling innovations are driving renewed consumer interest as concerns of distance and charging times are being alleviated. Most of today’s cars use lithium-ion batteries that use a liquid or gel electrolyte that is expensive & poses fire risks. Companies like QuantumScape and Solid Power have developed solid-state batteries that use ceramic/other electrolytes in order to reduce cost, make EV range comparable to that of cars that run on fossil fuels, and decrease the time needed to charge EVs. Additionally, countries like Korea have begun to launch vehicles that use hydrogen fuel cells as a source of power. As more companies form early relationships with manufacturers like BMW and Ford, it is expected that battery technology will see increased scalability and innovation over the next decade.

Even with all the innovation and funding happening, we would be remiss to not bring up one of the largest barriers to the adoption of EVs — insufficient charging infrastructure. Currently, the US ranks 27th in the world for public chargers per EV, and in 2020 the European Union failed to hit its goal of having 1 charger per EV which was laid out in its 2014 Alternative Fuel Infrastructure Directive (AIFD). There are also currently less than 40 active electric heavy freight trucks in the world due to a lack of sufficient charging infrastructure for HDVs. While these shortcomings are one of EVs main drawbacks to commercial practicality, there is optimism to be had given the wide variety of initiatives that are attempting to increase public charging infrastructure. Tesla for example is working with various third-parties, as of 2020, to develop a “mega charger” network for HDVs. There is plenty of proactivity in the realm of public charging infrastructure; it is just going to take some time and proper capital allocation to have a fully realized public charging network across the globe.

The coming dominance of the EV market is undeniable, both from an environmental and investment standpoint, and there is arguably no other market with such heavy cooperation between the public and private sectors today. With many markets, there is often a certain degree of economic uncertainty or commercial practicality, but EVs do not entertain either of these controversies. We are in the midst of a quiet but momentous technological shift that will revolutionize everything we know about transportation and energy.