Trystan Casey
The world is on the brink of an electric vehicle revolution. This shift will benefit a range of companies, from automakers to suppliers, software providers, semiconductor suppliers, component and part manufacturers, battery producers, and lithium miners. While electric vehicles currently make up less than 1% of global vehicle sales, this number is expected to rise to at least 10% by 2025, with some even more optimistic predictions estimating 16%. This means that companies with a diverse range of EV offerings, from electric cars to SUVs and pickup trucks, are well-positioned to benefit from this transition. Additionally, companies that develop batteries for electric vehicles will also see significant growth, with studies suggesting a $60 billion market for EV batteries by 2025.
| Characteristics | Values |
|---|---|
| Electric Vehicle Companies | Tesla, Porsche, Kia, Hyundai, General Motors, Ford |
| Auto OEMs and Parts Suppliers | Delphi Technologies, BorgWarner, Aptiv, Amphenol Corporation, TE Connectivity, Magna |
| Energy Companies | Sempra's San Diego Gas & Electric |
| Battery Technology Companies | BYD |
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What You'll Learn
Auto OEMs and parts suppliers
The electric vehicle (EV) market is experiencing rapid growth, with sales booming and an anticipated tenfold increase in the market size over the next decade. This shift towards electric vehicles is being driven by several factors, including advancements in technology, improvements in battery storage capacity and performance, and increasing consumer awareness of the environmental impact of gas-powered cars.
Parts suppliers will also benefit from the growth of the EV market, as they provide the components and systems necessary for electric vehicles. Companies like Aptiv, which produces electronic safety components, and Delphi Technologies, which designs and develops integrated powertrain technology, will see increased demand for their products as more electric vehicles hit the roads. Other suppliers like Magna, which manufactures automotive systems and components, and BorgWarner, a propulsion systems supplier, are also well-positioned to capitalize on the EV boom.
In addition to the increased demand for electric vehicles and their components, auto OEMs and parts suppliers may also benefit from government incentives. Many governments are offering incentives to manufacturers to improve battery storage capacity and performance, further encouraging the development and adoption of electric vehicles.
While the EV market holds many opportunities for auto OEMs and parts suppliers, it is important to note that there are also risks and uncertainties. As with any new technology, there may be challenges in product launches, balance sheet risks, and competition from other automakers. However, the overall trend suggests that the EV market will continue to grow, creating numerous benefits for companies in the auto OEM and parts supply sectors.
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Battery producers
Electric vehicles (EVs) are becoming increasingly popular, with global deliveries reaching over 2.2 million in 2019, or more than 2% of global auto-deliveries. This number is expected to rise to at least 10% by 2025, with some estimates reaching as high as 16%. This shift towards electric vehicles is driven by factors such as global legislation promoting EV purchases, improved technology, reduced battery costs, and increasing consumer awareness of the environmental impact of gas-powered cars.
As the demand for electric vehicles continues to grow, so too will the demand for batteries. Battery producers will be at the forefront of this revolution, and companies in this industry stand to benefit greatly from the widespread adoption of electric vehicles.
One company that has been identified as being well-positioned to benefit from the electric vehicle boom is Delphi Technologies, a supplier of electronic safety components and integrated powertrain technology for auto manufacturers. Delphi currently trades at a discount, but its involvement in the EV market gives it a competitive advantage that is expected to drive its stock higher in the long run.
Other companies that supply the electric vehicle market with batteries and powertrain technology, such as Aptiv, BorgWarner, Magna, TE Connectivity, and Amphenol, are also expected to benefit from the growth of the EV market. As suppliers to automakers, their success will be tied to the overall growth of the market, regardless of which automakers come out on top.
In addition to the companies directly involved in the production and supply of batteries, other industries and companies are also expected to benefit from the electric vehicle revolution. This includes companies involved in the development of charging infrastructure, such as Sempra's San Diego Gas & Electric, which has filed for approval for a significant investment in EV charging infrastructure and battery storage.
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Lithium miners
Lithium is a key component of batteries, including those used to power electric vehicles. As the demand for electric vehicles increases, so does the demand for lithium. This means that lithium miners are set to benefit from the electric vehicle boom.
Lithium is a metal with physical and chemical properties that make it versatile enough to be used in lubricants, ceramics, and batteries. Lithium-ion batteries, in particular, are prized for their energy density and rechargeability. They are integral to the Green New Deal, which aims to create a "just transition" from the fossil-fuel economy to a more sustainable future.
However, lithium mining has been associated with several environmental and social concerns. The process of mining, refining, and assembling lithium-ion batteries, especially for electric vehicles, has been criticized for its environmental impact. According to a report by MIT's Climate Lab, the production of one ton of lithium emits nearly 15 tons of CO2. Additionally, the brining process used to extract lithium from saltwater requires large amounts of freshwater, which can lead to groundwater depletion and damage to surrounding aquifers.
Despite these challenges, the demand for lithium is expected to continue growing. The consulting firm McKinsey predicts that the current global lithium supply will not meet the projected demand for large lithium-powered batteries by 2030. This has led to a rush for new lithium mining projects and the expansion of existing ones. For instance, ExxonMobil has announced plans to install a lithium mining facility in Arkansas, aiming to become a leading supplier of lithium for electric vehicles.
Recycling electric vehicle batteries and using improved technology to extract lithium from geothermal power plant brine are potential solutions to meet the growing demand for lithium while minimizing environmental impacts. However, these solutions will take time to implement and may not provide sufficient lithium in the short term.
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EV charging infrastructure providers
As the electric vehicle (EV) market continues to grow, EV charging infrastructure providers are poised to benefit significantly. The increasing demand for electric cars will drive the need for more charging stations, presenting opportunities for companies in this space.
One example is Sempra's San Diego Gas & Electric, which is well-positioned to capitalize on California's electric vehicle adoption. The company has filed for approval to invest up to $250 million in EV charging infrastructure, targeting medium and heavy-duty vehicles, and utility-owned battery storage. This investment demonstrates the potential profitability of the EV charging sector, attracting more players to enter the market.
Additionally, companies like Tesla have played a pivotal role in the EV revolution, and their focus on charging infrastructure is notable. Tesla's app is highly regarded for its user-friendly features, enabling drivers to locate charging points, monitor charging status, and remotely adjust vehicle settings. This integration of technology into the charging experience enhances the overall appeal of electric vehicles, encouraging further adoption.
Moreover, the development of EV charging infrastructure is not limited to traditional energy companies. Automakers themselves are actively investing in charging networks to support their electric vehicle offerings. For instance, Porsche, known for its luxury vehicles, has introduced advanced Apple CarPlay integration, allowing users to seamlessly adjust vehicle settings and plan routes on their devices. This integration highlights the convergence of the automotive and technology sectors in the EV space.
As the EV market expands, the role of EV charging infrastructure providers becomes increasingly crucial. The success of these providers will be instrumental in facilitating the widespread adoption of electric vehicles, potentially reshaping the transportation industry as we know it.
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Traditional automakers pivoting to EVs
The electric vehicle (EV) market is experiencing rapid growth, with sales booming and an anticipated tenfold increase in the market size over the next decade. This shift towards EVs is driven by factors such as advancements in technology, infrastructure development, and consumers' growing awareness of the environmental benefits of electric cars. As a result, traditional automakers are pivoting towards EVs to stay competitive and capture their share of the market.
General Motors (GM) is one example of a traditional automaker that has successfully pivoted to EVs. GM offers an impressive lineup of electric vehicles, including the Chevrolet Bolt, which is the fourth-best-selling EV in the United States. This strategic shift towards EVs is expected to drive GM stock higher in the long run. Similarly, Ford, a US auto giant, is aggressively pivoting into the EV market. Ford's current headline EV, the Ford Fusion Energi, was the ninth-best-selling EV in the US last year. However, the company is not resting on its laurels and is working on a range of new electric vehicles, including an electric SUV, a Lincoln crossover, and an electric F-150 pickup truck.
Another automaker making strides in the EV space is Kia, alongside its sister company Hyundai. They were among the first automakers outside of Tesla to fully embrace electrification, and their current car line-up reflects this commitment. Porsche is also making waves in the EV market, introducing greater levels of Apple CarPlay integration and a user-friendly smartphone app that allows for remote adjustments and route planning. While Porsche's electric vehicles come with a high price tag, they offer a luxurious and technology-filled interior experience.
As traditional automakers continue to pivot towards EVs, they are well-positioned to benefit from the growing demand for electric vehicles. By investing in research and development and adapting their product offerings, these companies are laying the groundwork for healthy growth and increased market share in the years to come. This transition to EVs by traditional automakers ensures that they remain competitive in a rapidly evolving automotive industry.
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