Season 4, Post 22: The very long road ahead for electric vehicles

“We have not yet scratched the surface” on electric vehicle (EV) adoption. This was the view put to us by the Finance Director of one NASDAQ-listed business…

Season 4, Post 22: The very long road ahead for electric vehicles

“We have not yet scratched the surface” on electric vehicle (EV) adoption. This was the view put to us by the Finance Director of one NASDAQ-listed business whom we met on our recent US trip (albeit the opinion of someone who clearly has a vested interest in increased take-up). The good news is that we may be close to a global tipping point for EV adoption..

Consumer interest in EVs has certainly reached record levels. For the first time, over 50% of respondents globally in EY’s annual Mobility Consumer Index (released last week) said they are “looking to buy” an EV. For context, this figure has risen by 22 percentage points over the last two years. The high cost of car ownership and rising gas prices (a perennial complaint across America that your author heard in the last fortnight) may have something to do with it. Government policies may also be playing a role. The EU has said it plans to ban conventional gas-powered vehicles by 2030, while China is putting in place policy to ensure that at least 40% of vehicles sold by this date are electric. President Biden has a 50% target for the same year.

Despite such positive policy moves, global consumer willingness to purchase electric vehicles currently varies markedly. Drivers in Italy, China and South Korea were the keenest to acquire an EV (with 73%, 69% and 63% of respondents in favour), while those in the US (just 29%) and Australia (38%) exhibited greatest reluctance, per the EY survey. Perhaps some of the American aversion is simply the fact that the US is still at a very early stage of EV adoption, with fewer than 5% of new car sales comprising EV purchases at present. Headline vehicle purchase prices (rather than range anxiety) seem to be the main reason why not many consumers are yet willing to make the leap, although few probably realise that lifetime ownership costs can be much lower.

Even if EV adoption looks set to grow (from a low base), don’t expect to see autonomous vehicles on the streets any time soon. You author was disappointed to learn when visiting Phoenix on his US trip that Google’s Waymo trial was still not operating either from the airport or downtown but was restricted just to a 50-mile radius around nearby Chandler and Tempe. Another executive with whom we met gave an end-of-decade timeline for initial autonomous adoption, noting that although the technology would likely work before then, consumers were still not yet ready for a fully driverless experience    

31 May 2022​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

Alex Gunz, Fund Manager

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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