With more global consumers becoming increasingly aware that “climate change” is actually a real thing they can no longer ignore, the EV industry has been thriving across financial markets.
In fact, the global EV market was valued at $162.34 billion in 2019, and is projected to reach $802.81 billion by 2027.
The trend of “green cars” has been taking shape for some time, however, it has recently accelerated with some of the leading motor vehicle companies declaring they will replace traditional petrol vehicles with environmentally friendly EVs in the not-too-distant future.
Can the growing EV market pave the way for a greener future? And if so, which company will emerge victorious?
The companies fuelling the EV revolution
“Ding, ding… and in the right corner we have our heavy-weight champion of the world...Tesla…”
It feels a little bit like a prime-time exhibition match, but in reality, there aren’t just one or two companies leading the industry race anymore.
In fact, most of the world’s biggest car manufacturers are trying to get a slice of the EV pie, including the once-struggling luxury brand Jaguar Land Rover, which recently announced its plans to be fully electric by 2025.
But there must be a favourite, right? Well, the obvious hot contender is Tesla, the brainchild of the world’s richest tech mogul Elon Musk.
In 2020, Tesla became the world’s most valuable automaker by market value, when its market valuation soared to over $200 billion, upheaving Toyota from its longstanding throne.
From being dismissed as a passing fad just a few years ago, Tesla has dwarfed the share price return on its traditional rivals.
Tesla’s share price is up nearly 700 per cent in the past year and it was the second most popular stock on the eToro platform last year among retail investors globally. Mr Musk’s company has built up a position of dominance based on the advanced technology it uses.
As well as the highly anticipated “Cybertruck”, Mr Musk also announced Tesla would “eventually” be releasing an electric van, following in the footsteps of other vehicle manufacturers such as GM, Rivian, and Ford, which are all conjuring up their own unique electric van solutions. This need has been amplified by US President Joe Biden’s decision to transition the entire US government fleet to electric vehicles.
Nipping at the heels of Tesla is its Chinese carmaker challenger Nio. As one of the only companies that have managed to threaten Tesla’s status as the world’s number one EV company, Nio’s market cap is valued at nearly $70 billion, also positioning itself as one of the world’s top automakers.
Nio still has a long way to go. If it can deliver on, investors will have a hard time ignoring this unexpected electric contender.
Another car manufacturer that has big plans to dominate the green revolution is General Motors. The Detroit-based giant went so far as to develop its very own EV battery technology, called “Ultrium”.
Similar to Tesla, General Motors is also building a battery factory and plans to develop a wide range of new EVs in the next few years. The company recently announced it will launch electric delivery vehicles for companies such as FedEx and UPS, and plans to go all-electric by 2025.
Investors are electrified
As more companies flood the EV industry with groundbreaking technologies that could make our normal day-to-day commute to the office a lot more exciting, investors are taking notice.
Young investors, in particular, are attracted to the EV market, and the surrounding trend of ESG investing.
Short for “environment, social and governance” investing, EGS investing is a strategy that entails researching and factoring in environmental, social, and governance issues, in addition to the usual financials when evaluating potential stocks for a portfolio.
Research is increasingly showing that EGS investing can reduce portfolio risk, generate competitive investment returns, and help investors feel good about the stocks they invest in.
It’s clear that investments into a green future aren’t slowing in pace any time soon, in fact, recent YouGov survey data commissioned by eToro, also found more than a quarter (28 per cent) of Millennials want to invest in companies that align with their ethical investing principles.
Does the future involve less petrol?
The EV industry has finally solved its most pressing problem: accessibility.
For years, owning an EV was only a reality for the rich, especially when compared to cheaper petrol-powered cars.
Now, EVs are finally making the move from being a luxury toy, to the family vehicle.
And it isn’t just the price that’s dropping, new innovations from companies like Canada’s Facedrive mean that even Tesla’s most expensive model will soon be available to the everyday Janes and Joes. How? The company recently purchased Steer – an EV subscription service that allows people to afford to drive the latest EV models.
The EV revolution is well and truly underway, and for investors, 2021 is only the beginning.
Robert Francis, Australian managing director of multi-asset investment platform eToro
