Future of Electric Vehicles Cemented as Internal Combustion Vehicle Sales in “Permanent Decline”

Sales of Internal Combustion Vehicles Peaked in 2017

Some drivers might be fighting the idea of ever driving an electric vehicle (EV), but it looks like their protestations are in vain. According to a recent report, sales of non-plug-in internal combustion vehicles hit a peak in 2017. (Source: “Electric Vehicle Outlook 2022,” Bloomberg, last accessed June 9, 2022.)

That means it’s all downhill for internal combustion vehicles, with the future being handed to EVs.

Sales of plug-in-vehicles from 2021 to 2025 are expected to more than triple to 20.6 million. EVs are projected to account for approximately 23% of global vehicle sales, up from just under 10% in 2021. Three quarters of those EVs sold will be full-battery EVs.

Pure internal combustion vehicles will still account for the majority of vehicle sales in 2025, but the numbers have been falling.

The global sales of electric commercial vans and trucks more than doubled in 2021, with the market expected to transition quickly in the second half of 2022.

Sales of EVs have been surging for a number of reasons, including support by governments. For example, in November 2021, President Joe Biden introduced a $1.2-trillion infrastructure bill that promised $7.5 billion to accelerate EV adoption.

The EU introduced a similar EV stimulus package that includes 20 billion euros to boost the sales of clean vehicles, along with the installation of one million electric and hydrogen vehicle charging stations by 2025. (Source: “EU Aims to Have 30 Million Electric Cars on the Road by 2030,” Bloomberg, December 3, 2020.)

These actions are expected to help the EU get at least 30 million EVs on the road by the end of the decade.

Europe and China are expected to account for the vast majority (80%) of global EV sales by 2025, with the U.S. accounting for just 15%. Nevertheless, EV sales are expected to trend significantly higher over the next decade.

A large number of established automakers already see the writing on the wall.

General Motors Company (NYSE:GM) has announced plans to only sell emission-free vehicles by 2035. (Source: “G.M. Will Sell Only Zero-Emission Vehicles by 2035,” The New York Times, January 28, 2021.)

Ford Motor Company (NYSE:F) said in early 2021 that it expects to have 40% of its global fleet electrified by 2030. In Europe, Ford’s passenger vehicles will be all-electric or plug-in hybrid by 2026 and all-electric by 2030. (Source: “GM, Ford to Aim for All Zero-Emission Vehicle Sales by 2040 in Glasgow Pledge,” The Detroit News, November 9, 2021.)

Of course, there are several EV companies looking to take a commanding lead in the world’s transition to EVs. Some of the biggest names include Tesla Inc (NASDAQ:TSLA), Lucid Group Inc (NASDAQ:LCID), and Rivian Automotive Inc (NASDAQ:RIVN).

There are also many EV start-ups looking to take early positions in the EV market, including ElectraMeccanica Vehicles Corp (NASDAQ:SOLO), Faraday Future Intelligent Electric Inc (NASDAQ:FFIE), Fisker Inc (NYSE:FSR), Lordstown Motors Corp (NASDAQ:RIDE), and Canoo Inc (NASDAQ:GOEV).

Electric Vehicle Battery Improvements

Advancements in battery technology have been helping fuel the demand for EVs. Moreover, thousands of new EV charging stations across the U.S. will ease drivers’ fears of running out of power, a condition called range anxiety.

For the 2022 model year, 61 EVs have Environmental Protection Agency (EPA) combined range ratings spanning from 100 miles to 520 miles. (Source: “EV Range: Everything You Need to Know,” Car and Driver, February 14, 2022.)

With new advancements, the ranges for EVs have been growing almost annually.

In late May, a Tesla researcher published a paper claiming to have demonstrated a battery design that could last 100 years and power an EV for more than four million miles. (Source: “Tesla Researcher Demonstrates 100-Year, 4-Million-Mile Battery,” Forbes, May 28, 2022.)

Analyst Take

Even though we’re still in the early days of the EV revolution, the days are numbered for internal combustion vehicles. As mentioned earlier, sales of non-hybrid internal combustion vehicles peaked in 2017.

The EV market opportunity between now and 2050 is estimated to be $53.0 trillion. That bodes well for investors in EV stocks and EV-related stocks.