Electric Vehicle (EV) Market Poised to Explode
The last few years have been pivotal for the electric vehicle (EV) market, with the number of EVs on the road hitting the 10 million mark in 2020. That’s a sizeable number, but still only one percent of the vehicles worldwide. (Source: “Trends and Developments in Electric Vehicle Markets,” International Energy Agency, last accessed March 23, 2022.)
Battery electric vehicles (BEVs) made up approximately two-thirds of new EV sales in 2020. China was home to the largest number of EVs that year, with 4.5 million, although Europe had the largest annual increase, reaching 3.2 million.
The number of EVs sold would have been higher in 2020, but the COVID-19 pandemic curbed the momentum that had been building over the last decade. The same holds true for 2021, during which an estimated record 6.5 million EVs were sold worldwide. (Source: “Global Electric Vehicle Sales Up 109% in 2021, With Half in Mainland China,” Canalys, February 14, 2022.)
This year is forecast to be another record year for EV sales, but again, the number would likely be higher if not for the supply chain crunch affecting computer chips and other electronic components required for EVs.
Still, a growing number of countries have been implementing legislation that will see the number of EVs on the road explode over the coming years.
In the U.S., the White House has said its aim is for EVs to make up 50% of new passenger vehicles and light trucks sold by 2030. Individual states have announced even more ambitious plans. (Source: “Executive Order on Strengthening American Leadership in Clean Cars and Trucks,” The White House, August 5, 2021.)
President Joe Biden said the federal government will be injecting $15.0 billion into initiatives to help build a national network of 500,000 EV charging stations by 2030. Other nations are doing similar things.
Canada announced a target of all new light-duty vehicles and passenger trucks sold in the country being zero-emission by 2035. (Source: “Building a Green Economy: Government of Canada to Require 100% of Car and Passenger Truck Sales Be Zero-Emission by 2035 in Canada,” Transport Canada, June 29, 2021.)
In Europe, under the “Fit for 55” initiative, the European Commission has proposed stringent emission reduction goals: at least 55% by 2030 and 100% for 2035. (Source: “Fit for 55,” Council of the EU and the European Council,” last accessed March 23, 2022.)
A lot of work needs to be done to reach these lofty goals, especially when it comes to EV infrastructure. For example, there aren’t nearly enough EV charging stations to meet the expected demand over the next 20+ years.
EV Charging Stocks Poised for Massive Growth
While many EV stock investors are dazzled by vehicle manufacturing stocks like Tesla Inc (NASDAQ:TSLA), Rivian Automotive Inc (NASDAQ:RIVN), Fisker Inc (NYSE:FSR), and Lucid Group Inc (NASDAQ:LCID), EV infrastructure stocks could become the biggest winners.
The power of “pick and shovel” stocks shouldn’t be ignored. During the Klondike gold rush, some of the people who made the most money weren’t miners, but shopkeepers who sold picks, shovels, and pans. The same concept holds true today.
By all accounts, EV infrastructure stocks are some of the most compelling opportunities.
According to one study, the global demand for EV supply equipment was valued at $32.5 billion in 2021. From 2022 to 2028, it’s projected to expand at a compound annual growth rate (CAGR) of 33.2% to $210.0 billion. (Source: “Global Demand of Electric Vehicle Supply Equipment Market Share to Surpass USD 210 Billion by 2028,” GlobeNewswire, March 22, 2022.)
EV supply equipment companies provide charging stations, charging systems, and charging points for EVs. They might not be as enthralling as EV manufacturers, but it’s pretty tough to ignore an industry that’s expected to grow at a CAGR of more than 33%.
Some of the most popular EV supply equipment stocks to keep on your radar are Wallbox NV (NYSE:WBX), ChargePoint Holdings Inc (NYSE:CHPT), EVgo Inc (NASDAQ:EVGO), Blink Charging Co (NASDAQ:BLNK), and Volta Inc (NYSE:VLTA).
Other, less obvious stocks in the EV supply equipment space include Schneider Electric SE (SU:EPA, OTCMKTS:SBGSF), Eaton Corporation PLC (NYSE:ETN), ABB Ltd (NYSE:ABB), and Siemens AG (ETR:SIE, OTCMKTS:SIEGY).
The EV industry is still in its infancy, but its growth trajectory over the coming decades is predicted to be massive.
This momentum, coupled with growing efforts around the world to fight climate change, should help fuel EV supply equipment stocks. EV charging stocks could provide some of the greatest investment growth opportunities.