Executive Summary
Climate change is disrupting the global economy and affecting everyone. The transition from fossil fuel vehicles to electric vehicles (EVs) is often considered a critical step in decarbonizing the global transportation system. The adoption of EVs has accelerated over the past few years. Since 2012, global EV sales have grown at a CAGR of 56%. In 2021, sales doubled from the previous year, hitting a record high of 6.75 million units (see Exhibit 1). Going forward, restrictions or even banning the production of fossil fuel vehicles, the tax credits for purchasing EVs, growing preference for EVs among young consumers, and billions of investments in EV charging infrastructure could continue to boost the supply and demand of electric vehicles. For market participants, this global structural shift from traditional engine vehicles to EVs represents meaningful opportunities.
An Electric Era Is Coming
More than 20 countries have announced their intention to fully phase out new sales of internal combustion engine (ICE) vehicles over the next 30 years, with many targeting zero carbon emissions by 2050. The U.K. is set to ban new sales of petrol and diesel cars by 2035. The U.S. government has set a target for half of new auto sales to be electric by 2030, with a USD 7.5 billion package to roll out charging stations across the country. Meanwhile, leading traditional automakers are pivoting toward EV manufacturing. General Motors has set an aggressive goal to exclusively produce EVs by 2035, and Ford announced it would target 40% of its vehicle production to be EVs by 2030. To meet the stated targets of all countries, the International Energy Agency’s forecast shows that global EV sales would need to increase to 25 million vehicles by 2030, representing 15% of the market share.
