Talk about a bullish estimate. Earlier this week a US investment house Wedbush Securities issued an eyebrow-raising estimate of the value of the electric vehicle (EV) industry over the next decade – $US5 trillion – or close to $A7 trillion.
Wedbush analysts said that while today’s EVs only represent 3% of total global automotive sales, the share is likely to reach the 10% threshold by 2025 and 20% by 2030.
S&P Global forecast in a study out in late September (See separate story) that global Plug-in Electric Vehicles (or PEV) sales will increase to 13.1 million units in 2025, with China regaining the top position as the world’s biggest PEV market with 5.2 million units, compared with 5.0 million for the EU.
S&P Global sees the uS running a distant third.
“While Tesla continues to be the vendor at the top of the EV pecking order, there are roughly 150 [original equipment manufacturers] globally going aggressively after the EV market which we view as the biggest change to the auto industry since the 1950s,” Wedbush analysts said in a report issued on Monday.
The analysts said that while 2021 has not been kind to the EV industry due to the chip shortage, they actually see it as a transformative growth opportunity.
“Our view is that while frustrating, this is a near-term trading dynamic that does not change our unwavering bullish view of the sector for the coming years,” they said in the report.
The “massive potential growth opportunity” is not only limited to OEMs (original Equipment Manufacturers), but the entire supply chain in the EV landscape also stands to benefit from a so-called green tidal wave, such as charging stations, battery players, recycling, raw materials, and the broader grid build-outs.
“Importantly, fertile areas such as long-haul trucking, hydrogen plays, and commercial last mile/fleet conversions represent a new landscape that is ripe for major growth over the coming years and comprises over $1 trillion of our $5 trillion EV market growth estimate for the next decade.”
Car making giants such as General Motors, Ford, Toyota, Mercedes and Volkswagen have strengthened their EV initiatives for the succeeding years, which according to the firm, reflects the shift in the EV tide among traditional auto players.
The Wedbush analysts chose Tesla as the favourite overall EV name, while Faraday Future (FFIE) is its top pick for disruptive EV OEM. Among commercial last-mile names, Electric Last Mile Solutions (ELMS) was the firm’s choice.
Other top selections by Wedbush were Hyzon Motors (HYZN) for long haul trucking, Li-Cycle (LICY) for EV supply chain, and General Motors (GM) as the favorite auto stalwart that is transitioning to an EV world.
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This week also saw GM flesh out its EV future with two days of briefing for investors and industry analysts.
GM’s briefing followed the previous weeks major announcements from Ford about new EV car plants and battery making centres in the US, in a joint venture with a South Korea’s SK Group in an $US11.4 billion plan.
Mercedes also revealed ambitious plans for batteries and EVs the same week.
Earlier this year GM outlined its thinking and has upgraded its thinking several days. Last week’s two days of briefings provided considerably more detail.
GM CEO Mary Barra told investors on the first two of the briefing on Wednesday that the car maker plans to double revenue by 2030, expanding profits from internal combustion vehicles (ICE) even as it rolls out new electric vehicles and new digitally powered services to catch up with Tesla.
GM said if it succeeds, annual revenue by 2030 would be about $US280 billion, and the company would be the leader in US electric vehicle sales.
Chief Financial Officer Paul Jacobson told the briefing that GM expects pre-tax profit margins of 12% to 14%, which could beat current levels. That would imply annual pre-tax profits of as much as $US39 billion.
Jacobson said GM can fund $9 billion to $10 billion in annual capital spending for electric vehicles and other initiatives while returning money to shareholders via buybacks or higher dividends.
GM thinks its ICE business can grow even as annual electric vehicle revenues rise to $US90 billion by 2030 from $US10 billion projected in 2023.
The company also plans to add $US80 billion from new businesses such as the Cruise autonomous vehicle ride service by 2030.
Barra and other GM executives outlined plans for the car making giant to transition to an all-electric fleet by 2035 that starts gradually, then accelerates after 2030, by which time more than half of GM’s factories in China and North America will be “capable of EV production.”
Ford has attracted a lot of attention for its plans for an EV version of its market topping F-150 pick up (Ute).
Ford’s battery-electric Ford F-150 Lightning is due to start being made early next year. Because of heavy orders, Ford last week said it will double capacity for the Lightning at its Dearborn, Michigan, factory.
Ford plans even more electric F-150 production at a new battery and car making complex planned for Tennessee.
Tesla though has delayed the launch of its futuristic (and much hyped) Cybertruck.
In 2022, GM plans to launch an electric version of its best-selling North American model, the Chevrolet Silverado pickup truck.
CEO Barra will unveil it at the big computer technology show (CES) on January 5 where EVs and battery technologies are going to dominate the headlines. GM suppliers say the vehicle will be launched in late 2022.
The other area of interest at GM is its BrightDrop commercial EV business that the company expects to top $US10 billion in revenue by 2030 with low 20% margins.
GM is also the majority owner of autonomous vehicle services company Cruise, and thinks that company should deliver $US50 billion in annual revenues by 2030.
Last week, Cruise received licenses in California to begin accepting passengers, though it cannot yet charge for rides.
GM said plans to double its battery making capacity to 140 gigawatt hours annually with the addition of two new plants.
