Sales of electric vehicles (EVs) have skyrocketed since 1999, when the U.S. Department of Transportation reported that only 17 hybrid electric vehicles had been sold. Look further in the rearview mirror and you will find that the history of electric vehicles is much more complicated. By 1900 – 10 years after the appearance of the first electric vehicle in the United States – electric vehicles were commonplace, accounting for nearly one in three cars on the road.
As we turn our attention back to the present – and the future – there are many more surprising details to be learned about electric vehicles. So fasten your seatbelt, let’s hit the road.
1. Uncle Sam wants to see electric vehicles across the United States
Although the Department of Energy’s Office of Loan Programs (LPO) had little success in spurring renewable energy innovation during President Trump’s administration, it appears that the LPO – active under the Obama Administration – Step On The Accelerator Again. Earlier this month, Energy Secretary Jennifer Granholm announced that the LPO was “open for business again”. Currently, it has nearly $ 18 billion under its advanced technology vehicle manufacturing loan program for two groups of potential borrowers: manufacturers of advanced technology vehicles that meet defined targets for ‘fuel economy and manufacturers of components or materials that support the fuel economy performance of eligible vehicles.
Ford (NYSE: F), for example, received a $ 5.9 billion loan from the LPO and used the funds to help develop its hybrid and all-electric vehicles. In the same way, You’re here (NASDAQ: TSLA) received a $ 465 million loan from the LPO in January 2010. Using the loan to help build its manufacturing facility in Fremont, Calif., Tesla repaid the entire loan three years later, nearly nine years before it expires.
2. There is a lot of growth on the road
Despite the challenges posed by the COVID-19 pandemic, the electric vehicle industry flourished in 2020. According to EV-volumes.com, preliminary estimates put global electric vehicle sales at 3.24 million, an increase of 43% from the 2.26 million sold in 2019. It’s clear that the electric vehicle industry has come a long way in getting drivers behind the wheel of fully electric and hybrid electric vehicles, and analysts believe it still a lot of growth. Bloomberg New Energy Finance predicts that by 2025, electric vehicles will account for 10% of global passenger vehicle sales and grow steadily to reach 58% of global sales by 2040.
3. Rare earth elements are of urgent concern
The enthusiasm for the burgeoning electric vehicle industry is high, but that doesn’t mean there aren’t challenges. A formidable retarder is the industry’s reliance on rare earth elements, important components in vehicle batteries and engines. In addition to the fact that they are not readily available, a pressing concern is that China is the source of the lion’s share of the world’s supply – around 90%, according to Adamas Intelligence. This helps to explain the considerable interest in MP materials (NYSE: MP), owner of the only rare earth mineral mining operation in North America, whose stated mission is “to restore the entire rare earth supply chain in the United States of America”. The company recently announced rare earth oxide production of 664 metric tonnes for 2020, an 8% increase from 2019.
4. Traditional automakers are enthusiastic about all-electric vehicles
Believing that the global appetite for electric vehicles will only continue to grow, many automakers have announced their intention to go all-electric in their offerings. Earlier this month, Swedish automaker Volvo announcement that it plans to stop offering internal combustion engine vehicles, including hybrids, by 2030. Owned by Geely Automobile Holdings (OTC: GELYY)Volvo also said it is targeting half of global sales to be fully electric, with the other half to be hybrid models by 2025.
Domestic automakers are also responsible for going all out on electric vehicles. General Motors (NYSE: GM), for example, plans to offer 30 models of all-electric vehicles worldwide by 2023 and plans to offer only light-weight all-electric vehicles by 2035. Ford, in addition, waits to only sell private electric vehicles in Europe by 2030.
5. Biden moves forward with charging infrastructure
Embracing enthusiasm for the electric vehicle industry during his presidential campaign, President Biden further demonstrated his zeal in January when he announced his desire to transition the government’s internal combustion vehicle fleet to electric vehicles. But that’s far from the only signal that the Oval Office likes the prospect of electric vehicles. In early March, Biden also set an objective deploy 500,000 charging stations across the country. Its $ 3 trillion infrastructure plan, details of which are expected to be released this week, will further detail infrastructure development for electric vehicle charging stations.
Reach the finish line
Of the wave of electric vehicle manufacturers that have gone public in the past year through ad hoc acquisition companies to traditional automakers who are opting for all-electric vehicles, the electric vehicle industry represents a viable opportunity to growth-oriented investors. Of course, those who expect EV stocks to generate big gains in their portfolios need to do their due diligence, as many EV companies still carry a lot of risk.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.