Here’s Proof The Investment Community Believes In Electric Cars

MAY 8 2018 BY EVANNEX 13


The success of Tesla (TSLA) is proof-positive that the investment community believes electric cars could be the future. Now there’s another sign that EVs are gaining traction on Wall Street. Global X has dedicated an exchange-traded fund to lithium and battery tech (LIT). And the company just added another exchange-traded fund dedicated to autonomous and electric vehicles (DRIV).

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Check This Out: Global Plug-In Electric Car Sales Increased To 81,000 In February

Related: Electric Vehicles Are Attracting Attention Due To Tesla’s Appeal

Above: Tesla Model S charging (Instagram: voudetesla)

Global X recently made its case for EVs (via Seeking Alpha) explaining that “electric vehicles are rapidly advancing and appear poised to trigger the transportation industry’s largest shakeup in over a century.” Why? In a series of charts, Global X states their case. First, “EVs have various advantages over ICE vehicles, including cheaper fuel, lower maintenance costs, and less air pollution.”

Above: Electric cars cost less for both “fuel” and maintenance while having lower CO2 emissions that internal combustion engine cars (Chart: Global X)

And EV battery costs are falling too. However, for legacy automakers, “EVs remain more expensive than ICEs… [yet] many analysts believe this will change within the next 10 years as battery costs continue to rapidly decline. In the three year period from 2014 to 2016, battery costs fell over 50% from process improvements and scale effects, bringing EVs significantly closer to parity with ICE costs.”

Above: A look at the rapid decline in electric vehicle battery costs (Chart: Global X)

Electric vehicle range is also improving. Why is that important? Because “consumers need to overcome ‘range anxiety,’ or fears that a battery cannot take them as far as a gas tank. As battery performance continues to improve and charging networks expand, this fear is likely to eventually abate over time. Over the last six years, the median range for EVs has extended 56%, and certain models can now drive well over 300 miles on a single charge.”

Above: Electric vehicle range is steadily improving (Chart: Global X)

Last, overall plug-in car sales are on the rise. Although the EV market is “only a small sliver of the total car market… sales have been accelerating. In 2017, electric vehicle sales including plug-in hybrids (PHEVs), accounted for 1.7% of total car sales around the globe. This represented a significant increase from 2016, where sales amounted to just 1.1% of the total car market. In EV-friendly Norway, sales of electric cars amounted to a much higher number [totaling] 39% of total sales in 2017.”

Above: The growth of plug-in cars from 2014-2017 as a percentage of market share (Chart: Global X)

The story changes, however, when looking at the EV industry-leader, Tesla. Although plug-in cars sales have accelerated the last few years, Tesla’s sales have been able to grow even faster. And with its partner Panasonic, Tesla has driven battery costs down further than others at its state-of-the-art Gigafactory. Tesla’s cars have the longest EV range. And Tesla’s flagship, its Model S, actually outsells its internal combustion engine competitors in the large luxury sedan sector.

Above: A look at Tesla’s cars at a Supercharger station (Instagram: asphaltech)

These factors have allowed Tesla’s stock to skyrocket since its IPO. And although the EV industry (as a whole) moves slower, it looks like Global X wants in on the action.


Source: Global X via Seeking Alpha

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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13 Comments on "Here’s Proof The Investment Community Believes In Electric Cars"

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I think if you consider TCTO they are already at parity, at least in the luxury segment.

In many cases, yes — depending on local gas and electricity prices, as well as mileage of individual vehicles.

“The success of Tesla (TSLA) is proof-positive that the investment community believes electric cars could be the future.”

They seem to be right.
Electric cars COULD be the future. You need to be really smart to figure out they COULD.

The battery cost chart is the one I find myself reminding others of, the most. How tax-credits helped $200/KWh become real. There’s still the, now stale, GM quote of $143/KWh, from LG Chem. So, not sure even $200 holds true. The other day a visiting oil analyst claimed 1.5mboe/d will fall off global oil demand from electrification, versus 15.0mboe/d from improvements in ICE efficiency. I almost fell out of my chair.

LICE improvements IF they chose to do so. Instead they get their lawyers and lobbyist to try and stop CAFE regulations. Seems like maybe the analyst was fibbing or got his numbers swapped.

The GM (Bolt) quote (actually 145 $/kWh) was cell-level; pack-level they claimed 190 $/kWh. Someone else (don’t remember who) claimed very similar prices. But that’s for models introduced in 2016 — the current state of the art should already be much lower. Tesla said they are already below 190 $/kWh at pack level in 2016 — and that was before the Gigafactory. Most recently, Tesla claimed they will likely reach 100 $/kWh at cell level by the end of the year, and at pack level in early 2020. Audi not long ago also claimed they are getting batteries for their upcoming models pretty cheap. (Don’t remember the exact number — but it was way below the Bolt number, and closer to the Tesla one…)

Ford and Toyota dragging the median down.

I think this is for BEVs only — so Toyota isn’t even in there…

Why do we need proof, they are not morons. The electric future is blatantly obvious already.

Yes, it’s blatantly obvious to those of us who don’t have an immense financial and/or psychological incentive to not see it. No matter how clear the eventual result is to us, I consider it very positive when a group as important to our transportation future as is the money people seems to be onboard.

It’s not so obvious to people not deeply into the topic. While current growth rates are very positive, most analyst predictions based on economic models are predicting way slower growth… So who do we believe? Can we just safely extrapolate from current growth, or do we believe the models suggesting it’s not sustainable?…

The $100/kWh price parity data point is fascinating. I’ve suggested before here it’s interesting to consider a modern EV and a virtually identical ICE version of the same car, with all the version-specific parts removed from each one and spread out on the ground. (I would assume that some pieces, like computers, would be essentially the same price and would be left out of the mental exercise.) Then guesstimate what each car’s pile of parts costs at its production volume. Obviously, the EV has a much smaller pile of pieces, and its pile is very heavily dominated by the battery pack. The ICE car has quite an interesting array of innards — you can’t turn exploding hydrocarbons into motive force in a safe and minimally noisy and polluting fashion without a LOT of hardware. At $100/kWh, a Bolt’s battery costs $6,000. Add in the motor and other parts, and we’re likely at around $7,000 to $7,500 total. Does the ICE’s parts, including engine, transmission, muffler, catalytic converter, emissions gear, fuel system, etc. add up to that amount? It’s probably in the ballpark. People always mention the TCO aspect of EVs, something I stress constantly when educating newbies. That does help… Read more »
Some organisations have done the numbers. One study I have seen assumed the price of an entry-level gasoline power train to be close to $2,000, and supporting technology adding close to $1,000 on top of that. Also, the more complex chassis needed to accommodate an ICE power train again adds close to $1,000. An electric power trains sans battery was somewhat below $2,000 in their estimations. Assuming the costs of the electric power train sans battery falls with bigger volumes and further development, that should increase the cost advantage of the electric power train sans battery to close to $3,000 I believe. Add in a few hundreds saved on R&D (since the power train is much simpler), and I think we should be looking towards $3,000 – $3,500 room for the battery cost. There seems to be a rough consensus forming that around 50 kWh are needed for an entry-level EV for most people to see it as an acceptable substitute for an entry-level combustion car. That means price parity in this segment is reached only when battery costs fall to something like 65 $/kWh. (Other segments should get there earlier.) Going by current developments, it’s not unreasonable to assume… Read more »