Interest in clean energy is surging with the Inflation Reduction Act of 2022 as a major catalyst, supporting all three primary drivers of growth:
- Electric vehicles (EVs) are seeing accelerated adoption on the back of decreasing costs. Continued advances in battery technology could soon make EVs cost-competitive versus internal combustion engine (ICE) counterparts.
- Autonomous driving functions are becoming commonplace in new car models and real-world trials are bringing us closer to fully autonomous vehicles (AVs).
- We believe investors can benefit from the growth of EVs and AVs by investing in segments that capture the EV/AV value chain, including EV and AV manufacturers, EV battery producers, EV battery material suppliers, and EV and AV technology enablers.
The electricity-powered and autonomous future of transportation is arriving. EVs are fast taking market share after more than a century of internal combustion engine dominance. And with recent advances in autonomous driving technologies, drivers, too, might become relics of the past.
Last year, EVs commanded 8.3% of the global car market, almost doubling their 2020 share and more than tripling their share from 2019.1 After a period of slowed progress, autonomous vehicles (AVs) are also advancing. In 2021, Germany became the first country to approve a conditionally automated driving system. Cars equipped with this system can autonomously navigate traffic with a driver behind the wheel and will hit the road in 2022.2 (But rest assured, we expect these cars to have their own built-in speed limits on the autobahn even though humans do not.)
We expect EV sales to accelerate further on the back of continued innovation and public and private sector support. Driving systems featuring greater automation are also on the horizon; advances in underlying technologies and heightened data proliferation will bring new AV options to streets soon. In the near future, transportation could become both electric and autonomous, becoming cleaner, safer, and less expensive than ever before.