The previous issue of Energy & Income Advisor explained our outlook for electric vehicles (EV) to increase gradually and over a longer time frame, a view that also supports our bullish near-term outlook for energy stocks.
Tesla (NSDQ: TSLA) has undeniably changed the conversation about electric vehicles and spurred established automakers to step up their efforts on that front.
Toyota Motor Corp (Tokyo: 7203, NYSE: TM), for example, aims to roll out a lineup of 10 fully electric vehicles by the early 2020s, while Ford Motor Company (NYSE: F) has guided for its stable to include 16 of these automobiles over a similar time frame. General Motors (NYSE: GM) has targeted 20 electric vehicle offerings by 2023.
Meanwhile,Volkswagen (Frankfurt: VOW, OTC: VLKAY) has guided for electric vehicles to account for about 25 percent of its sales by 2025, while Daimler (Frankfurt: DAI, OTC: DMLRY) aims for these offerings to increase to 20 percent of its car sales over this period.
In terms of sales mix, Bayer Motoren Werke (Frankfurt: BMW, OTC: BAMXF) led European automakers through the first three quarters of 2017, with electric vehicles contributing 3.4 percent of its sales. Chinese automakers dominate on this metric, in part because of strong government support for electric vehicles.
Albeit from a low base, global sales of these automobiles have also increased dramatically, surging to 1.09 million units last year from 695,000 in 2016—a 56 percent increase. The latest forecast from Bloomberg New Energy Financial calls for similar growth in 2018, with sales of plug-in hybrids and battery-powered electrics expected to reach 1.59 million this year.
But adoption of electric vehicles displaced only 204,000 barrels per day of oil demand last year; Bloomberg New Energy Finance forecasts that this number will grow to 279,000 barrels per day in 2018, or 0.29 percent of global oil consumption.
Although the global push to break away from the internal combustion engine continues to gain traction, this process won’t take place overnight. Widespread adoption of fully electric vehicles will require improvements in driving range, battery cost and charging times. The number of charging stations will also need to increase.
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In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Mar. 25, 2021
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