It was in 2006 when I first got interested in electric cars.
Not so much as an investor, but as an unapologetic environmentalist who posited that perhaps electric vehicles could serve as a less pollutive alternative to internal combustion vehicles.
That being said, a few years later, I did recommend folks buy a few shares of Tesla (NASDAQ: TSLA) shortly after its IPO, and have since been an outspoken advocate of EVs and EV technology. Both as an environmentalist and an investor.
Admittedly, this didn’t make me many friends in the early years of my coverage. It still blows me away that people get legitimately offended at the mere suggestion we should begin transitioning away from internal combustion and towards vehicle electrification. But that was never enough to stop me. And to this day, I still maintain that we are at the dawn of a major sea change in transportation markets, with the end result being the ultimate demise of internal combustion.
Now over the past twelve years, we really have seen the EV market explode.
In 2012, there were about 200,000 electric vehicles on the roads. By 2023, more than 40 million had been sold worldwide.
It should also be noted that according to data from Bloomberg, global sales of internal combustion vehicles actually peaked in 2017. This is not a coincidence.
Internal combustion loyalists and Big Oil zealots aren’t particularly keen on this transition. But with more and more data indicating that EVs are, in fact, gaining market share while internal combustion vehicles lose market share, EV haters are constantly looking for new ways to invalidate the benefits of vehicle electrification.
One way they’ve done this is through arguments that claim EVs are more environmentally damaging than internal combustion.
Of course, this isn’t true, and any analyses claiming such a thing are often shown to be incomplete or reliant on questionable data collection methods.
I’m a bit on the fence about countering these nonsense claims, as I know they tend to be fabricated, and those who accept these frivolous findings do so because they WANT to believe that nothing can replace internal combustion.
So in other words, why bother?
But last week, I read an article from transportation analyst Colin McKerracher, which highlighted the latest data analysis on lifecycle emissions from both EVs and internal combustion vehicles.
Here’s a snippet of that article …
EVs have lower lifecycle emissions than their internal combustion counterparts.
This doesn’t mean no emissions. Both the manufacturing of batteries and the usage of vehicles add significant emissions over their lifecycles. But even in places like China, where coal still plays a large role in power generation, EVs have lower emissions overall. The reduction is around 27% there, compared to 71% lower in a market like the UK, where coal has been mostly pushed out of the generation mix.
Another way to think about this is in terms of payback time for the emissions incurred from manufacturing the battery. In a market like the US, an EV becomes a cleaner option after about 25,000 miles of driving, which is about 2.2 years for the average US vehicle.
The power sector is changing rapidly, with more clean generation capacity being added to the grid. This means that by 2030, the breakeven point will have moved up significantly in all regions. An EV made in the US in 2030 will be lower-emitting after a year of driving, while in China, it will be after just over four years, based on current trends. Battery recycling eventually will push EV emissions down even further, as will localizing battery production closer to demand centers.
All this adds up to an important point when it comes to gaming out long-term national emissions-reductions plans: Whereas the emissions profile of an internal combustion vehicle is locked in when it rolls off the line, EVs can keep getting cleaner over time. Given how long vehicles last, concurrent decarbonization of the power sector and electrification of the transport sector are among the only ways to keep emissions on track for any of the targets governments have set for the coming decades.
You can read the article in its entirety here: https://www.bloomberg.com/
The truth is, as time progresses, EVs will continue to prove to be less and less of an environmental burden than internal combustion. And this is not only relevant for those who aren’t embarrassed to give a shit about the environment, but it’s also relevant for investors that understand that most countries in the world are actively seeking to support lower emission vehicles.
And this, of course, will only further bolster the value proposition for the EV market. Which is why I continue to recommend getting some exposure to the space through EV producers, battery makers and the mining companies that are providing the materials for the mass production of electric vehicles – on a global scale.
At the moment, I’m particularly bullish on Stellantis (NASDAQ: STLA), Albemarle Corp. (NYSE: ALB), and Lundin Mining (OTCBB: LUNMF), as well as a few more I’ll be sharing with you in the coming weeks and months. So keep a look out for those.
