Investing in the Death of Internal Combustion

Three million.

That's how many electric cars have been sold in the U.S.

Of course, 3 million may not seem like much when you consider nearly 14 million new cars were sold in 2022 alone — and last year was the worst year for new car sales since the Great Recession.

So why does a number so small matter?

Let me explain…

According to Bloomberg data, internal combustion vehicle sales peaked in 2017 and are now in “structural decline.” There are a number of reasons for this, including the fact that 1 in 4 new cars sold in China is now electric, the sale of new internal combustion vehicles in the EU will be banned by 2035, and the cost to own an EV continues to plunge, with price parity expected in just three years. 

Meanwhile, here’s how the EV market has performed since 2011, just one year after Tesla (NASDAQ: TSLA) went public:

Bloomberg analyst Tom Randall also looked at this growth rate through a 12-month rolling sales analysis to ensure seasonal fluctuations wouldn't disguise long-term trends.

Here’s what he found:

The only time 12-month EV sales have declined was a brief stretch beginning the third quarter of 2019. That’s when Tesla temporarily exported a significant share of its American-made Model 3 inventory to kick off overseas sales. The period also coincided with the start of the pandemic.

Here it is charted out:

I remember when folks told me the EV market was just a novelty, a fad.

Yet all estimates show that by 2030, more than half of all new car sales in the U.S. will be electric. That’s less than seven years away.

We also got confirmation from Sinopec — the largest oil refining, gas, and petrochemical conglomerate in the world — that peak gasoline in China has already passed. This is two years ahead of earlier estimates.

And according to another analysis, global road fuel demand is expected to peak in 2027 at 49 million barrels per day and then decline to 35 million barrels a day by 2040.

I imagine this is what the transitional landscape must’ve looked like in the early days of the internal combustion engine… when horses and buggies were preparing for obsolescence and the smartest guys in the room were putting their chips on the horseless carriage. 

While you can be sure the internal combustion vehicle will not go gently into that good night, you can be equally sure that the world is transitioning away from internal combustion and toward vehicle electrification. And investors who ignore this truism will miss out on some of the most profitable investment opportunities of a lifetime. 

Whether it’s next-generation EV battery materials that’ll make EVs cheaper and more efficient, like this one, or new technologies that charge electric cars while they’re driving, making charging stations completely obsolete, electric vehicle dominance IS coming, so you might as well get rich from it.

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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