Updated: Dec 12, 2022
Only 0.7% of global light-duty-vehicle (LDV) cars are electric. Still, it is estimated that by 2050 31% of all vehicles on the road will be.
So, what does this mean for traditional petrol-based cars? The US Energy Information Administration (EIA) predicts global diesel and petrol car sales will peak by 2038 due to significant Electric Vehicle (EV) sales growth. Put simply, the transport industry is at the start of a substantial shift with mounting pressure from the public and governments to move towards greener and cleaner solutions.
So what are the opportunities, and what are the challenges when shifting an entire industry?
Firstly, why is going electric necessary for the future?
Athena Motavvef, an Earthjustice associate legislative representative, explains it best, "If we're going to have a real shot at stemming the impact of the climate crisis, we need to ditch fossil fuels, pivot to 100% clean energy, and achieve zero emissions. Making electric vehicles accessible to all people is an essential step towards that goal".
Athena echoes the sentiment heard across the public domain, in board rooms and governments worldwide. Everyone wants to see traditional high pollution emitting industries adapt and move towards more environmentally friendly solutions. The Transport industry is the perfect place to start.
In Australia alone, the Transport sector was responsible for emitting over 84 million tonnes of CO2 in 2020. So adapting just this industry alone could have hugely positive environmental outcomes.
Ok, but wait, are EVs better for the environment? Doesn’t EV production create more emissions than petroleum cars?
Research suggests that 95% of the globe going electric is less carbon-intensive than conventional petroleum vehicles. Mainly because petroleum cars produce CO2 for their whole lifecycle -whereas EVs don't.
Let's look at how electric vehicles create emissions compared to petroleum cars.
Manufacturing/ Battery production
Yes, crucial mining minerals aren't climate-positive. However, some companies focus on developing zero-carbon lithium mines - like Vulcan Energy.
Most emissions are produced because our electricity grid operates on coal and gas. Moving over to a 100% renewable energy electricity grid would immediately reduce emissions associated with charging electric vehicles.
On The Road
Diesel and petrol-only vehicles exacerbate their emissions every year on the road. Picture the last car you saw, which was older the 10 years; the black smoke coming out the back is what we are referencing.
We are the only developed country that doesn't regulate the disposal of end-of-life vehicles nationwide. Without one, it's hard for companies to take recycling seriously. But, aluminium, steel and some alloys can be recycled and diverted from dumps. However, it's common for plastic components to be found in landfill shredded to pieces.
Producing a large lithium-ion battery requires more materials and energy.
“Producing electric vehicles leads to significantly more emissions than producing petrol cars. Depending on the country of production, that’s between 30% to 40% extra in production emissions, which is mostly from the battery production,” said Florian Knobloch, a fellow at the Cambridge Centre for Environment, Energy and Natural Resource Governance.
Once Jack hits the road, the car corrects and offsets any harmful emissions generated. Within 18 months, the CO2 emissions are accounted for, which only continues to improve.
Even considering the emissions from charging EVs, they still make less over their lifetime. For example, in Europe, EVs have 66 to 69% fewer emissions than their petrol counterparts. In China, EVs will produce 37 to 45% fewer emissions as the country's electricity grid is still entirely reliant on coal and gas.
As EVs become commonplace, the government has the opportunity to set the record straight before anything gets out of hand. Excitingly, materials within EV batteries can cause "uncertainty over the availability of relevant metals", so the government can create incentives to ensure circular models are implemented alongside the new technology rollout.
The batteries, for example, can be used as home solar storage systems or support industrial factories.
The bottom line is that EVs produce fewer emissions when on the road and offset all emissions produced from the production process in under 2 years. This number only gets smaller as Australia focuses and shifts towards renewable energy sources.
What’s the market opportunity in Australia?
While there has been some uptake for EVs in Australia, it only accounts for 2% of the new car market share (20,665 in 2021). Compared to the rest of the world, we're off to a slow start, with 6.6 million sold globally (China being the reason for over half).
Australian policies to be introduced promoting EVs:
Labor's Electric Car Discount Bill: Labour wants to make EVs affordable as their uptake is being halted due to high upfront costs;
Driving the Nation: Tackling infrastructure to ensure people can get from point A to B efficiently with charging networks and hydrogen highways to replace petrol stations.
So, are EVs a simple solution? It's complicated, particularly for us Australians; creating the infrastructure to support everyone's needs is costly and time-consuming. Imagine how many charging stations are needed across our vast land to comfortably travel from Brisbane to Perth. It will require immediate funds transfer across the production to charging stations, presenting a huge opportunity to tap into and benefit from this fast-growing sector.
What are the investment opportunities?
One way we can benefit from the EV transition is by investing in the companies on the frontlines of the change. We've compiled a list of some EV companies you can invest in individual or through the Bloom Climate Impact Fund. Don't forget that you can invest in all of these listed companies (and more) in one trade through the Bloom app.
Electric vehicle stocks
ABB is a company specialising in electrification, automation, robotics and motion products while servicing utilities, industry, transport, and infrastructure. ABB’s services include EV infrastructure, control technologies, and electrical motors.
Impact: Released world’s fastest EV Charger - 100km in 3 minutes or fully charged in 15 minutes (2021).
Honda services customers worldwide through developing, manufacturing, and distributing motorcycles, automobiles, and other power products. Honda’s power products include items from general-purpose engines and generators to outboard marine engines and water pumps.
Impact: It is investing 5 trillion yen ($39.91 billion) to support its electrification strategy, which includes expanding the production capacity of 2 million EVs annually by 2030.
Nissan manufactures and sells vehicles and automotive parts under the brands of Nissan, Infiniti, Datsun, Heritage, and Motorsports. Amongst many other things, Nissan also provides financial services, auto credit, car leasing and consultation related to analysing and assessing raw materials.
JP¥*: Japanese Yen
Impact: Joined forces with Renault Group and Mitsubishi Motors to reduce battery costs by 65% by 2028.
Tesla was founded in 2003 to prove that people could drive electric vehicles without compromising performance and design. Today Tesla manufactures electric cars, scalable clean energy generation and storage products in an attempt to remove our dependency on fossil fuels.
Impact: Tesla’s vehicles, energy storage and solar panels helped customers avoid 8.4Mt of CO₂.
Li Auto is a Chinese automotive manufacturer that designs and produces premium electric vehicles. Placing great emphasis on innovation through technology, Li Auto strives to extend its product line to develop the ideal EVs. This goal is hinged on Li Auto’s commitment to developing EVs superior to fuel vehicles.
Li Auto performance:
*CN¥: Renminbi/ Chinese Yuan
Impact: Li’s second model, the hybrid Li L9, received 30,000 orders in the first 72 hours.
Giant Manufacturing is a Taiwanese company that produces and sells bicycle and bicycle-related products to customers. With more than 12,000 retail stores worldwide, Giant has sought to foster an all-encompassing ecosystem wherein customers can meet all their cycling and biking needs. As such, Giant’s product offerings include bicycles, electric bikes and bike gear to meet the rider's needs, whether on-road, off-road, x-road or service-related.
Giant Manufacturing performance:
Impact: Its bike hire program in Taiwan, YouBike, helped cut 84M kg of CO₂ in 2021.
To view more of our investment listings, click here.
Thanks for reading; we hope you got all the EV knowledge you came for...
Don’t forget you can invest in many of the EVs we’ve listed above and more scientifically proven climate solutions through the Bloom fund. Our sign-up on Apple and Android phones takes 5 minutes, and you’ll invest in over 95 assets and 50 climate solutions. Read our PDS for further details.
Note: The Bloom Climate Impact Fund is an actively managed fund. Accordingly, the investments described in this article may not be an exact reflection of the Bloom Climate Impact Fund holdings. The information on this website is prepared by Bloom Impact Investment Services Pty Ltd (CAN 651 965 098 AR 001294778), who is an authorised representative of Cache Investment Management Pty Ltd (CAN 624 306 430 AFSL 514 360) (Cache). Bloom’s financial products are issued by Melbourne Securities Corporation Limited (ACN 160 326 545 AFSL 428 289), as disclosed in the relevant PDS. All information provided in this article is general information only and does not take into account your personal circumstances, financial situation or needs. Before making a financial decision, you should read the relevant product disclosure statement and target market determination to consider whether the product is right for you and whether you should obtain advice from a professional financial adviser.