What’s driving the EV revolution?
MACRO TAKET
he deployment of electric cars is on an exponential growth curve, driven by increased oil prices, Russia’s invasion of Ukraine, Covid-related supply chain constraints in China, inflation pressures, government incentives and, most importantly, declining battery prices and improving battery technologies.
IS THIS WAVE OF GROWTH SUSTAINABLE?
Look no further than recent precedents:
• In April, 29% of all new cars sold in China were either electric or plug-in hybrid, and in several European countries the trend is remarkably similar.
• More than 33% of all new cars in the Netherlands are now electric or plug-in hybrid, up from 2.1% of new cars in 2017. Norway is even further along, with an 88% market share.
• In the US, around 208,000 electric cars were sold in Q1 2022, equating to a roughly 6% market share. Although behind Europe and Asia, this represents 1.5x YOY growth.
THE FACTORS AT PLAY
Electric cars are reaching the proverbial tipping point and reaching virality in the US due to a number of factors, including:
• Cost: The cost advantage of owning electric compared with a petrol vehicle now applies to the majority of the 50 states.
• A return to cities: 90% of trips in the US are within 50 miles and EVs work best with city use and smaller cars.
• Aging stock: The average age of cars in the US has risen to a record 12.2 years, making vehicle replacement naturally overdue for many drivers.
• Convenience: Significant improvements in charging infrastructure mean that US EV owners can now drive from coast to coast , thanks to roughly 6,000 DC fast-charging stations.
WHY THIS MATTERS
Real estate owners have two options: one, ignore EVs and hope they will go away due to some external factors; or two, embrace them and become one of the drivers of change and a source of opportunity. Learn more about how owner/operators can leverage EVs as a new revenue source here.
Written by Peter Gajdoš, a partner at Fifth Wall and co-lead of the climate investment team.
