April 24, 2023
The Biden Administration recently announced details of the Infrastructure Law that highlighted extensive investment in the future of electric vehicles and the infrastructure to support them. These expansive changes invite the retail shareholder to consider their investment options in green vehicles, battery production and charging stations. What has been a trend is now a mandate, and the implications for the individual investor are significant.
The law allocates $75 billion to electric vehicle charging, over $7 billion in EV battery components/essential minerals and materials, and $10 billion allocated to clean transportation. (Clean transportation is a term that refers to the investment in the development and creation of a system that supports vehicles that use clean energy–including electric/hydrogen and the supporting infrastructure). There are implications for positive growth in manufacturing with the immediate requirement that EV chargers must be built in the US. And by July 2024, at least 55 percent of the cost of all components will need to be manufactured domestically as well.
The Department of Transportation, in partnership with the Department of Energy, finalized new standards that would provide universal, reliable and convenient access to charging stations, even on long distance drives. A national network of 500,000 chargers along US highways and communities is the targeted goal. An additional ambitious goal sets the stage for increasing EV sales to make up at least 50% of new car sales by 2030. Companies like Tesla (Tii:TSLA), General Motors (Tii:GM), EVgo (Tii:EVGO), Hertz (Tii:HTZ) and BP (Tii:BP), and others across multiple industries, are committing to expand their networks by thousands of public charging ports in the next two years. Companies like Ford (Tii:F), Mercedes-Benz Group (Tii:MGBYY) and Volkswagen (Tii:VWAGY) and other carmakers are moving swiftly to shift to electric vehicle sales.
GM has estimated it can manufacture 1 million electric vehicles a year by 2025, while Ford expects to be able to produce 2 million per year by 2026. Volkswagen’s goal to capture 80% of EV sales in Europe and 55% of sales in the U.S. by 2030 is ambitious as well. Mercedes-Benz plans to invest €40 billion in electric vehicles in the next 10 years, with a comprehensive goal to have all new vehicles be electric by 2025.
Investment opportunities do not exclusively lie in car companies. An investor might consider funding the companies that supply the batteries, arguably the most important and costly components of electric vehicles. If electric vehicle manufacturing notably increases over the next decade, the demand for EV batteries will similarly expand. Battery producers are heavily funding development to meet the rising EV battery demand. At the same time, battery technology start-ups – some of which are going public through specialized mergers – are creating new types of energy storage systems that could transform the industry.
Some of the major players in battery production are already doing very well. BYD (Tii:BYDDF), a Chinese manufacturer, was the leading global maker of battery electric vehicles and plug-in hybrids in 2022. Albemarle (Tii:ALB), another major player in battery production, is one of the world’s largest producers of lithium -- a key ingredient in most EV batteries. Additionally, Panasonic (Tii:PCRFY), once the exclusive battery supplier to Tesla, remains an influential and significant producer continues to work with car manufacturers.
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