The central theses
- Electric vehicles are gaining popularity and market share. In the second quarter of 2022, electric vehicle sales accounted for 5.6% of the total auto market (up from 2.7% in the second quarter of 2021).
- Clean energy and improved performance are driving people to switch to electric.
- Government incentives continue to prop up the future of all things electrical.
As gasoline prices soared this summer, it only helped underscore the potential of electric vehicles, which are still the primary consumer bulkhead for America’s new electric economy. Although gasoline prices are trending downward again, more and more consumers, businesses and communities are looking to electric power as the future of transportation.
To understand why electric vehicles (EVs) are growing in popularity, let’s take a deeper look at the sector.
Electric vehicles: on the rise
As a consumer, it’s easy to believe that electric vehicles are a relatively new thing. After all, they’ve only gained popularity in the last decade.
You may be shocked to learn that the first electric car hit the open road in the United States in 1890. Although William Morrison’s electric vehicle only had a top speed of 14 miles per hour, this electric drive has fueled America’s interest in electric vehicles.
For a while, electric cars and gas-powered cars competed heavily for market share. But when Henry Ford launched the Model T in 1908, the tide turned in favor of gas-powered cars, and with that scale came even greater affordability.
Our modern interest in electric vehicles dates back to the release of the Toyota Prius in 1997. As the first mass-produced hybrid electric vehicle, the automotive market began to get excited about modern electric vehicles.
As automakers create lower-cost options to get from point A to point B with electric vehicles, more consumers are switching. As of the second quarter of 2022, EV sales accounted for 5.6% of the total auto market. That’s up from 2.7% in the second quarter of 2021.
Pros and cons of electric vehicles
Since the Prius was released, electric vehicles have improved significantly to compete with the gasoline-powered vehicles that are the current industry standard. Over time, electric vehicles have become more cost-effective to operate. Also, improvements in technology have helped EVs achieve longer ranges on a single charge.
However, there are still some clear pros and cons when it comes to electric vehicles. Here’s a closer look at both sides of the coin.
Advantages of electric vehicles
Let’s start with the benefits.
Energy efficiency (and costs)
According to the US Department of Energy, electric vehicles are more energy efficient because they convert over 77% of the electrical energy at the wheel into electricity.
That’s a big difference from gasoline-powered vehicles, which convert 12% to 30% of the energy stored in gasoline into kinetic energy.
A key benefit of electric vehicles is the ability to limit environmental impact while driving.
If the electricity used by your vehicle comes from a nuclear, hydro, solar or wind source, no pollutants are emitted during your journey. But even when charging from fossil power sources, pollutants are still produced by the drive.
According to the U.S. Department of Energy, electric motors provide a smoother ride with faster acceleration—put simply, we buy for horsepower, but we drive for torque. EVs are all torque and they’re fast off the assembly line. Additionally, EV owners enjoy more limited maintenance requirements than gas-powered vehicle owners.
Challenges for electric vehicles
Of course, there are also some challenges that current EV owners have to deal with:
Compared to gas-powered vehicles, electric vehicles tend to have a shorter range. For example, most electric vehicles can travel at least 100 miles on a single charge. While some can go in excess of 200 or 300 miles per charge, that’s usually a bit more limited than a gas-powered option.
The limited range of electric vehicles can have a significant impact on consumer vehicle choices. Many customers cite limited range as a reason for passing on EV purchases. According to the 2022 Global Automotive Consumer Study conducted by Deloitte, 20% of US consumers are not considering an electric vehicle due to range concerns. With US consumers expecting at least 500 miles of range from EVs, this limitation could be a problem for years to come.
Although the charging infrastructure is growing, it is not yet fully scaled. Many potential EV buyers will wait to make this purchase until they are familiar with the availability of public charging stations.
According to the Global Automotive Consumer Study 2022 conducted by Deloitte, 14% of US consumers are not considering an electric vehicle because of concerns about the lack of available charging infrastructure.
Even if the charging infrastructure were sufficient for the growing demand, charging your electric vehicle takes significantly longer than filling up your gas tank.
Depending on the vehicle, it can take between 3 and 12 hours to fully charge the battery. Even the faster 80% charge option often takes at least 30 minutes. Therefore, EV drivers need to factor this extra time into their travel time calculations.
The changing landscape for electric vehicle production
As the technology for powering electric vehicles improves, other factors come into play in the industry. Although 13% of US consumers said they would not consider buying an electric vehicle because of the cost, recent tax law changes could help remove that burden.
When the Inflation Mitigation Act of 2022 was passed in August 2022, it included provisions for tax credits for qualifying electric vehicle purchases. Those who purchase an electric vehicle that meets the requirements will receive a $7,500 tax credit. The US Department of Energy has compiled a list of eligible electric vehicles.
The tax credit is part of a stimulus plan to meet the Biden administration’s ambitious goal of reaching a target of 50% of EV sales in the United States by 2030. As governments continue to incentivize electric vehicles, it’s possible consumers will adopt this newer technology.
Clean tech companies to watch
As electric vehicles become more popular, other areas of the clean tech industry are also growing. Here’s a look at some clean tech companies to check out:
- Tesla: No discussion of electric vehicles would be complete without Tesla constantly advancing the technology and capability of this market.
- Wolfspeed Inc.: Wolfspeed is a producer of semiconductors that many vehicles rely on.
- Charging point: This is the largest independent manufacturer of charging stations, operating in 14 countries.
- Soluna Computing: Soluna Computing is working on a way to efficiently sell every megawatt produced by solar or wind farms.
Of course, there are countless companies in this field. But as consumers and governments prioritize clean energy, the industry will become more important.
How to expose your investment portfolio to the EV economy
The main attraction of an electric vehicle is the potential for a greener lifestyle. With fewer trips to the gas station, less maintenance and the possibility of zero-emission driving, it’s easy to see why many are switching to electric vehicles.
You may not be ready to buy a new car just yet, but it’s still possible to easily invest in a greener future with the help of Q.ai’s Clean Tech Kit, which simplifies investing in EV economics (including being environmentally conscious). sectors). You invest in an industry you believe in without having to constantly monitor this rapidly evolving market and sentiment that all too often drives stock prices.
Download Q.ai today for access to AI-supported investment strategies. If you deposit $100, we’ll add another $100 to your account.