By 2030, EV adoption in the US could range from 20% to 55% and government regulation may be the most significant change agent in this development, according to BofA Securities.
The EV industry represents 4%-7% of the GDP in most countries and contributes to employment, directly and indirectly, and "functions as a key enabler of societal development," analyst John Murphy said in the note. If these “nationalistic interests” dominate, EVs will attract government oversight and interjection, he added.
For the automotive industry to move towards 100% electrification could take an estimated $2.5 trillion or more of investment over the next decade or so, “which is unlikely to be funded by the private sector alone,” Murphy wrote.
U.S. Government Action For EVs
While the U.S. offers a $7,500 federal tax incentive for buying EVs, the purchase needs to be from automakers with less than 200,000 units in cumulative sales, the analyst mentioned. The Biden administration now aims to remove this unit cap for all automakers, he added.
EU Government Action For EVs
“The European Union has proposed an effective ban on the sale of new petrol/diesel (ICE) vehicles from 2035,” Murphy said. “Another form of government intervention is targeted CO2 reduction by 2025 and 2030, which suggests de facto EV penetration of >50% by 2030 to meet the target,” he further stated.
China Government Action For EVs
“China currently penalizes automakers that fail to meet volume targets for EV manufactured/sold… The government also provides subsidies to manufacturers of EVs, encourages construction of new EV facilities, and promotes the build out of an EV charging infrastructure,” the BofA analyst wrote.
EV Price Action
Shares of Tesla Inc (NASDAQ:TSLA), General Motors Company’s (NYSE:GM) and Ford Motor Company (NYSE:F) declined in premarket trading on Monday. All three stocks have lost more than 40% year to date.
