Saxo Group
Electric vehicles (EVs) are a core focus for carmakers, governments, and investors. Global brands are shifting production away from petrol and diesel, while startups are building the next generation of battery tech and charging systems. The transition is picking up speed, and capital is flowing into every part of the EV supply chain.
Specifically for investors, this shift to electric vehicles marks a revaluation of the global auto industry, energy systems, and raw materials. From lithium mining and battery manufacturing to intelligent vehicles and charging infrastructure, EVs are shaping long-term trends across multiple sectors and drawing interest from institutional funds, venture capital, and retail investors alike.
The transition to electric vehicles is no longer theoretical. It's now built into government policy, automaker strategies, and investor expectations. Countries across Europe, China, and North America have set targets to reduce or phase out new internal combustion engine (ICE) vehicle sales, mostly between 2030 and 2035. While not all are legally binding yet, they are reinforced by regulatory incentives, infrastructure funding, and emissions standards.
Cost dynamics are also shifting. Battery costs have declined sharply over the past decade, making EVs more cost-competitive in many segments. Though prices rose temporarily due to supply chain constraints, the long-term trend remains downward. Combined with improving range, faster charging, and more consumer choice, EVs are becoming a practical alternative, especially in countries where fuel prices are high or emissions rules limit combustion vehicles.
But it's not just a consumer story. For governments, EVs are essential to decarbonisation targets and energy independence. For manufacturers, it's a fundamental change in how vehicles are designed and built. And for investors, it marks the restructuring of a multi-trillion-dollar industry, with implications for batteries, semiconductors, utilities, and critical minerals.
However, challenges persist: many regions still lack adequate charging networks, and upgrading electrical grids is necessary to accommodate increased loads. But the direction is clear. The auto industry is moving to electric, faster in some markets than others, but globally and irreversibly.
Global electric vehicle sales have grown at a pace that consistently exceeds forecasts. In 2024, global sales of fully electric and plug-in hybrid vehicles surpassed 17 million units, reflecting a 25% increase from the previous year. This growth was driven by a 36.5% surge in China's EV sales, totaling 11 million vehicles. According to the International Energy Agency (IEA), global EV sales are projected to reach 45 million by 2030, representing about 35% of total car sales.
Beyond passenger cars, electrification is rapidly advancing across all vehicle segments. In emerging markets, electric two- and three-wheelers continue to gain momentum, with global electric sales expected to exceed 90% by 2040. Decarbonisation in commercial transportation (particularly vans, trucks, and buses) is also accelerating. This widespread EV adoption presents a massive economic opportunity since the cumulative value of EV sales across all segments could reach USD 9 trillion by 2030 and soar to USD 63 trillion by 2050.
This scale is reshaping the competitive landscape. Incumbent automakers are racing to expand their electric offerings, while startups in both hardware and software are targeting specific niches within the EV supply chain.
Electric vehicle investment opportunities now extend beyond car manufacturers. While major manufacturers remain central to the market, the broader ecosystem, from batteries to charging networks, is attracting increasing investor interest. Battery producers play a critical role in the sector, and investors have been turning their attention to companies from around the world that supply Western and Asian automakers with the required parts. Additionally, as vehicle production relies heavily on access to materials like lithium, nickel, and cobalt, interest in mining firms have grown.
Charging infrastructure is also expanding quickly, to meet rising demand. These include companies that build public and commercial networks, as well as semiconductor firms that provide essential components for power conversion, battery control, and drivetrain systems.
Software and energy management platforms are emerging as another growth area. Companies developing tools for fleet optimisation, battery analytics, and vehicle-to-grid integration are gaining traction, particularly in commercial transportation and logistics.
The EV sector is expected to keep growing, but not all parts will benefit equally. Business models, margins, and access to raw materials will determine which firms can scale profitably. For most investors, diversification across different parts of the value chain remains the most practical way to reduce risk in this fast-moving industry.
Some common investment opportunities across the EV ecosystem include:
Electric vehicles are changing how the auto industry designs, builds and sells cars. Traditional manufacturers are gradually shifting away from internal combustion engines toward electric and hybrid platforms. This shift demands new supply chains, retraining of workers, and substantial investment in retooling factories.
The pace of change varies by region and company, but the direction is clear. Firms like Volkswagen, Ford, and General Motors have committed billions of dollars to expand their electric vehicle offerings. At the same time, companies like Tesla (built around a fully electric model) and fast-growing Chinese manufacturers like BYD are gaining market share with newer manufacturing systems, software integration, and direct-to-consumer sales models.
This shift is not just about drivetrains. As more vehicles become connected and digitally controlled, software is playing a larger role. Features such as battery performance monitoring, remote diagnostics, and in-vehicle updates are moving the focus away from mechanical complexity toward digital platforms. That's changing what gives companies a competitive edge.
The rise of electric vehicles reflects a broader industrial reset. Legacy automakers are adjusting long-standing strategies while new players are reshaping what the modern vehicle can do. The companies that adapt fastest will likely define the next generation of market leadership.
The electric vehicle sector continues to grow, but investing in it comes with significant risks. Here are the main ones:
The production of electric vehicles depends heavily on a limited number of critical minerals, such as lithium, cobalt, and nickel. These resources are largely sourced from a handful of countries, making the supply chain vulnerable to geopolitical risks and fluctuations in global trade. Although mineral prices can vary over time, challenges such as financing constraints and project delays continue to affect the sector. These issues impact not only mining operations but also car manufacturers, who rely on consistent and predictable material costs to support long-term planning.
Investor optimism has driven up valuations across the EV ecosystem, sometimes ahead of actual earnings or delivery numbers. Several high-profile companies have struggled to meet expectations, leading to sharp market corrections. With tighter monetary policy and higher financing costs, companies that depend on future growth without near-term profits are especially vulnerable.
As more firms enter the EV space, price competition is intensifying, especially in the entry-level and mid-range segments. Manufacturers are cutting prices to retain market share, compressing margins across the board. This dynamic is most acute in regions where subsidies are being phased out or demand is softening.
Startups in EV batteries, software, and charging infrastructure remain high-risk. Commercialisation has been slower than expected in many cases, and funding has declined in recent years. Business models are still evolving, and profitability timelines remain uncertain, leading to layoffs, pivots, and, in some cases, exits from the market.
Government support, through tax credits, fuel economy standards, and emissions targets, has played a major role in EV adoption. Any reversal, delay, or inconsistency in these policies can directly affect consumer demand, production economics, and long-term planning for manufacturers and suppliers.
Charging infrastructure rollout remains uneven. In some markets, public charging is still insufficient to support mass adoption, particularly outside urban areas. Infrastructure lags may slow EV adoption and limit growth for companies banking on rapid uptake.
The EV sector is evolving quickly. Battery chemistry, charging standards, and software platforms are in constant flux. Companies betting on the wrong technologies may fall behind. Meanwhile, concerns around battery degradation, rapid model cycles, and falling new car prices are putting pressure on used EV values, affecting leasing economics and resale markets.
Policy support has played a central role in accelerating electric vehicle adoption. Governments have offered financial incentives, regulatory targets, and infrastructure funding to encourage the shift away from internal combustion engines.
In the United States, the Inflation Reduction Act introduced tax credits of up to USD 7,500 for eligible electric vehicles, alongside significant subsidies for domestic battery production, critical mineral sourcing, and clean energy projects. However, tightened rules on sourcing and assembly have reduced the number of models that qualify.
Across Europe, fleet-wide CO₂ targets are supported through a mix of government subsidies and infrastructure investment. In some markets, including Germany and the United Kingdom, a reduction in purchase incentives has contributed to slower growth in electric vehicle sales.
China has established itself as one of the most supportive markets for electric vehicles from a policy standpoint. In addition to earlier purchase subsidies, ongoing measures include regulatory credits, state-backed financing, government procurement mandates, and extensive investment in local supply chains and domestic brands. The policy focus has shifted from stimulating consumer demand to consolidating national leadership in electric vehicle manufacturing.
Incentives, however, are not guaranteed. As markets mature and budgets tighten, some governments are reducing or redefining their support. The investment outlook will depend on how clearly and consistently policies are implemented. Companies exposed to multiple jurisdictions need to stay alert to changing rules and adjust their compliance and go-to-market strategies accordingly.
Electric vehicles are often presented as a climate solution, but their environmental footprint depends on several factors: how electricity is generated, how batteries are made, and how the power grid adapts to rising demand.
Battery-electric vehicles produce no tailpipe emissions — meaning they don't release exhaust gases while driving, which helps reduce air pollution and greenhouse gases, especially in cities or countries with clean air targets. The climate benefit grows when EVs are charged using low-carbon energy sources like wind, solar, hydro, or nuclear rather than fossil fuel-based grids.
However, battery production is energy-intensive and requires raw materials such as lithium, nickel, and cobalt. This makes EVs' manufacturing footprint higher than that of conventional vehicles upfront. Over time, this gap narrows. Most lifecycle assessments show that EVs emit significantly less CO₂ than internal combustion vehicles over their full lifetime, particularly in regions with cleaner electricity mixes.
Grid impact is also part of the equation. Today's EV adoption levels are manageable, but large-scale uptake could strain local grids if charging isn't well planned. To manage this, utilities and policymakers are investing in smart charging, time-of-use pricing, and emerging vehicle-to-grid technologies. In countries with strong renewable energy supply, EVs could eventually help balance load by absorbing excess generation during off-peak hours.
As adoption grows, the environmental question will change from "Are EVs better?" to "How clean is the energy system they rely on?" The answer will depend on grid decarbonisation, battery innovation, and how charging is integrated into broader energy planning.
The electric vehicle transition has moved from speculative to strategic. EVs are reshaping demand for raw materials, disrupting legacy manufacturing, accelerating innovation in semiconductors and software, and driving infrastructure spending across power grids and charging networks.
Still, not every company tied to EVs will succeed. Profitability pressures, volatile input costs, and changing government incentives will create clear winners and losers. If you want to increase your EV exposure, it's advisable to consider the entire EV value chain—batteries, materials, software, and infrastructure—and approach the space with diversification, selectivity, and a long-term perspective.
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