Electric Vehicle (EV) Growth Projections

As part of Fire Capital Management’s 2023 Annual Outlook, our Managing Partner outlined several secular growth trends we are excited about in 2023 and beyond.  One of these trends focuses on the necessity for more energy supply that will undoubtedly drive future innovation in both traditional and clean energy. In this write-up we provide an overview of one growing sub-trend within the Energy space – electric vehicles (EVs). In just the last decade, EVs are increasingly becoming a formidable opponent to conventional gas-powered vehicles. In 2012, global EV sales amounted to 120,000 vehicles. Springing forward to 2022, more than two million EVs were sold in the first quarter alone. In terms of market share, in 2021 EV sales made up approximately 10% of global car sales and accounted for $250 billion in purchases. Over the next several decades the growth of EVs is expected to accelerate even further, becoming a critical part of the global transportation system. By 2030, it’s estimated that EVs will make up more than 55% of new car sales, and by 2040 its likely that these vehicles will make up more than 80% of the global car market.

At present, China, Europe, and the United States (US) are the three key markets for EVs, with estimates suggesting there are roughly 16.5 million EVs on the road. More than one-third of these vehicles were from sales made in 2021, with China, Europe, and the US accounting for approximately 50%, 35%, and 10% of 2021 sales respectively. Further, in the US alone, EV sales doubled their market share year-over-year, reaching 4.5% of total domestic vehicle sales in 2021. As mentioned above, while adoption has been growing, there remains substantial runway for EVs to become even more prevalent in the next several decades.  This makes EVs an exciting investment theme with multiple avenues of investment to capitalize on the trend.

Source: IEA, Electric car registrations and sales share in China, United States, Europe and other regions, 2016-2021, IEA, Parishttps://www.iea.org/data-and-statistics/charts/electric-car-registrations-and-sales-share-in-china-united-states-europe-and-other-regions-2016-2021,IEA. Licence: CC BY 4.0 Notes: The countries/regions shown are the world’s largest EV markets and are ordered by size of the total car market (i.e., all powertrains). Regional EV registration data can be interactively explored via the Global EV Data Explorer. Other includes Australia, Brazil, Canada, Chile, India, Japan, Korea, Malaysia, Mexico, New Zealand, South Africa and Thailand. Europe in this figure includes the EU27,Norway, Iceland, Switzerland and United Kingdom. (from IEA)

Electric Vehicle Public Support and Incentives 

There are several factors contributing to the uptick in EV adoption including public policy support, technological advances, increased consumer options, and corporate ambitions. Continued global policy support is the primary driver for increased adoption. In 2021, global public spending on EV subsidies and incentives reached $30 billion – almost double that of 2020. China, Korea, and Japan made major positive changes that included extending or expanding on existing subsidy programs. Additionally, in the US, the Inflation Reduction Act (IRA) extends and expands electric vehicle tax credits for certain EVs and the state of California passed a regulation that requires all new cars sold by 2035 to be zero emission vehicles (ZEVs). By providing support and incentives, governments are helping to make EVs a more accessible and practical option for everyday use. 

Beyond subsidies and spending, as detailed in the Global EV Policy Explorer, there are a number of policies aimed at supporting the deployment of EVs and ZEVs. A major international collaboration occurred at the UN Climate Change Conference in Glasgow (COP26) where more than 100 stakeholders (including governments, automakers, and investors) signed a declaration to accelerate the transition to 100% zero emission cars and vans by 2040, and by no later than 2035 for leading markets. Separately, individual countries announced new or enhanced existing ZEV sales targets. For example, in August 2021 the US issued an executive order to target 50% EV market share for light-duty vehicles (LDV) in 2030. Likewise, governments – including the US and European Union (EU) – have increased vehicle emission standards which help bolster adoption of ZEVs.

Source: IEA (2022), Global EV Outlook 2022, IEA, Paris https://www.iea.org/reports/global-ev-outlook-2022,License: CC BY 4.0Notes: In this figure, only countries and large regions that have 100% zero-emission vehicles (ZEVs) in Light-Duty Vehicles (LDV) sales ambitions (unofficial targets) in policy/strategy documents or announcements and those with internal combustion engine bans for LDV by 2035 encoded in law are represented. China, Japan, and Israel have electrification targets for 2035, which include ZEVs as well as hybrid electric vehicles and therefore are not included in this figure. North America here only includes Canada, California, and New York. Other Europe includes Norway, Iceland, and United Kingdom. Shares of the global LDV market are based on 2021 LDV sales.

Technological Advances

Historically, EV adoption has been stunted by barriers associated with perceived efficiency, affordability, and practicality of the vehicles. Continued advancements in technology are helping to overcome these concerns. For example, one of the biggest barriers to widespread adoption has been range anxiety – the fear of running out of a charge on a long trip. However, battery technology is improving at a rapid pace, making it possible to drive longer distances on a single charge. 

Source: IEA, Number of available electric car models and driving range by type, 2015-2021, IEA, Parishttps://www.iea.org/data-and-statistics/charts/number-of-available-electric-car-models-and-driving-range-by-type-2015-2021,IEA. Licence: CC BY 4.0

Additionally, while initially, EVs have been cost prohibitive for the average consumer, cost competitiveness has increased. The cost of batteries, the key component in EVs, has fallen dramatically in recent years, making EVS increasingly affordable. In addition, the cost of electricity as a fuel source is typically lower than that of gasoline, leading to lower operating costs for EV owners. 

Investing in EV related companies can provide exposure to innovation and technological advances within the sector. As the technology continues to evolve and improve, we are looking for investment opportunities in companies that can use this innovation and technology to gain a competitive advantage and capture significant market share. 

Electric Vehicle Market Expansion 

As the EV market has expanded, the types of EVs have also evolved which has attracted customers. Recent estimates indicate there are approximately 450 different EV models available in the global market. The number of options has increased quickly, increasing more than 5x between 2015 and 2021.  Interestingly, compared to other key EV markets, the US generally has fewer EV models available to consumers. For example, China offered close to 300 different models compared to only 65 models in the US. As a result, in 2021, Tesla accounted for more than half of all the EVs sold in the US. This is expected to change, however, as incumbent automakers increase the availability of new EV models and as other new competitors enter the space. 

US Electric Vehicle Market Share by model (Electrek)

Car Companies are Going Electric

Moreover, while governments are increasingly committing to EV and ZEV targets, the automakers are also setting ambitious goals for themselves. As they race for market share, many incumbent conventional automakers are setting their sights on capturing a bigger chunk of growing EV demand. As a few examples, BMW and Ford are both targeting EV sales to make up 50% of their global sales before 2030. Meanwhile, General Motors (GM) committed to selling only zero emission cars and trucks by 2035 while Honda aims to convert its entire lineup to ZEV in major markets by 2040. 

Source: IEA (2022), Global EV Outlook 2022, IEA, Paris https://www.iea.org/reports/global-ev-outlook-2022, License: CC BY 4.0Notes: Dots represent the date of automaker announcements on sales or production targets for EVs

EV Investment Opportunities & Market Outlook

While the data clearly supports increasing creation, sales, and adoption of EVs – what is causing governments and consumers to increase their demand for these vehicles? Sustainability is the easiest answer. Assuming electricity is not coming from coal powered plants, EVs are better for the environment and climate than conventional gas-powered cars. In a scenario analysis conducted by the IEA, EV deployment in line with the pledges and announcements made to date suggest that EVs achieve net greenhouse gas emissions reductions that equate to more than the entirety of Canada’s current energy-relation CO2 emissions. The positive climate impact is the primary driver of sustained public policy support and international collaboration to speed up EV adoption. However, sustainability concerns are not limited to governments. Many consumers also identify helping the environment as a major motivation for considering the purchase of an EV. 

Source: Pew Research Center Survey Conducted May 2-8, 2022 Notes: Respondents who did not give an answer are not shown. Question based on those who say they are very or somewhat likely to consider purchasing an EV the next time they purchase a vehicle.

As seen in the exhibit above, another major consumer consideration is the ability to save money on gas, which experienced significant price volatility in 2022. Related, Russia’s invasion of Ukraine highlighted the importance of reducing oil import dependency for many nations. Studies conducted by the IEA indicate that EV deployment in line with the pledges and announcements made to date could displace 4.6 million barrels per day by 2030. Given that the US consumed an average of 20 million barrels per day in 2021, the move to EVs would significantly reduce foreign oil dependency while offering potential cost savings for consumers.

Source: IEA (2022), Global EV Data Explorer, IEA, Paris https://www.iea.org/data-and-statistics/data-tools/global-ev-data-explorer

EV Investment Opportunities Beyond Automakers 

As mentioned in the onset of this post, innovation surrounding energy scarcity and the related transition to clean energy are areas that Fire Capital Management are observing for long-term investment opportunities. When it comes to the EV industry, investment opportunities are not limited to the automakers themselves. There are a host of closely tied business lines that may also yield fruitful opportunities as the EV market expands. For instance, in the IEA’s scenario analysis, the global market value of electricity for EVs is projected to increase by more than 20x, reaching approximately 190 billion USD by 2030. However, it appears that the planned charging infrastructure is insufficient to meet this size. Charging station and electric grid infrastructure will need to be built out at the public, home, and workplace level to help meet the overall electricity demand generated by EVs. 

Source: IEA (2022), Global EV Outlook 2022, IEA, Paris https://www.iea.org/reports/global-ev-outlook-2022, License: CC BY 4.0 Notes: EV charging stations in the contiguous United States,2022

Additionally, EVs require batteries, and increasing demand for these vehicles has implications for battery supply chains and the underlying raw materials (e.g., cobalt, lithium, and nickel) required to create the batteries. To date, there has been a lack of capital expenditure investment in new supply capacity that presents itself as a sticking point to matching the rapid run-up in battery demand generated by increasing EV sales. These issues have been magnified by the Russia-Ukraine conflict which has created further price pressures on critical raw materials (e.g., Russia supplies 20% of global high-purity nickel) needed for batteries. 

Source: IEA (2022), Global Supply Chains of EV Batteries, IEA, Paris https://www.iea.org/reports/global-supply-chains-of-ev-batteries, License: CCBY 4.0

Currently, most of the mining of raw materials occurs in a few select countries (e.g., Australia, Chile, and the Democratic Republic of Congo) and is handled by just a handful of companies. It is clear that additional capital expenditure investments are needed particularly in mining - which requires a long lead time - to help meet the level of materials needed to keep up with EV demand and related infrastructure. Consumer preferences for SUVs and other larger vehicles only enhances this need as these types of vehicles require larger batteries and therefore more raw materials. As a result, investment into battery production may also yield good opportunities for those seeking to capitalize on the EV trend.  

Source: IEA (2022), Global Supply Chains of EV Batteries, IEA, Paris https://www.iea.org/reports/global-supply-chains-of-ev-batteries, License: CC BY 4.0

Moreover, battery supply chains are very concentrated and present opportunities for countries looking to onshore critical processes and reduce global dependency. At present battery supply chains are concentrated in China with both Korea and Japan having considerable shares of the supply chain after raw material processing. In contrast, the US and Europe have very small roles. While the IEA expects the majority (~70%) of the battery supply chain to remain in China at least through 2030, the US and European governments have both implemented public sector initiatives to develop domestic battery supply chains. With so much attention on supply chain diversification and geopolitics, it wouldn’t surprise us if more government subsidies were announced to reduce reliance on China.

Source: IEA (2022), Global Supply Chains of EV Batteries, IEA, Paris https://www.iea.org/reports/global-supply-chains-of-ev-batteries, License: CCBY 4.0


Overall, adoption of EVs is growing but remains in its infancy. Considering the overwhelming commitment by both automakers and governments to make the majority of vehicle sales EV in the next five to ten years, there remains a large amount of runway and tailwinds for the industry. Moreover, the investment opportunities related to EVs extend far beyond automakers. Significant investment needs to be made in charging infrastructure as well as establishing domestic supply chains to support battery creation needed to meet EV demand. It appears that the future is poised to include EVs as the predominant mode of transportation the world over.  As long-term investors, we believe this presents a unique opportunity to tap into a rapidly growing market with vast potential for sustained growth in the coming decades.













The information in this report was prepared by Fire Capital Management. Any views, ideas or forecasts expressed in this report are solely the opinion of Fire Capital Management, unless specifically stated otherwise. The information, data, and statements of fact as of the date of this report are for general purposes only and are believed to be accurate from reliable sources, but no representation or guarantee is made as to their completeness or accuracy. Market conditions can change very quickly. Fire Capital Management reserves the right to alter opinions and/or forecasts as of the date of this report without notice.

All investments involve risk and possible loss of principal. There is no assurance that any intended results and/or hypothetical projections will be achieved or that any forecasts expressed will be realized. The information in this report does guarantee future performance of any security, product, or market. Fire Capital Management does not accept any liability for any loss arising from the use of information or opinions stated in this report.

The information in this report may not to be suitable or useful to all investors. Every individual has unique circumstances, risk tolerance, financial goals, investment objectives, and investment constraints. This report and its contents should not be used as the sole basis for any investment decision. Fire Capital Management is a boutique investment management company and operates as a Registered Investment Advisor (RIA). Additional information about the firm and its processes can be found in the company ADV or on the company website (firecapitalmanagement.com).

CFA® and Chartered Financial Analyst® are trademarks owned by CFA institute.

Kelsey Syvrud, PhD

Read Full Bio