Page 12 - ISQ - April 2022

INVESTMENT STRATEGY QUARTERLY

60
Passenger/Light-Duty

Electric Vehicle Sales (millions)
50
Electric vehicle sales are expected to grow significantly over the next
decade, with worldwide sales surpassing 50 million vehicles per year.
Electric vehicle sales 30
40

20

10

0
2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E 2025E 2030E
China Europe US All other

Source: Raymond James Research

and petroleum phase-outs) are already pointing consumers and standout leader in electric buses, though Europe and the US are
businesses toward low- and zero-emission alternatives. Oil moving in the same direction. Electrification of trucks is at a very
prices at fourteen-year highs are compounding the effect of early stage, but if it follows the trajectory of buses, this will imply
climate policies, as the economics of electric vehicles look more rapid transformation of truck fleets into the second half of this
attractive than they did just a few years ago. As it relates to decade. It is worth noting that sustaining rapid growth in EV sales
Europe specifically, there is also the geopolitical urgency of will require an equally aggressive buildout of charging infra-
shifting away from Russian oil. The war has dramatically raised structure, especially the DC ultra-fast chargers that can make it
the issue of energy security on the agenda across Europe. Ger- as convenient as filling up a conventional car at a fuel station,
many, whose new coalition government includes the Green i.e., a mere five to ten minutes.
Party, is taking the lead: targeting 15 million electric vehicles
(EVs) on the road by 2030, which is approximately equivalent to
what the entire world currently has. EVs in Germany had a KEY TAKEAWAYS:
market share of 26% in 2021 (among light-duty auto sales) – the • High oil prices are here to stay. We forecast that
highest of any G20 economy. By comparison, the US was at only West Texas Intermediate (WTI) crude will average
5%. If Germany reaches its 2030 EV target, it would have the $100/Bbl. in 2022, with only a modest cool-off to
effect of erasing the need to buy Russian oil ever again. $90/Bbl. in 2023.

Taking a global perspective, we forecast light-duty EV market • Russia is a major producer of oil and natural gas.
share increasing from 8% in 2021 to 25% in 2025 and 50% in Three quarters of natural gas production goes
2030. Alongside the demand boost from high fuel prices, expan- to Europe.
sion of consumer appetite for EVs is being driven by the declining • High oil prices will accelerate the transition away
cost of lithium-ion batteries, longer range of those batteries, and from fossil fuels.
a broader array of model choices across the price spectrum.
Interestingly, though, the adoption curve is progressing more • Along with higher gas prices, consumer appetite for
rapidly in buses as compared to the car market. China is the electric vehicles is being driven by high oil prices.

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