More than 17 million cars are sold every year in the US. Gobally, that number rises to around 75 million cars sold. We currently sell more internal combustion engine (I.C.E) vehicles that run on gas than at any other point in history. Which brings about one very important question…
If I.C.E vehicles are so popular, why are auto-manufacturers switching to electric vehicle production?
Currently, electric vehicles (EV) make up around 2% of the total market for cars in the US. However, that number continues to grow exponentially each year. In fact, the EV market is expected to reach an estimated global size of $567 billion by 2025 — a compounded annual growth rate (CAGR) of around 22 percent.
Tesla is a big part of that momentum, but they’re not the only mainstream carmaker focusing on EVs. You might be surprised to learn that just about every major automaker has made a huge commitment to EV production. That’s because no single automaker can produce enough EVs to meet growing consumer demand.
Here’s just a sample of what to expect — and from who — in the coming EV revolution.
Mercedes is a household name in the luxury vehicle market. Powerful engines paired with sleek designs really elevated Mercedes to the top of the “automobile food chain” for decades. But now, Mercedes and parent company Daimler are changing things up and getting rid of their signature engines. Daimler is switching to development of electrical engines only starting in 2026.
The newest family of internal combustion engines created by Daimler is the last gas-powered engines they’ll develop. However, even though they’ll only be developing EV engines in 2026 and beyond, these internal combustion engines will still be modified, refined, and available for several years.
There just won’t be any more all-new engines.
While this may be a surprising announcement, Daimler was not the first to commit to EVs. They were preceded by the next name on our list…
Volkswagen appears to be genuinely excited about their transition to fully electric vehicles.
The German automaker expects to produce 50 fully different electric models by 2025. To help facilitate this huge feat, VW is investing $40 billion into EV technology, including batteries and computers, within the next two years.
VW expects to sell between 2–3 million EVs annually by 2025, with sales from those vehicles accounting for 20–25% of company sales. If the company can hit its goals, Volkswagen looks to be the most likely contender to Tesla in the EV market. However, by that point, it’s likely that Tesla can increase production to meet demand and sell more than 3 million cars a year by 2025.
Ford is another major automaker leaning into the EV space.
Ford plans to invest $11 billion into EV production by 2022 — up from an original commitment of $4.5 billion. The American automaker also announced plans to offer 40 different “electrified” models by 2022 — though only about half will be fully electric, with the rest being plug-in hybrids.
CEO Jim Hackett announced that the automaker would slash $14 billion in costs over the next five years and shift capital investment away from sedans and internal combustion engines to develop more trucks and electric and hybrid cars, with a third of its vehicles being fully electric by 2030.
BMW is another big name in a long list of big names transitioning to electric. After seeing the success Tesla has maintained with its luxury offerings, BMW is leaning in, with plans to commit at least $6.5 billion to develop EVs, including $4.5 billion on EV battery technology, according to Reuters.
BMW’s investment comes from the company’s ambitious goal to produce 25 electrified models by 2023 — a goal originally set for 2025.
The new models will range from plug-in hybrid to fully electric, and could match Tesla when it comes to range and style.
Never one to fall behind in a race, Audi is accelerating its EV production plans with an updated investment schedule.
Audi announced an upfront investment of about $40 billion towards EV production over the next 4 years. That includes $13 billion in fully electric vehicles.
By 2025, Audi says that it will have “more than 30 electrified models in its product range” and “20 of which will be fully electric.”
To finance the accelerated schedule, Audi plans to cut 9,500 jobs from its German factories until 2025. At that point, the new electric vehicle production will add 2,000 jobs.
The German automaker is currently producing its e-tron electric SUV in Brussels and it plans to soon add production of the new e-tron Sportback, while another major Audi factory is currently being prepared for the production of premium electric vehicles.
By 2021, Audi will have 3 all-electric vehicles on the market. After that, the German automaker is expected to enter the premium electric compact SUV market with the Q4 e-tron SUV.
Toyota plans on offering more than 10 all-electric models around the world by the early 2020s, as well as investing $13 billion into the development of battery technology through 2030,
At the moment, Toyota doesn’t sell any fully electric cars. The Prius Prime is its closest offering, but is still only a plug-in hybrid. However, a fully electric compact SUV based on its C-HR or IZOA is hitting the streets in 2020.
It seems unlikely that Toyota can hit its ambitious goals, but the fact that they are investing heavily into battery technology and EV production overall bodes extremely well for the industry as a whole.
General Motors currently offers the Chevy Bolt EV and Chevy Volt plug-in hybrid EV, but plans on transitioning to more EV options.
The company’s existing offerings put it on track to become the second company to sell 200,000 electric vehicles in the US. That number is important, because it triggers the phaseout of the US federal tax credit for EVs.
And while that’s great for GM and the US, the company’s future plans seem to revolve around China, with production of 10 electric vehicle models by 2020 and another 10 between 2021-2023 all in China. It’s likely that at least some of these models will be available in the US and Europe, but there are no definitive announcements.
On a positive note, however, all 20 models will be fully electric rather than just electrified, which requires a massive investment, showing the world that GM is all in on EVs.
The list continues…
The names above are 7 of the most well known automakers in the world, but they’re far from the only ones investing in EV production.
The list goes on and on, and includes names like Hyundai, Kia, Nissan, Honda, Fiat Chrysler, Renault, and Groupe PSA — which includes numerous international brands like Peugeot, Citroën, DS, Opel, and Vauxhall.
With so many automakers investing so heavily into EV production, consumers will soon have just as many EV options as they have I.C.E. options today, regardless of if they’re looking for power, suspension, style, or durability.
This all points to EVs being one of the most undervalued opportunities available to investors today.