Excitement is Electric: How Car Stocks are Buoyed by a Petrol-less Future
Nowadays, electric cars are all the rage. They’re becoming increasingly popular with each passing day – in fact, the UK now has more electric charging stations than it does petrol stations. Growth may be slowing down, but global sales are still on the up, and that’s positive news for the market as we work towards a greener future on the roads.
The total global sales of electric vehicles rose by an impressive 160% in H1 2021 compared to the sales at the same time the previous year. And at present, there are 10 million electric cars in use all over the world. These aren’t bad numbers at all, despite the hurdles manufacturers face in keeping up the e-car momentum.
Michael Hewson, Chief Market Analyst at CMC Markets UK said: “Despite those impending concerns over Russia’s progress in Ukraine and the mounting global recession risk, the latter part of the week saw a strong finish for a number of European car makers and banks. That was evidently driven by a combination of factors ranging from fundamental excitement over progress with electric vehicles to the other extreme of bargain hunting after Italy’s bank-heavy MIB index bounced off lows not seen since November 2020.”
And by the end of last week, daily vol on CMC’s proprietary basket of European car manufacturing stocks sat at 65% on the day against 52% on the month. Whilst on Thursday the Euro bank’s basket traded at 61% on the day versus 47% on the month.
Accelerating forward
The 10 million electric cars currently on the road account for only 0.7% of the total number of cars in use. But this percentage is expected to increase to 7% by 2030.
In April, according to EV-Volumes data, 542,732 new passenger plug-in electric cars were registered. That’s 38% more than a year ago. The market-share amounted to about 10.2%, including 7% for all-electric cars.
Michael Hewson said earlier this year: “In the UK, the electric car market share is expected to increase particularly within the next few years as the government prepares to ban the production of petrol and diesel vehicles from 2030. Electric options accounted for 11.6% of all new car registrations in 2021, according to SMMT. The plug-in car grant (PICG) is a government-funded scheme that allows buyers to automatically quality for a £1,500 discount on an EV model if it sells for under £32,000 in the UK, in an effort to sway society towards cleaner options.”
At the moment, there are 345,000 electric cars on UK roads, and China has the world’s largest electric car market. In 2021, it was reported that 3.2million EVs had been sold there, a huge jump from 2019 where the figure stood at around 1.2 million.
A big draw for the consumer is that cars that run solely on electricity and don’t require oil changes, transmission and brake fluid replacement, or coolants. People like the fact that they’re easier to maintain and have much lower overheads as a result.
Many electric vehicle manufacturers are still on the road to profitability. And that might mean if investors take action now, a trade placed in the right company could provide a healthy future profit.
