Sales of electric vehicles (EVs) are still tiny in the United States. And while they’re growing in China, Europe is where they really took off in 2020. In this appearance on Motley Fool Live, recorded on Jan. 12, Industry Focus host Nick Sciple and Fool.com senior auto specialist John Rosevear looked at why EVs are doing so well in Europe — and why sales could soon take off elsewhere as well.
Nick Sciple: John, to follow up, what’s been driving this market? When you look at the US or even some of these Asian markets, electric vehicle growth has been relatively tepid in 2020, but you saw a massive growth in Europe in 2020. What’s really been driving that, bringing all these big European automakers to market?
John Rosevear: It’s a combination of regulatory carrot-and-stick, and that the EVs are now getting good enough and affordable enough that they make their own case. To circle back to Ford (NYSE:F) again, this is something they’ve been talking about for a while, saying: “We don’t want to come out with little cheap EVs to check a regulatory box. We want to make products that people really desire.”
This is is the lesson of Tesla (NASDAQ:TSLA) for the auto industry, that we can sell electric cars if they’re great. We’ve been talking about this process for a few years now for investors and saying, “Yes, they’re coming,” and, “Yes, they’re coming,” with respect to the big automakers getting into EVs as they build out the supply chain and build the infrastructure, and so forth, and now it’s starting to happen.
Sciple: You mentioned The Empire Strikes Back, there was that scene where the emperor is, I don’t know if it’s Empire Strikes Back, but he’s like, “You’re now witnessing the firepower of a fully armed battle station,” or whatever. They’ve ticked around slowly so now they’ve turned around. We’ll see how they compete. It’s this question of whether they’re just going to maintain share or whether Tesla blows them up and continues the kind of rebel force taking over the auto market. That’s a trend we’ll continue to watch. One thing I mentioned is Cybertruck, I think production is expected to begin in 2021. But maybe we’ll talk a little bit later about the pickup truck market and how significant that is for autos. But any last thoughts on just electric vehicles? We’ll throw up a bunch of questions, but before we move on to this next trend.
Rosevear: It’s also China, which is the world’s largest new vehicle market, and where the government has room to be quite aggressive in its carrot-and-stick approach to adoption — not least because some Chinese cities have had terrible smog problems and they would like to end that. Tesla is in China, Volkswagen (OTC:VWAGY) is in China, General Motors (NYSE:GM) is in China, but that’s where also we’re talking about NIO (NYSE:NIO), and XPeng (NYSE:XPEV), and Li Auto (NASDAQ:LI). NIO has really gained some traction, not just in the stock market, but in sales over the last year as well. A year ago we were wondering if they were going to go bankrupt and now they’ve got several billion dollars in the bank, new model just launched, they just showed a sedan last weekend that’s coming soon. A lot going on there.
This is a global story, a developed world story, but will be developing world as well. Watch India as well, where EVs and hybrids are getting traction there at the low end of the market.