International viewpoints: navigating trends in electric vehicles’ global adoption

July 2024 / 2 minutes

The International Team asks how investors can capitalise on the opportunities presented by the EV revolution.

Over the coming years, we anticipate profound change in the electric vehicle (EV) landscape, propelled by technological advancements, evolving consumer preferences, regulatory demands, and increasing awareness of environmental impacts.

How will this play out? We can look to the past for insight.

Red electric powered US car drives on city highway tunnel while night - streaking lights and road signs.

Capital at risk. 


In the 1980s and 1990s, Japan’s auto industry shifted gears, accelerating past the US. Led by giants like Toyota, Japan's car industry reached unparalleled manufacturing efficiencies.

Ground-breaking technological and managerial innovations upended traditional mass production methods, and their productivity and product completion rates far exceeded those of many American factories.

Currently, we are witnessing a similar transformation, with China set to reshape the global car industry through its leadership in EV technology and manufacturing. Ultimately, EVs’ adoption and success will be influenced by several trends that Baillie Gifford continues to monitor:


01. EVs’ affordability differs dramatically by region

The EV market continues to experience robust growth, but adoption rates vary significantly by region. The first quarter of 2024 witnessed a 25 per cent surge in global EV sales from the previous year. EV sales could hit 17 million units this year, representing more than 20 per cent of worldwide car sales. However, adoption rates vary significantly by region. In the US, approximately one in ten cars sold is an EV. In Europe, the figure is one in four, and in China, EVs are nearing half of all new car sales. Much of this difference is a result of affordability.

According to the International Energy Agency, over 60 per cent of EVs sold in China last year were cheaper than the average combustion engine car. Entry-level EVs in China are now below $10,000. Yet, in the US and Europe, EVs are still 10 per cent to 50 per cent more expensive than their combustion engine counterparts.


02. Emerging and developing markets underpin EV uptake

To safeguard their domestic auto industries, Western governments have begun raising tariffs on Chinese EVs to counteract state subsidies provided to Chinese manufacturers. The EU has imposed provisional tariffs of up to nearly 40 per cent on EVs shipped from China. Meanwhile, the US has raised tariffs on Chinese EVs to over 100 per cent, effectively blocking nearly all Chinese EV imports. Despite these early measures, we believe that Western markets, especially Europe, will continue to be accessible to Chinese manufacturers. We think this is particularly true for vertically-integrated manufacturers with superior margin structures such as BYD.

But it’s the rate at which EV sales increase in emerging and developing markets that will determine their worldwide success. In emerging economies with large car markets, EV penetration is still relatively low. In India (where EVs have a 2 per cent market share), Brazil (3 per cent share), Indonesia, and Malaysia (2 per cent share each), cheaper models, mainly from Chinese manufacturers, are underpinning uptake.


03. Charging infrastructure is improving but remains a challenge

Technological advancements, particularly in battery technology, are central to the EV revolution. The industry is witnessing dramatic improvements in battery capacity with new models boasting ranges of over 600 miles. NIO’s ET7 recently completed a journey of nearly 650 miles on a single charge.
The development of charging infrastructure remains a critical challenge for the widespread adoption of EVs, though. While there is a clear push towards electrification, the readiness of infrastructure and the alignment of government regulations vary significantly across geographies.

Baillie Gifford is well-equipped to understand the EV revolution

By leveraging our deep understanding of the industry's technological advancements, consumer trends, and regulatory landscapes, we can identify companies at the forefront of EV innovation. This insight not only enables us to identify businesses poised for growth but also helps us steer clear of companies likely to underperform in the shifting automotive landscape.

Our research methodology, grounded in thorough analysis and forward-looking perspectives, ensures that we are well-equipped to capitalise on the opportunities presented by the EV revolution.

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The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.

This communication was produced and approved in July 2024 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

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