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In a densely populated area like San Francisco, you can’t go very far without seeing an electric vehicle or a charging station to accompany it. This is slowly becoming more and more of an everyday reality across America, with the increasingly widespread adoption of electric vehicles. Companies like Tesla are becoming extremely hot commodities on the stock market, from this burgeoning trend.
The electric vehicle market has become a booming industry recently and it stands to change the automotive world as we know it. With over 5.6 million electric vehicles on the road, (an increase of 64% from last year’s figures), electric vehicle adoption is reaching new highs with every passing quarter.
Economically, the electric vehicle market’s growth may have drastic impacts on the current automotive landscape. As such, many wonder what specific impacts electric vehicle adoption will have on the automotive economy and related markets. Let’s look at some of the impacts that have already been seen in the current market.
The oil and gas industries are two markets that are under threat and are likely to be hit hard by the widespread adoption of electric vehicles. According to a paper produced by the Institute of Energy for South-East Europe, with the 60% growth that the electric vehicle industry has seen, the oil industry could stand to lose around 2 million barrels worth of demand every day, by 2023, if the trend continues. This would be equivalent to the oil glut that occurred in the 2014 oil crisis. If the increasing demand for electric vehicles continues the way it has been, then the oil and gas industry could potentially be hit harder than ever before.
The instability of the oil market, in general, is a factor when discussing the future of the American and global oil markets. In April of 2020, the oil and gas industry was hit extremely hard when massively decreased demand was met with scarce storage capability. This culminated in the price of oil dropping to the first-time value of negative $40. This massive fluctuation only serves as a single example of the shortcomings of the slowly decaying industry. The fact of the matter is that with more clean energy being adopted by the United States every year, the oil and gas industry will lose a significant portion of its profits, due to the decreased demand for traditional automobiles.
The automotive industry’s relationship with electric vehicles is complex. While the sections of the automotive industry that design, manufacture, and distribute electric cars will see growth as a result of electric vehicle adoption, the rest of the automotive industry would not be so lucky.
Focusing only on the electric vehicle portion of the automotive industry, there are a lot of companies now looking at manufacturing their own electric vehicles. With major car manufacturers like Chevy, Nissan, and Tesla releasing long-range electric cars in the $30,000 price range, the likelihood that electric vehicles will become more widely adopted has increased drastically. This relatively cheap price will become a huge factor in the purchasing decision of electric vehicles, compared to traditional vehicles. Many Americans would stand to benefit from cheaper new cars that are more efficient and convenient, which would deal a massive blow to the existing automotive industry.
The electric vehicle industry as a whole has a lot to gain, when considering this new wave of enthusiasm. EV stocks are, with every passing day, becoming more and more of the desired commodity within the trading scene. Tesla, Inc. (TSLA) alone skyrocketed in value to an all-time high near the end of 2020. Other companies within the electric vehicle market like Hyliion Holdings Corp. (HYLN) and Blink Charging (BLNK) are expected to see their stocks rise similarly to Tesla’s if the market trend continues upward.
Electric vehicle manufacturing is also closely linked to the battery and solar cell manufacturing industries. Tesla is also a major player in these fields, as both technologies are crucial to the Tesla vehicle manufacturing process. Tesla’s solar panels for homes are competing against some of the biggest players in the solar industry. However, their ability to be readily accessible to customers, combined with higher quality, puts them in a strong place to compete in the solar industry, especially in states like California, where demand is growing rapidly. On top of this, Tesla’s battery technology is considered to be one of the most cutting-edge in the electric vehicle market. Both of these industries will benefit alongside the electric vehicle market if the trend continues.
Electric vehicles are the new wave. Their influence within the American and global market is slowly growing, and it is only a matter of time before these industries become more dominant powers in the market. The future is largely uncertain, but a growing majority of American investors seem to think that electric vehicles will be a part of that future.
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