Andrew Willis: Despite everything that’s going on right now, somehow electric vehicles have managed to steal some of the investor spotlight even as we continue to live in semi-lockdown, with less of a need to drive!
The most puzzling bit has to be the fanfare about Tesla (TSLA) - outside of the little promotion recently with its stock split - considering China has quietly become a global leader in the electric vehicle market.
Frank Pan, Manager of Asia Pacific Research at Sustainalytics says that China stands out as having some of the most success with policies that encourage EV production and sales. In fact, Chinese roads have around 1.2 million electric vehicles. That’s more than half of the world’s cars sold in 2019!
This growth is fuelled by government policies that specifically target each of the pain points and costs associated with EV research and production. It’s because of a technology gap between electric and combustion that there aren’t more EVs on the road. And China subsidizes solutions to exact obstacles, such as mileage per charge, battery capacity and charging speed.
These cash incentives aren’t the only investment either. China built 516 thousand charging outlets by the end of 2019 (relative to 82 thousand outlets in the U.S. as of May 2020). For investors, you might consider researching stocks for Chinese electric vehicle manufacturers. Or perhaps consider how this might compete with North American manufacturers…
For Morningstar, I’m Andrew Willis.
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