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Plugging into the Future: 2021, the year of the Electric Vehicle Revolution

In this article, we would like to discuss some of the key factors driving the EV space and how EVs and related companies are positioned to benefit from this high potential industry.

February 23, 2021 / 06:38 PM IST

If you thought 2020 was good for EVs, then the potential for this market in 2021 will surely impress you. The EV market is already looking more promising and profitable in the first few months of the new year. With Tesla’s (Ticker: TSLA) incredible rise making headlines in 2020, the entire EV industry has reaped the benefits. From EV producers and battery makers to companies building charging infrastructure, any company with a tie-in to electric vehicles has gotten the Tesla bump. Industry leaders, market participants and policy makers increased their investments in EVs in 2020 and saw huge gains with returns on pure-play EVs ranging between 5-10 times. This shift to EVs is undeniable and the momentum is likely to continue in 2021. In this article, we would like to discuss some of the key factors driving the EV space and how EVs and related companies are positioned to benefit from this high potential industry.

Global and U.S. Electric Vehicle (EV) Market Outlook

The billions of dollars that major automakers have put into developing electric vehicles are starting to manifest into mainstream vehicles in the auto industry. As predicted by Morgan Stanley analysts, the global EV sales are estimated to grow 50% or more in 2021. The share of battery electric vehicles (BEVs) and Hybrid cars is likely to increase substantially in the global EV sector by 2030 as per analysts’ estimates (Figure 1).  The U.S. Electric Vehicle (EV) market is likely to reach 6.9-million unit sales by 2025 as compared to 1.4-million unit sales forecast for 2020.

Figure 1: Global electric vehicle forecast (2015-2030 estimates)



Drivers of growth

With increased environmental awareness, several individuals are choosing to switch from gasoline-powered vehicles to electric vehicles (EV) each year. Favorable government policies and support in terms of subsidies and grants, tax rebates and other non-financial benefits in the form of carpool lane access along with declining battery prices are set to boost the U.S. electric vehicle market.

How much of an impact will the Biden Government make?

The U.S. EV narrative is likely to see a step forward under the new President-Joe Biden, who has made it a centerpiece of his plan to combat climate change. Furthermore, the President is seen rejoining the Paris agreement on climate change recently and directing federal agencies to consider revising vehicle-fuel emission standards that were earlier cut by the Trump administration. EV stocks are likely to be more attractive to Wall Street investors under President Biden and some of the key reforms in the sector include:

  • Assistance in the adoption of EVs which use electricity instead of gasoline; thereby produce zero emissions.

  • Fuel regulations, EV stimulus and consumer tax credits to assist EV adoptions.

  • Incentives for EV manufacturers to build or retool factories to assemble EVs and parts.

  • Increased infra spend in clean energy, including battery technologies.

  • Re-establishing federal fuel economy rules and emission standards to focus more on EVs.

Cash for clunkers and tax credits

Biden is supportive of the rebate program where “Car Allowance Rebate System”(CARS) includes a credit of upto USD 4,500 for Americans to trade in their older vehicles for new EVs which is likely to increase the sales of EV manufacturers. Added to this is Biden’s push to expand tax incentives for clean energy including restoring full federal tax credit for electric vehicle purchases. This new framework is designed to target middle-class consumers at large to prioritize the purchase of vehicles made in America. Consumers can get a federal tax credit of up to USD 7,500 on purchase of an all-electric or plug-in hybrid EV.

USD 2 trillion climate plan stimulus agenda and EV subsidies

The President is seen announcing the green agenda with a spend of USD 2 trillion for interlocking spheres of automobiles, transportation and energy with emphasis on enhancing the country’s infrastructure and significantly cutting fossil fuel emissions. Additionally, the government has subsidized EV companies through loans and tax credits in new R&D and emerging technologies.  An expansion of such programs is likely to assist further development of EVs, especially the start-up companies like Lordstown Motors (Ticker: RIDE) and Fisker (Ticker: FSR), both of which went public last year. Most analysts see government stimulus under Biden’s Green New Deal as a potential solution to the EV industry.

Increased Infra spend for EVs

The U.S. currently has less than 29,000 public EV chargers, according to the U.S. Department of Energy. Biden aims to spend USD 400 billion in clean energy infra including battery technologies and EVs with a target to put up 500,000 new electric vehicle charging outlets by the end of 2030. This is likely to benefit utility companies involved in investing  in more charging stations across the country.

President Biden’s buying spree

Biden has vowed to replace the U.S. Federal government’s fleet of roughly 650,000 vehicles with U.S.-made EVs as the new administration shifts its focus towards clean energy. The U.S. governments’ purchase order is a big incentive to EV manufacturers. This is likely to boost the number of electric vehicles in the U.S. by 40% above 1.6 million. (including government and privately-owned). A switch to EVs would slash the government’s annual spend on fuels by approximately USD 795 million and also cut emissions.

Unlocking value streams

New launches in the Electric trucks to hit the roads in 2021-22

Most analysts see the real opportunity in EV space coming from electric trucks as EV manufacturers like Lordstown Motors Corp. which is a relatively new truck maker claims its first model, the Endurance,  to be out in 2021. Tesla’s angular, stainless-steel Cybertruck is likely to start shipping in 2021. Other auto majors are adding to this party too when General Motors (Ticker: GM) announced its new GMC Hummer likely to arrive in 2021 and Ford’s (Ticker: F) electric F-150 which is due in 2022.

Increased demand from fleet and logistics companies

The American Council for Freight Efficiency predicts some large demands for electric buses and trucks coming from big fleet and logistics operators like Amazon (Ticker: AMZN) and United Parcel Services (Ticker: UPS), further adding to this is the demand for electric buses coming from bigger school districts.

Plummeted battery prices to help EV manufacturers

Battery prices, one of the biggest costs for electric cars have fallen over the years. For instance, lithium-ion battery pack prices have fallen over 80% in the last 10 years. With battery energy increasing, more charging infrastructures being built and battery prices falling over time all add up to increase EV sales for auto majors.

Auto manufacturers poised for EV growth

A shift towards electric future made it necessary for industry players to reorient their business models and accelerate EV game. Some of the key EV auto companies include Tesla, General Motors ,Ford, Rivian (IPO scheduled early this year)

Tesla Synonymous for Electric Vehicles

Tesla’s rise in stock price (over 600% in 2020) to become the world’s most valued automaker by market cap is drawing investors to EV start-ups. The company makes up for the majority of the U.S. EV auto sales with its Model 3 sales and also announced the launch of its Cybertruck or Model Y. According to the company’s quarterly report, it saw a 36% increase in vehicle sales in 2020 vs. 2019 sales adding to a total of 499,550 vehicle deliveries in 2020; close to the carmaker’s goal of 500,000 EV sales. The company ended the quarter with strong liquidity with USD5.9 billion increase in cash to USD14.5 billion in 2020.  Despite steep valuations, after the run-up in stock price; markets look at Tesla stock as an innovative technology platform for EVs. Analysts expect Earnings-per-share (EPS) of $4.15 for 2021 with a forward P/E of 162.75. (Figure 4) The company has a robust revenue growth estimate of over 48% in 2021 (Figure 3) and plans to increase its EV sales volumes to 20 million annually over the next 10 years.

Figure 2: One-year stock performance of GM, Tesla vs. S&P 500 (2020-21)


General Motors is beyond an ICE supplier

Shares of GM have almost doubled in the last six months with over 30% year-to-date returns in 2021. Notably this may not look like Tesla numbers but they are significantly higher than the broader market’s performance (Figure 2). Investors should no longer look at GM as just an Internal Combustion Engine (ICE) supplier as the company’s investments in engineering, design and IT is likely to accelerate its push into EVs significantly. The company with its “Exhibit Zero”, announced its key is Electrification; reflecting GM’s goal to be a zero emissions company. The automaker plans to invest USD 2 billion into six domestic assembly plants dedicated to manufacturing EVs and has unveiled its all new electric Hummer. With all these developments, investors clearly see that GM is at the forefront of the EV space. The stock is currently trading at attractive valuations to its peers with a 1-year forward P/E of 8.85 and analysts’ Earnings-per-share (EPS) estimate of $5.88. (Figure 4)

Figure 3: Revenue estimates of Auto majors in 2021


Customers snapped Fords’ E-Transit electric cargo

The commercial auto market needs a zero-emission fleet and the company is poised to ride this trend with its all-electric transit delivery cargo van for under USD 45,000 developing the “next-level software services and capability” with its E-Transit release. This launch comes at a time when most people are using delivery more than ever and is likely to help commercial fleet owners manage their cargo operations better. The E-Transit is Ford’s second major EV release as part of the company’s USD 11.5 billion push into electrification, the previous one being the Mustang Mach-E which the company plans to start delivery to its customers at the end of this year. Revenues are likely to be higher for 2021 as per analysts’ estimates with a 23% year-on-year growth at USD 145 billion in 2021 (Figure 3). The company also expects to unveil an electric version of its best-selling F-150 pickup truck in 2022 all adding up to an increase in its share of EV space.

Figure 4: 2021 EPS estimate and Forward P/E for Tesla, GM and Ford


Amazon-backed EV maker Rivian aims for IPO this year

The EV start-up Rivian Automotive backed by Amazon and Ford Motor Co. which is valued at USD 50 billion is looking to go public this year. The Rivian electric vans are already in production and performing deliveries and the Rivian R1T electric pick-up trucks are expected to hit the markets this June with deliveries of R1S SUVs following not long after that. In addition, Ford and Rivian will jointly develop a new battery EV using Rivian’s platform. Along with consumer pickups and SUVs, the company’s revenue stream is likely to benefit from Amazon’s order for 100,000 electric delivery vans and is likely to compete head-to- head with Tesla in the nascent electric pick-up space.

 Role of utilities operating in EV space

The rising use of EVs has boosted demand for EV charging stations and utilities play a vital role in the EV market as they possess the expertise and advantage of setting up faster and more efficient charging stations. This is likely to encourage utility providers involved in the EV market to invest in construction of more charging stations across the country. As per Natural Resources Defense Council (NRDC), utility companies have been approved to invest close to USD 1.5 billion in EV charging-related programs. In November 2020, a group of major utilities along with Tesla , Uber Technologies (UBER), automakers like Lucid Motor along with EV battery maker Albemarle (ALB) announced the launch of Zero Emission Transportation Association to lobby for policies to boost EV sales.

A handful of utility stocks taking initiatives to expand their footprint in the EV market are likely to gain in 2021. Some of them include:

Edison International’s (Ticker: EIX) subsidiary Southern California Edison (SCE) received regulatory approvals for the expansion of its Charge Ready 2 EV charging infrastructure program worth USD 436 million. The program aims to add around 38,000 new chargers going forward. By 2030, every passenger car and small-to-midsize SUV in SCE’s fleet will be electric.

QuantumScape Corp. (Ticker: QS): The company is well positioned to serve domestic EV players with its solid state cell technology over the last decade. As EV makers look to secure battery supplies the company has achieved promising results with its patented ceramic separator, which enables higher energy density, lower costs, improved safety and faster charging.

Investors can make the most of the EV revolution by investing in the  Electric vehicle (EV) stack available on our platform which includes EV manufacturers and utility companies operating in the EV space.


Despite the impact of COVID-19 on car sales, the growth path in the EV sector looks clear with EV manufacturers investing billions of dollars and U.S. President-Joe Biden supporting the switch and re-looking at the fuel-emission standards which were earlier cut by the Trump government. With increased environmental awareness and investors looking more towards EV space; 2021 clearly looks promising for the sector.

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first published: Feb 23, 2021 06:36 pm
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