What’s next for the electric vehicle industry? Consumer preference, legislation, and technological innovation are driving EV growth, but unpacking the industry trends and investment risks are more complex challenges.

We’ve laid out some of the key potential changes, values, and myths of EV below to help you better understand our approach to the sector.

Legislation Paves the Way

As a global community, we committed to keeping global warming below 1.5 degrees C above pre-industrial levels. The transportation sector plays a vital role in this effort as the most significant contributor of greenhouse gas (GHG) emissions, accounting for 27% of the US’s total (1).

Public policy is starting to recognize these goals and decisively shift towards favoring decarbonization. A few recent changes include:

  • Twenty-four states and the District of Columbia put in place some form of clean-vehicle policies. This includes increasingly stringent emissions standards, as well as rebates and other incentives for zero-emission vehicles and related infrastructure (2).
  • The new Inflation Reduction Act (“IRA”) includes $2 billion of grants to support the domestic production of hybrid, plug-in EVs, and hydrogen fuel cell vehicles (3).
  • EV buyers receive a tax credit of up to $7,500 if the vehicle is new and up to $4,000 if used. The cap on the number of EVs per manufacturer eligible for tax credits has been removed. Tax credits also apply to sustainable aviation fuels and biodiesel (4, 5).

With these changes and more, it’s unsurprising that more manufacturers and consumers are looking to EVs as the next big vehicle type.

EV Gains Value

The EV market is expected to grow at a 35% CAGR over the next five years to 20% of annual auto sales (7). This would be three times its penetration rate today.

In conjunction with the increasingly favorable legislative environment, other factors contributing to the sector growth include:

Net-Zero Targets

The world needs significant investment in electric vehicles over the next 30 years to reach Net Zero carbon. We must put more personal electric cars and electric trucks and buses on the road to hit our goals. We’ll also need to invest in expanding our charging infrastructure to keep up with this transition.

Price Parity with Gas Vehicles Just Ahead

EV’s performance continues to improve, and the cost of their batteries, which account for 35% of their total cost, continues to reduce. With these changes, EVs will reach unsubsidized price parity with internal combustion engine vehicles in most segments/countries by late 2020s (8).

Improving Elements: Semiconductors

Semiconductors are essential for connected, electric, and autonomous vehicles. They’re critical to powertrain, safety, infotainment, and other vehicle electronic functions. According to Infineon, one of the leading suppliers of automotive semiconductors, fully electric vehicles have the potential to carry 110% higher semiconductor content per vehicle (9).

Busting EV Myths

As with many emerging industries, there are pervasive myths surrounding EVs. We want to address a few of them here to help you better understand the market trajectory.

Myth: EVs are worse for the climate because of power plants.

Reality: Electric vehicles have no tailpipe emissions. However, generating the electricity used to charge EVs may create carbon pollution. The amount varies widely based on how local power is generated, e.g., using coal or natural gas, which emit carbon pollution, versus renewable resources like wind or solar, which do not.

Even accounting for these electricity emissions, research shows that an EV is typically responsible for lower levels of GHGs than an average new gasoline car. To the extent that more renewable energy sources like wind and solar are used to generate electricity, the total GHGs associated with EVs could be even lower. (In 2020, renewables became the second-most prevalent U.S. electricity source. (11))

Myth: Electric vehicles are worse for the climate than gasoline cars because of battery manufacturing.

Reality: Some studies have shown that making a typical EV can create more carbon pollution than making a gasoline car. This is because of the additional energy required to manufacture an EV’s battery.

Still, over the vehicle’s lifetime, total GHG emissions associated with manufacturing, charging, and driving an EV are typically lower than the total GHGs associated with a gasoline car. That’s because EVs have zero tailpipe emissions and usually emit significantly fewer GHGs during operation (see Myth 1).

Myth: EVs are impractical for longer-distance travel.

Reality: While it is true that some older EV models have shorter driving ranges, modern EVs can have ranges of up to 250-300 miles on a single charge, which is comparable to the range of many gas-powered cars.

With the increasing number of fast-charging stations, EV charging has become more convenient and less time-consuming. Furthermore, EVs have fewer moving parts than gas-powered cars, which can help reduce the repair costs that can accompany significant travel.

Myth: EVs are less safe than gas-powered cars.

Reality: EVs have undergone the same rigorous safety testing as gas-powered cars and have similar or better safety ratings. In addition, EVs have a lower center of gravity due to their battery placement, which can make them more stable and less prone to rollovers.

Investing in the Future

As a result of our in-house analysis and continued coverage monitoring, we invest in select EV market players that we believe will play a role in the evolution of the sector.

From legislation to technological innovations to outside market forces, we’re looking forward to watching the development of this space and its burgeoning role in the transportation sector.


  1. “Carbon Pollution from Transportation.”EPA, www.epa.gov/transportation-air-pollution-and-climate-change/carbon-pollution-transportation.
  2. “Megatrends: Driving toward Electric Vehicle Mass Adoption.”Morgan Stanley, 20 Dec. 2022, www.morganstanley.com/articles/ev-investment-adoption.
  3. “Domestic Manufacturing Conversion Grants.”Gov, www.energy.gov/mesc/domestic-manufacturing-conversion-grants.
  4. “Used Clean Vehicle Credit.”Internal Revenue Service, www.irs.gov/credits-deductions/used-clean-vehicle-credit. Accessed 16 May 2023.
  5. “Credits for New Clean Vehicles Purchased in 2023 or After.”Internal Revenue Service, www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after.
  6. “Carbon-Free Electricity Hits a Milestone in the US – but More Work Is Needed.”World Economic Forum, www.weforum.org/agenda/2023/03/us-electricity-energy-carbon-renewables/.
  7. Limited, Cmi Market Research Private. “[Latest] Global Smart Electric Drive Market Size/Share Worth 14.5 Billion by 2030 at a 35% CAGR: Custom Market Insights.”GlobeNewswire News Room, 31 Oct. 2022, www.globenewswire.com/en/news-release/2022/10/31/2544341/0/en/Latest-Global-Smart-Electric-Drive-Market-Size-Share-Worth-14-5-Billion-by-2030-at-a-35-CAGR-Custom-Market-Insights-Analysis-Outlook-Leaders-Report-Trends-Forecast-Segmentation-Gro.html.
  8. Boudway, Ira. “More than Half of US Car Sales Will Be Electric by 2030.”Com, 20 Sept. 2022, www.bloomberg.com/news/articles/2022-09-20/more-than-half-of-us-car-sales-will-be-electric-by-2030?sref=8rmz6kKf.
  9. “Addressing Scarcity in a Transforming World – Bofa Securities.”Bank of America, 19 Apr. 2022, business.bofa.com/content/dam/flagship/bank-of-america-institute/esg/addressing-scarcity-in-a-transforming-world-april-2022.pdf.
  10. Ellerbeck, Stefan. “Carbon-Free Electricity Hits a Milestone in the US – but More Work Is Needed.”World Economic Forum, 9 Mar. 2023, www.weforum.org/agenda/2023/03/us-electricity-energy-carbon-renewables/.
  11. “Renewables Became the Second-Most Prevalent U.S. Electricity Source in 2020.”S. Energy Information Administration (EIA), 28 July 2021, www.eia.gov/todayinenergy/detail.php?id=48896.

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