Stakeholders, investors and consumers have long understood the need for clean mobility. However, 2020 might be looked back as the turning point which really brought this sector centre stage and shaped its future.
It is no grand revelation that electric vehicles are the future of personal and commercial mobility. While this been obvious to most, till about 2019, the sentiment around the sector was more a ‘nice to have’ rather than a ‘must-have’.
For an average consumer, electric vehicles were expensive and the choice of going electric didn’t leave a customer with many options to choose from. While some of these hurdles still exist, albeit to a lesser extent, a collective behavioural shift towards sustainable living and environment preservation has brought this sector up in the priority list.
In an exclusive interview published by the IGB with Naveen Munjal, the Managing Director of Hero Eco Group discusses how ‘now is the time to be investing in the EV ecosystem’. As an industry leader in this space, his views that ‘We’ve never had the air so clean in the past 20-30 years in Delhi. There’s health, environment, oil imports, savings on foreign exchange – EVs will have a substantial impact on all of that.’, sums up all the reasons why the sector got turbocharged last year.
2020 saw large international auto manufacturers double down on electric mobility. E.g., Ford Motor Company released its much-awaited Ford Mustang Mach-E, an electric version of the quintessential gas-guzzling muscle car brand, the Mustang. The year also saw Ford unveiling details of its upcoming F-150 EV pickup while General Motors revealed its plans for an all-electric version of the iconic Hummer brand. In addition to the large automakers, several new and innovative brands other than Tesla gained prominence. These include US-based manufacturers like Lucid Motors, Lordstown Motors, Fisker Automotive and Chinese manufacturers like Nio, Xpeng among many others.
In India, the large automotive manufacturers launched a slew of electric vehicles in 2020. E.g., Both Bajaj and TVS launched the electric Chetak and TVS iQube respectively in Jan 2020. Mahindra revealed that it will invest c.$232 million (c.INR 1,700 crores) to expand its EV fleet by 2025 and has committed $68 million (c.INR 500 crores) for an EV R&D centre called Global Electric Vehicle Technology Centre. The passenger vehicle maker plans to launch 5 EV models in India in 2021.
Like other countries, Indian start-ups are also jumping into this sector. Ola Electric, Ola’s EV business, ramped up its investments through the acquisition of Amsterdam-based electric scooter start-up, Etergo. Furthermore, it announced plans for investing c.$329m (or INR 2,400 Crore as reported in the news article) to build an electric vehicle factory in Tamil Nadu, India. Additionally, there is Ather Energy, which was founded in 2013, IIT Hyderabad incubated PURENERGY which manufactures electric two-wheelers under the PURE EV brand and Micromax founder Rahul Sharma’s Revolt Motors among many others. Now, with the recent launch of a globally admired brand like Tesla in India, the already active ecosystem is expected to receive a boost in the medium to long term.
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The emergence of a large ancillary/support ecosystem around electric vehicles in recent years is also worth mentioning. This includes charging infrastructure companies like ChargePoint, EVgo, EVBox and battery manufacturers like QuantumScape (backed by Bill Gates), all developing platforms that will play a key role in the long-term viability and adoption of electric vehicles.
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A lot of the companies mentioned above got into the spotlight on the back of the increased investor attention to this sector in 2020. Even Tesla, which has been the most prominent name in the EV space among the investment community for years, saw a significant chunk of its attention and investor dollars in 2020.
The company’s share price as of close on 28th January 2021, $835.43, is 9.4 times its share price on 3rd January 2020 at $88.60 (adjusted for the 5-to-1 split during the year). It was a defining year for the Tesla stock not just because of the jump price but also because it was admitted into the prestigious S&P 500 index in December 2020, the largest company to do so at the time of entry in the index.
A lot of the emerging EV names mentioned above also rose to prominence post their equity listing on the US stock markets. Companies like Nio, Xpeng, Switchback Energy (in the anticipation of its merger with ChargePoint) among others have seen their share price skyrocket fuelled by the investor interest in this sector.
Finally, positive actions by government bodies during the year also solidified the demand for electric vehicles globally. E.g., cities in the UK have been pushing the use of low-emission or emission-free modes of transport for years now. Measures include the Congestion Zone in London and Clean Air Zone in Manchester among others. In 2020, London increased its Congestion charge rates and times significantly, disincentivising the use of internal combustion engine (ICE) vehicles even further. Some local councils within the city are going even further by implementing additional roles like Ultra Low Emission Zones which allow only electric vehicles to be parked on certain streets.
Stakeholders, investors and consumers have long understood the need for clean mobility. However, 2020 saw an increased concerted effort by all the parties involved. The year, despite all its flaws, might be looked back as the turning point which brought this EVs centre stage and shaped its future.
Vaibhav Kapoor is a finance and strategy professional with c.12 years of experience.