EV Stocks Charged Up as Transition to Clean Energy Picks Up

Electric vehicle stocks including Tesla (TSLA), GM (GM), Ford Motor Co. (F), and the Chinese EV majors including Li Auto (LI), NIO (NIO), and XPeng (XPEV) were on an upswing in morning trading at the time of writing on Wednesday due to multiple factors.

EV stocks got a major boost on Wednesday after the International Energy Agency report pointed towards a declining demand for oil after 2026 as the transition to electric vehicles and clean fuels is likely to pick up pace.

IEA Executive Director Fatih Birol commented, “The shift to a clean energy economy is picking up pace, with a peak in global oil demand in sight before the end of this decade as electric vehicles, energy efficiency and other technologies advance.”

In addition, Bank of America analyst John Murphy asserted that the era of Internal Combustion Engine (ICE) dominance is likely to be over. According to the analyst, EVs are likely to account for a majority of new model launches for the first time at 46% as compared to 36% of new model launches being ICE vehicles while hybrids could make up 18%.

Murphy has forecasted that 1.6 million EVs could be sold in the calendar year 2023 and model year 2024, 2.2 million EVs next year, 3.5 million EVs in 2025, and 4.6 million EVs are expected to be sold in 2026.

According to the analyst, Tesla could face rising competition as legacy automakers go electric and could see its share of the EV market go down to 18% in 2026 from 62% in 2022. This could result in incumbent automakers grabbing a market share of around 70% of this market by 2026 while new entrants could hold the remaining 30%.

Meanwhile, Tesla raised the prices of its Model Y in the U.S. even as its EV semitrailer was hit with supply problems.

The rising focus on EV stocks has seen the Global X Autonomous & Electric Vehicles ETF (DRIV) surge by more than 12% in the past three months.