Industry Voice: Electric Vehicles - The Boom is Just Beginning

Jennison Associates provides insights on how a niche market is transforming into a multi-trillion dollar industry.

clock • 9 min read
Industry Voice: Electric Vehicles - The Boom is Just Beginning



When the COVID-19 pandemic drastically restricted mobility worldwide last year, few industry analysts predicted strong growth for electric vehicles. Yet it turned out to be a banner year. Even while overall car sales fell 15%, automakers sold 3 million electric vehicles in 2020, a 40+% increase over the previous year.1

A combination of trends converged to drive this dramatic growth: lower-cost batteries that can hold a charge longer, more charging stations, supportive government policies, and improvements in autonomous driving technology. Traditional auto manufacturers were also determined to expand their electric vehicle fleets to compete with industry leader Tesla.

With an industry projected compound annual growth rate of over 20% from 2019 to 2027, Jennison Associates' Global Equity team believes the electric vehicle boom is just beginning and will evolve into an engine for larger disruptions in the transportation industry.2




Source: Statista as of March 2021. Any projections or forecasts presented herein are subject to change.


Thomas Davis, CFA, global equity portfolio manager at Jennison Associates, notes, "Electric vehicles, electric batteries, and smarter semiconductor chips with artificial intelligence that enable parallel thinking are interesting ways to play the theme right now. But once the proper infrastructure is built and autonomous driving capabilities have improved, we expect disruptive mobility trends such as ride sharing, robo-taxis, and in-car monetization services to shift into overdrive."



Changing consumer demand


As technologies improve and safety increases, costs decline, and convenience and choices expand, consumers are increasingly gravitating to electric vehicles. The industry is now nearing an inflection point, moving from a relatively small group of early adopters toward mass adoption. Three big trends are helping to propel this growth:

Lower Battery Costs Enhance Affordability: Thanks to technological advances, the cost of an electric battery has dropped more than seven-fold to $156/kWh over the last decade and is expected to fall below $100/kWh by 2024.3

Higher Battery Capacity Extends Range: In 2020, electric vehicles traveled an average of 300 kilometers on a single charge, but as battery technology improves, the average range is expected to reach 440 kilometers by 2030.4

More Charging Stations Improve Convenience: A large network of publicly available charging stations and outlets is critical for electric vehicles to go mainstream. Globally, publicly available fast chargers topped 263,800 in 2019.3 The number of global electric vehicle fast-charging systems for light duty vehicles (i.e., passenger cars) is expected to reach nearly 565,000 units by 2029.2


Supportive Government Policies


To avoid the most devasting impacts of climate change, governments worldwide are rolling out infrastructure plans to reduce their carbon footprints. Broader adoption of electric vehicles hinges upon availability of more public charging stations and more power generation from cleaner sources. Innovations in battery storage and recharging efficiency, along with lower production costs, are also essential for widespread electric vehicle adoption.

Financial Incentives & Restriction Exemptions: To entice consumers to buy cleaner-energy electric vehicles, governments have been offering rebates, discounts, and/or income tax credits to reduce the total cost—in some cases by roughly $10,000 per vehicle.5

Tighter Emission Standards: Regulators are forcing automakers to accelerate their electric vehicle launch plans by aggressively tightening emission standards. While China and Europe are currently leading the electrification race, the U.S. is expected to make major investments in clean energy to help achieve net-zero emissions by 2050.


More models on the market


The global automotive industry is expected to grow into a $9 trillion market by 2030, although it will look starkly different from today, with a slew of new electric vehicles set to upend the status quo.6

Global EV Fleet Expansion: Jennison's equity research analyst for industrial and consumer sectors, Owuraka Koney, CFA, notes that "Tesla's game-changing impact on mobility continues to strengthen." While the company could maintain its significant lead over newcomers if it continues to innovate and adapt faster than its rivals, the competition isn't backing down. Almost every automaker is expanding its lineup to include electric vehicles. By 2030, the global electric vehicle fleet size is expected to grow 14-fold to 116 million units.4

Enhanced Self-Driving Technology: As 5G becomes more widespread globally and autonomous driving technologies evolve, the global autonomous car market is expected to reach $60 billion by 2030, a 10-fold increase over 2018, with 800,000 robo cars projected to be on the road.7

The Mobility Services Opportunity: With a compound annual growth rate of 18%, the global mobility services market (which excludes carpools, chauffeur services, ride-sharing agencies, ferries, and public transport) is expected to balloon to $1.4 trillion by 2025.5 As artificial intelligence and autonomous vehicles make mobility more convenient, mobility-as-a-service (MaaS) is expected to become a $9.2 trillion market by 2030.2



The transformation of the global auto industry will have vast implications for economies, societies, and investors. Adoption of electric vehicles and mobility services likely will be chaotic and confusing for investors. Capitalizing on the disruptive mobility opportunities in the NEXT—or new exceptional technologies—economy will require the vision to identify big secular themes and the ability to pick the future winners early. Active managers with intimate industry knowledge and the expertise to forecast the magnitude and duration of a company's growth can help position investors to succeed.




Want to learn about other emerging growth trends? View Insights


1 Source: Statista as of January 2021. 

2 Source: Statista as of March 2021.  

3 Source: Statista as of December 2020. 

4 Source: Statista as of June 2020.  

5 Source: Statista as of October 2020.  

6 Source: Statista as of September 2020.  

7 Source: Statista as of March 2020.  

8 Source: Statista as of March 2020.


For Professional Investors only. All investments involve risk, including the possible loss of capital.

In the United Kingdom, this financial promotion is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority ("FCA") of the United Kingdom (Firm Reference Number 193418). In the European Economic Area ("EEA"), this financial promotion may be issued by PGIM Netherlands B.V. or PGIM Limited depending on the jurisdiction.  PGIM Netherlands B.V., with registered office at Gustav Mahlerlaan 1212, 1081 LA, Amsterdam, The Netherlands, is authorised by the Autoriteit Financiële Markten ("AFM") in the Netherlands (Registration number 15003620) and operates on the basis of a European passport. In certain EEA countries, this financial promotion is, where permitted, presented by PGIM Limited in reliance of provisions, exemptions or licenses available to PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. These materials are issued by PGIM Limited and/or PGIM Netherlands B.V. to persons in the UK who are professional clients as defined  under the rules of the FCA and/or to persons in the EEA who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II). PGIM Limited and/or PGIM Netherlands B.V. are indirect, wholly-owned subsidiaries of PGIM, Inc. ("PGIM" and the "Investment Manager"), the principal asset management business of Prudential Financial, Inc. ("PFI"), a company incorporated and with its principal place of business in the United States. PFI of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. PGIM, the PGIM logo and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide. PGIM Fixed Income and PGIM Real Estate are trading names of PGIM an SEC registered investment adviser in the United States. Jennison and QMA are trading names of Jennison Associates LLC, and QMA LLC, respectively, both of which are SEC registered investment advisers and wholly owned subsidiaries of PGIM. Registration with the SEC does not imply a certain level or skill or training.

As a result of the exit of the United Kingdom from the European Union, PGIM Limited is currently not permitted to liaise with Italian investors, including with respect to the distribution of marketing materials. PGIM Limited is in the process of filing an application with the Italian Securities and Exchange Commission (CONSOB) to obtain permissions to do so in the future. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in the portfolio at the time of publication and, if such securities are held, no representation is being made that such securities will continue to be held.

The views expressed herein are those of Jennison Associates' investment professionals at the time the comments were made, may not be reflective of their current opinions, and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. Neither PFI, its affiliates, nor their licensed sales professionals render tax or legal advice. Clients should consult with their attorney, accountant, and/or tax professional for advice concerning their particular situation. Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy.

Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.

© 2021 Prudential Financial, Inc. ('PFI') of the United States and its related entities. PGIM and the PGIM logo are service marks of PFI and its related entities, registered in many jurisdictions worldwide.




More on Investment

Industry Voice Video: Wellington Global Impact Bond Fund

Celebrating the fund’s three-year anniversary

Celebrating the fund's three-year anniversary

Campe Goodman, CFA, Fixed Income Portfolio Manager and Paul Skinner, Investment Director at Wellington Management
clock 26 May 2022 • 2 min read
Industry Voice: 'Net Zero by 2050 won't happen without Asia'

Industry Voice: 'Net Zero by 2050 won't happen without Asia'

Investment Week and ThomasLloyd Group
clock 18 May 2022 • 5 min read
Event Voice: Your Questions Answered by Baillie Gifford at the Sustainable Investment Funds to Watch

Event Voice: Your Questions Answered by Baillie Gifford at the Sustainable Investment Funds to Watch

Alasdair McHugh, Investment Specialist, Global Stewardship, Baillie Gifford
clock 17 May 2022 • 5 min read