Is the EV tipping point here now?

In today’s Exponential Investor

  • The Germans on my driveway need to leave
  • A mind-blowing ride of a lifetime
  • You need to be thinking about selling your car

Well, a day after I wrote to you about the resurgence of the MG name in the automotive world, I look to my driveway and sadly, no, still no MG, Austin-Healey or Morgan parked there.

Sadly just a couple of Germans.

And as I look at the “foreign raiders” on my driveway, I think about their future. They don’t know it yet, but their future is pretty bleak.

The delicate dance I’ve got to manage is offloading them to a better home at a time where I’ll still get some kind of residual value for them, but also ensuring their replacements are sufficiently “future proof”.

This dilemma is something that’s going to face all Brits in the next few years. And it’s going to come down to who flinches first, because if you’ve got a couple of “relics” like mine in the driveway and you’re not prepared for what’s coming next, you could be out of pocket a lot more than you realise.

Soon to be as ancient as a ’68 MGB

As I wrote to you yesterday, my love affair with the automobile stretches some way back. That 1968 MGB in our friend’s back shed was a thing of beauty. And over the years I’ve sufficiently seen the kind of progress and development of the car as a sign of how fast and rapidly our world changes.

And it was only just a few years back in January 2017 that I took my first ever ride in a fully autonomous car.

Source: editor’s own photo

While that’s a still image you see there, there’s an accompanying video on my Twitter feed for a little more proof. You can check that out here.

I must admit when our friend finally took me for a ride in that old MGB I didn’t think 20-odd years later I’d be sat in the back of an Audi Q7 that was driving itself. Of course the gap from that MGB birthday in 1968 to 2017 is a bloody long time.

What’s important to understand is that the fiction of a self-driving car quickly appears a reality if you’re not paying attention. And if you’re not paying attention now, another major technology shift is going to pass before your eyes.

Today every new Tesla that rolls off the production line has capability for autonomous driving. And recently NVIDIA and Mercedes-Benz announced an agreement to put NVIDIA’s DRIVE platform technology in all Mercs as standard from 2024.

That means all Mercs will have autonomous driving capabilities and be upgradeable to autonomous driving. It might not be deployed right away, but it will be possible to. This of course will only be possible with over-the-air updates thanks to our hyperconnected, 5G-enabled and connected car world. And we all know just how massive an opportunity that’s going to open up for investors.

But the biggest change in the automotive world isn’t necessarily autonomous driving systems. Not yet at least. We know self-driving cars are coming. And there are companies listed on the UK markets helping press towards “level 5” full autonomy such as Seeing Machines (LSE:SEE) and its driver monitoring systems.

There are also private companies like Five.AI that are also developing self-driving car software and platforms. These companies are certainly part of the automotive shift to cutting-edge technologies.

But as I say, it’s something else that’s going to change the face of the auto industry in the UK first. And it’s not about what the car does, but how it does it.

The first real sign that change is here

On 15 March 2018 I was also at an industry event on batteries and battery materials. A friend of mine invited me as he was presenting a talk about the global supply chain of graphite and its use in the auto industry.

It was also at this event where the first Jaguar I-PACE all-electric car on UK roads was on display for us to have a look at. At this point the world was still in giddy love with Tesla and its stranglehold on functional, long-range EVs.

But clearly this Jaguar was going to be the start of something bigger. Something where all car makers were going to shift their production lines and design to new long-range, Tesla-competing EVs.

And that’s exactly what’s been playing out over the last two years. As you know, even MG has gone into the full EV market and it’s certainly not alone. BMW’s “i” division (its electric division) tweeted yesterday that all new iX3 was about to hit the market.

We’ve known that’s been coming for some time though. Also Daimler (parent of Mercedes) is shifting its entire focus to electric drivetrains. And Volkswagen’s Zwickau factory – which started making cars in 1904 – is about to stop production of internal combustion cars.

Zwickau has produced more than six million Volkswagens since 1904 from that plant alone. As of 2021 it will only make all-electric vehicles. Converting the factory to do that is costing a cool €1.2 billion.

So you see, there’s a lot of money invested into electric cars from the world’s biggest car makers. For good reason.

While I look at the Germans on my driveway, they’re both diesel cars. They are soon to be relics of a bygone era. Even though they’re both 2015 model cars, they’re already ageing artefacts.

My next cars will be electric. I don’t say that as a maybe, I say that as an absolute certainty. And I’m not alone. In June new car sales nosedived this year compared to last – for obvious reasons.

But there were still new car sales as dealerships had been opened. What was fascinating was the triple-digit growth in electric and plug-in hybrid cars compared to 2019. In fact, when you look at the new car sales for electric, plug-in hybrid, and even diesel and petrol hybrids, there was growth across all of those sub-classes.

However, new car sales of diesel and petrol cars tanked. Now these two categories still have a massive market share, around 75% of the market. But that’s changing. Electric cars and hybrids now have around 25% market share in the UK. That’s the highest it’s ever been and is a glaringly obvious sign that change is finally here.

And that’s only going to grow. UK companies like Engenie are already starting mass a rollout of charging infrastructure. As charging infrastructure, like more fast-charging stations, improves and the batteries in the cars are capable of longer range with faster charging, and as the cost, range and choice of EVs to buy increases, the market share is fast going to pass diesel and petrol cars.

This means something very important for your money. It means that soon enough the diesel and petrol cars in our driveways will be next to worthless. Who’s going to want to buy a diesel or petrol car, when you’re effectively being forced to buy a “green energy” car?

And considering aside from the family home, the car is pretty much the most expensive thing you own, it’s something you really need to be thinking about.

The backside is going to fall out of the second-hand market for diesel and petrol cars. They will become nothing more than a slice of history. So if you want to get any kind of value for them, you might want to be seriously thinking about when is going to be the right time to sell up.

I know I am. And I think that decision is going to come much sooner, before it gets too late.


Sam Volkering
Editor, Exponential Investor

Category: Artificial Intelligence

From time to time we may tell you about regulated products issued by Southbank Investment Research Limited. With these products your capital is at risk. You can lose some or all of your investment, so never risk more than you can afford to lose. Seek independent advice if you are unsure of the suitability of any investment. Southbank Investment Research Limited is authorised and regulated by the Financial Conduct Authority. FCA No 706697.

© 2021 Southbank Investment Research Ltd. Registered in England and Wales No 9539630. VAT No GB629 7287 94.
Registered Office: 2nd Floor, Crowne House, 56-58 Southwark Street, London, SE1 1UN.

Terms and conditions | Privacy Policy | Cookie Policy | FAQ | Contact Us | Top ↑