Mobility: The drive continues

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May 18, 2021

 

Traveling needs may have been put on hold as the world has been in lock-down but it hasn’t slowed the speed of driving demand in the mobility sector. Managers of the Mellon Mobility Innovation strategy outline the latest trends they see sparking growth in this sector.

Key STATS:

  • In 2019, Europe secured €60bn billion in investments to produce EVs and batteries – 19 times more than in 2018.
  • 5.2% of China’s vehicles are electric – Norway has 56% of its vehicles running on electricity; in Iceland it is 25.5% and the Netherlands has 15% EV penetration.
  • Electric micromobility options have expanded rapidly since their emergence in 2017. Shared electric scooters, electric-assist bicycles and electric mopeds are now available in over 600 cities across more than 50 countries.
  • Chile aims to electrify all of its public transport by 2040; in European Union countries, a new Clean Vehicles Directive also provides a public procurement of electric buses.
  • In Europe, 76% of all charging points are concentrated in just 4 countries: The Netherlands, Germany, France, and the UK (as of end of 2019).

Source: European electric vehicle charging platform Virta.global. The global electric vehicle market in 2021: statistics & forecasts

Last year in Europe – amid wide-spread lockdowns – electric vehicle (EV) purchases rose 1c135%, propelling the region to overtake China (which recorded c12% growth) as the global driver of EV sales.2 At a time when the global auto market was facing headwinds, global EV sales reached 3.24 million units for the first time and their market share increased from 2.5% in 2019 to 4.2% in 2020.3

According to Rob Zeuthen, portfolio manager of the Mellon Mobility Innovation strategy, the acceleration of the digital transformation witnessed last year across the global economy appears to have carried over into 2021.

The International Energy Agency found that a record three million electric cars were registered across the world in 2020, 41% higher than in 2019; in 2021 there were 2.5 times as many registrations recorded in the first quarter of the year as during the same period in 2020.4

Says Zeuthen: “While the pandemic remains a key source of risk and uncertainty, a combination of low, but rising rates, low inventory, new sources of mobility innovation, tighter regulations, heightened environmental concerns and shifting consumer preferences provide a combination of cyclical and secular forces that will drive demand across the mobility landscape.”

Zeuthen agrees robust demand for electric vehicles was the bright spot in the European market in 2020, and notes continued outperformance in Western Europe compared to other regions around the world, including China. However, as the world’s largest passenger vehicle market, China has had a notable volume recovery since its economy reopened. He notes: “We believe there will be continued positive underlying demand, assuming China’s domestic economy continues its growth trend.”

Although the Chinese market is supported by government purchase subsidies, which are due to be cut at the end of 2022, Zeuthen says growth should remain positive as consumer interest grows.

With respect to the US market, he points out that growth in passenger vehicle volumes is highly dependent on the health of the consumer and employment. As the distribution of new Covid-19 vaccines continues, Zeuthen expects its economy will remain on a positive, albeit bumpy track for the remainder of the year.

Technology support

Outside of EVs there is a growing world of mobility investment opportunities, according to Zeuthen. “We see structural growth trends across a variety of areas,” he says. “This should drive opportunity in manufacturers of 5G networks, cloud computing networks, infrastructure and, increasingly, advanced driver assistance systems (ADAS).”

The outlook for growth in ADAS and vehicle electrification in particular remains positive over the mid to long-term, he adds. ADAS content and functionality per vehicle continues to increase in key markets, as does the underlying secular shift to vehicle electrification, which remains a key focus for Europe and China due to emission policies and regulation. By some measures, the ADAS market is anticipated to grow at a compound annual growth rate (CAGR) of roughly 16% between 2021-2026, reaching upwards of US$73bn, according to UnivDatos Market Insights.

Zeuthen also highlights 5G as an area continuing to have a positive impact on the mobility industry. New smartphone launches are seeing notable adoption and the prospects for market share gains are emboldening their competitors, he says. “Given tightening foundry capacity and lengthening lead times, we expect better-than-seasonal smartphone conditions in the near-term.”

1 Circa, or about.

2 EV-volumes.com and S&P Global Market Insights. Europe overtakes china in EV sales growth in 2020. January 2021.

3 Ibid.

4 International Energy Agency and Statista: Electric vehicle market to hit ludicrous mode. April 29, 2021.

 

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