At what point does a great idea — even a good idea — become a no-brainer?
We could come up with a few answers to that one, but I think the most basic is…
It always all comes down to money.
Electric vehicles (EVs) were already on the path to no-brainer status. And if you’ll pardon the pun, the pedal just got put to the metal.
It’s the kind of hypergrowth trend I love. It has the potential to make you a lot of money … is virtually unstoppable… and its tipping point just got closer…
Even if you like the idea of an electric vehicle, you wouldn’t pay 83% more for it, would you?
A few people might. Most wouldn’t even consider it.
But… what if the two were the same price?
Or what if the electric vehicle were cheaper?
That day is not too far in the future.
In 2018, the average cost for an electric vehicle with a 250-mile range was $44,000, which is 83% more than the $24,000 price tag of a Toyota Camry. That’s a $20,000 difference.
But by last year, that price gap was expected to narrow to $9,000 as the average cost for an EV dropped to $33,000.
And within just the next two years, the average cost of a 250-mile range EV will fall to $24,000 — while the cost of the Toyota Camry rises to $25,000.
The first time an EV is cheaper than the average gas-powered vehicle will be a major milestone. The breakthrough will push a lot of prospective car buyers to strongly consider an EV… and that day is coming quickly.
By 2024, the cost is expected to swing greatly in favor of EVs. ARK Invest predicts EV prices will drop to $17,000 while the Toyota Camry remains constant at $25,000.
This was the unstoppable trend before Joe Biden was elected president, but with increased attention and massive spending to increase the number of EVs, the future will get here faster.
Part of the administration’s proposed $2.25 trillion infrastructure plan includes $100 million to provide rebates to those who purchase EVs. Not a tax credit… a rebate when you by the car. That drops the price further and faster.
Earlier this week in his first speech to Congress, President Biden talked about installing 500,000 charging stations “so we can own the electric car market.”
Rebates would accelerate the trend, but even without them, EVs continue to get cheaper.
How is that possible?
A few years ago, the battery made up about 57% of an EV’s cost. In 2019, that percentage fell to 33%. And by 2025, it is projected to be just 20% of the cost of the vehicle.
Electric vehicles becoming increasingly more affordable is a big reason behind the eye-popping growth forecasts. The Energy Industry Administration calls for sales to more than triple to 6.5 million units by 2024.
ARK Invest is even more bullish, predicting that 37 million EVs will be sold in 2024. That would be an amazing 79% compound annual growth rate and result in full-year revenue of $1.1 trillion.
Even if we basically split the difference and EV sales increase to 20 million units in the next few years, it is an easy 10X opportunity for investors.
Over the past decade, electric vehicle technology has advanced by leaps and bounds, and companies like those we just talked about are all in. Toyota expects to have a solid state battery prototype working this year, which is a big step forward. These batteries are lighter, last longer, charge faster, and are safer than lithium-ion batteries that are currently used.
In addition to technology improvements, electric vehicles have governments on their side. Thanks to environmental concerns, governments in China and Europe are moving to phase out internal combustion engines and phase in EVs.
We’re talking about an epic boom coming in EV sales. Bloomberg estimates that at least 50% of cars sold by 2040 will be electric.
Breakthrough battery technology will power the electric vehicles of the future. This hypergrowth trend is well underway, but it’s still early. That means now is the time for smart investors to get in position for the biggest profits.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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