Electric vehicle adoption will accelerate over the next decade, driven by a number of variables analyzed in detail in Morningstar’s recent Electric Vehicle Observer. Battery-powered electric vehicles will reach cost parity with vehicles powered by internal combustion engines. Technological innovations will improve batteries, increasing driving range and shortening charging times. In the medium term, emission-driven regulations will spur investment to build better electric vehicles.
In the long run, however, charging infrastructure is the wild card that will either spur or limit electric vehicle adoption in a particular region. A lack of public charging infrastructure in a region limits adoption, as consumers fear being stranded or limited by a vehicle that will not allow them to travel between cities. A 2017 International Council on Clean Transportation white paper cited the number of public charge points as the most important factor in electric vehicle penetration, with an R-squared of 0.78. For adoption to grow, public charging infrastructure needs to be in place throughout cities and along highways.
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Seth Goldstein does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.