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5 Predictions For The Electric Vehicle Market From Morgan Stanley

Originally published on RenewEconomy.
By Sophie Vorrath

They might not be driving them yet, but electric vehicles are definitely on the radar of some of the world’s top investment and market analysts. Last week, US-based global investment bank Morgan Stanley named “alternative fuel vehicles” as one of seven key market and technology options it sees as well positioned to mitigate or adapt to climate change.

The call was made in Morgan Stanley’s latest research report examining the most relevant climate change mitigation and adaptation options, policy developments, and investment implications.

The report, Addressing Climate Change and the Investment Implications – A Primer on Climate Change, notes that key technological solutions like EVs may see more investment and deployment driven by technology maturity, mitigation potential, economic feasibility, and political support.

This is nothing we don’t already know, but further on in the report, Morgan Stanley has a closer look at the current state of the “alternative fuel vehicles” market and comes up with some interesting predictions and information tidbits:

1. Battery cost is expected to drop significantly  And by significantly, Morgan Stanley means by a good deal more than half. The report points to Tesla, which aims to produce a battery that costs only $US100/kWh – currently, the average EV battery costs between $US250-400/kWh – from its under-construction Gigafactory.

2. Apple will likely launch into electric cars  This is something many have been predicting, since the tech giant hired former Chrysler executive Doug Betts, who has auto industry experience spanning 30 years. And if they do join the EV game, Morgan Stanley says it would “change the industry landscape considering Apple’s scale, innovation and integration capability.”

Recently, Morgan Stanley US auto analyst Adam Jonas argued that technology companies, including Google, Samsung, Uber, etc. were better suited to bringing successful EV products to the mass market, pairing them with a sharing-economy model to increase utilisation and shorten pay-back periods.

3. Progress will be made around range/charging issues  Another of the key barriers to EV mass uptake – after cost of batteries and infrastructure – electric vehicle range has been restricted to around 100 miles (160km) pretty much since the first EV was driven. But according to Morgan Stanley, GM and Tesla plan to launch models with driving ranges greater than 200 miles (320km).


In the meantime, policies to develop better recharging networks in major cities and along major travel routes are expected to help counter range anxiety. Morgan Stanley points to a policy unveiled by Beijing Municipal in February to provide investment subsidy of 30 per cent for building public charging stations.

4. New black cabs in London will be EVs with zero emissions from 2018  And these new-age London icons will be built by Chinese manufacturer Geely, according to Morgan Stanley, which has already invested £250 million in production facilities.

Of course, London, under the leadership of Mayor Boris Johnson, has been a leader in policy to drive the uptake of low-emissions vehicles. Most recently, the City of London introduced further lowered the congestion charge for ultra low-emission vehicles, and proposed giving decommissioning grants to taxis that are were than 10 years old – to encourage drivers to switch to electric cars. The policy update also proposes increasing the number of electric vehicle charging points, and could even lead to the introduction of preferential access and lower parking charges for electric vehicles in some parts of London.

5. There’s not much competition from hydrogen fuel models in the market  The fact that hydrogen cars – the first example of which arrived on Australian soil in April – have been one of the few low-carbon technologies to attract the attention of federal industry minister Ian Macfarlane, might serve as a warning to some investors. But they get a mention in the Morgan Stanley report, if only to note that the Hyundai Tucson hydrogen model (the same that Macfarlane welcomed), launched in 2013 with a sales goal of 1,000 models by end of 2015, had only achieved around 25 percent of this goal as of June.

Reprinted with permission.

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