The Future of Electric Vehicles

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Electric vehicles are going to increase sales more than sevenfold or a 50 percent annual rate from 7.8 million units in 2022 to roughly 60 million units in 2027, according to Morgan Stanley. One of the biggest downside risks to our forecast are supply constraints, though we think the market is signaling, price signaling for those to be resolved. But also whether or not traditional automakers, automakers can successfully transition quickly enough.

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This week’s Big Ideas Monday Mini Episode focuses on Electric Vehicles.

Investors once questioned whether the future was electric. Demand for EVs has scaled despite a pause in cost declines caused by commodity price shocks. Now investors doubt whether or not the growth will be exponential.

The debate around electric vehicles has shifted from demand to supply. Based on Wright’s Law, ARK forecasts that EV prices will decline and sales will increase more than 7-fold, or 50% at an annual rate, from roughly 7.8 million in 2022 to 60 million units in 2027.

The biggest downside risks to our forecast are supply constraints that could continue to impact pricing and the speed at which traditional automakers transition to electric vehicles.

Sources: ARK Investment Management LLC, 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.