Is Electric Vehicle Era Making Fossil Fuel-Driven Vehicles a History?

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Summary

  • With the flourishing EV arena, a few new players are entering the space.
  • Governments are putting resources into the EV foundation to support its development.
  • Semiconductor shortage is an area of concern for the EV business.

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Investors consistently keep a watch on the next big thing, and electric vehicles (EV) are today's big idea. Internet is flooded with new updates related to EVs. EV-related start-ups have been mushrooming across the globe with new EV models are being launched almost every week.

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The recent surge in EV sales during the past year amid the coronavirus pandemic has turned the table on fossil fuel-driven vehicles. Electric vehicles registered groundbreaking sales growth of over 43% in 2020, while the sales of fossil fuel-driven cars were almost hammered by 20%. With the start of the EV revolution after marking its impactful presence, the industry was driven by high-intensity fuel afterwards. Joe Biden's recent US$2.0 trillion infrastructure plan includes US$174 billion towards the development of the EV sector and it has additionally accelerated the movement.

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Has the EV Era already started?

With more and more bullish news coming on a daily basis, analysts around the globe believe that the EV Era has already begun. The leading tech company, Xiaomi, has recently decided to jump into the already crowded Chinese EV sector, with US$10-billion investment towards EV.

Image source: © Maxoido | Megapixl.com

German automaker Daimler anticipates intense competition with rumoured news of Apple and Alibaba entering into the EV market. Earlier in January, tech giant Baidu partnered up with China's biggest automaker, Geely Automobile, to step into the car production domain.

Interesting Read: Why Hyundai, Kia Deny EV Collaboration Reports with Apple? - Kalkine Media

Hundreds of new EV variants have already been launched in the last couple of months. Mercedes, Tesla, Hyundai, Audi, Ford, General Motors, Toyota, and Jaguar have already entered into the race of tapping the EV market with the frequent launch of EVs. Numerous electric car start-ups, including NIO, Xpeng, and Li Auto, are in line to launch their new long-range vehicles in the coming days.

Miners across the globe, including ASX-listed Galaxy Resources Limited (ASX:GXY), Mineral Resources (ASX:MIN), Wesfarmers (ASX:WES), Altura Mining (ASX:AJM), Orocobre Limited (ASX:ORE), and Pilbara Minerals Limited (ASX:PLS) are also supporting the EV battery manufacturers by supplying raw materials.

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Technological upgradation coupled with battery affordability and stringent emission policies dramatically reduces the use of Internal Combustion Engines worldwide. Some leading market analysts believe that every new car and truck that will be sold in the US by 2035 could be an EV.

Chip Shortage-A short-term hiccup

Higher demands with poor inventory planning have led to the shortage of chip or semiconductors which are used to manufacture EVs. Lower demands during a pandemic due to automobile manufacturing plants' shutdown forced chip suppliers to reduce their production. However, the dramatic surge in EV sales in the fourth quarter of 2020  forced EV manufacturers to ramp up their production, creating a skyrocketing demand for chips.

However, due to a limited number of chip suppliers because of its heavy manufacturing cost, the global supplies remain limited, creating a market deficit.

Must Read: How global chip shortage is denting auto production plans

However, the problem is believed to be resolved soon, as the chip manufacturers understood the importance of the EV Era and have already started to increase their production.

Biden also planned to meet with the executives of numerous major companies on 19 April 2021 and was expected to endorse US$50 billion towards the manufacturing and research of semiconductors.


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