Goldman Sachs Sees EVs Claiming 50% Market Share by 2035

As the quest for achieving zero emissions intensifies, electric cars will account for almost 50% of total new vehicle sales globally by 2035, as per Goldman Sachs Research. According to Kota Yuzawa, a strategist for equity research at Goldman Sachs, the rising use of self-driving cars and electrified vehicles would cause a significant change in the automotive sector between the years 2020 through 2030.

As regulations for the environment get tighter and electric vehicle technology advances, the auto sector’s growth won’t slow down. The transition to electric vehicles is predicted to happen more quickly.

Governments in nations all around the world are shifting their focus to electrification and sustainable energy initiatives to reduce emissions while they embrace net-zero goals in the upcoming decades. The United States, whose economy is the largest, along with Canada and Britain as well as the 27-member European Union seek to achieve net-zero emissions by 2050, while China, which comes in second in terms of economy after the U.S., hopes to do so by a decade later. The United Arab Emirates and Saudi Arabia both want to become carbon neutral by 2050 and 2060, respectively.

Goldman Sachs predicts that electric vehicle sales will increase by 32% yearly during this decade, and the electric vehicle revenues will rise from $1 billion to $110 billion.

The report stated that the electric vehicle battery market, which can make up approximately 40% of a vehicle’s price, is consolidating. As per Goldman Sachs, the leading five manufacturers on the battery manufacturers’ list controlled more than 80% of the market across the globe in 2020, whereas the leading five car producers controlled just approximately 40% of the market worldwide.

According to the research, battery manufacturers now have more negotiating leverage, which helps them increase profits. Unfortunately, the government policies in place will alter the supplier networks, with nations such as the U.S. emphasizing local production of materials and pushing the local manufacturing of electric vehicles and their batteries.

The United States Inflation Reduction Act (IRA) encourages the purchase of electric vehicles and provides several tax benefits on renewable energy sources such as solar, wind and hydropower. This framework forbids companies from using the Chinese battery supply chain for exporting batteries to the United States, according to Goldman Sachs.

According to the investment bank, their analysts find strong indications that the IRA formal announcement set to be made in March 2023 will provide comparative advantages to manufacturers that, going forward, are pushing for domestic production of electric vehicles, batteries and electric vehicle materials in the United States. With all these favorable policies and initiatives in place, manufacturers such as QuantumScape Corp. (NYSE: QS) have all the motivation they need to scale up their operations.

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