Moody’s Forecasts Growth, Low-Returns for EVs

Electric vehicles will grow from less than 1% of the global new vehicle market today to more than 7% in the mid-2020s and as much as 19% by the end of next decade, according to a report by Moody’s Investors Service.

But the rating agency says the price of entry to develop EVs will remain high through early next decade, thereby requiring “considerable” capital investments by carmakers. The authors also caution that such vehicles will provide lower returns for manufacturers than the already-meager margins typical for vehicles powered solely by an internal combustion engine.

Moody’s says demand for EVs will grow regardless, thanks to improving range, greater availability of charging facilities and shrinking costs for batteries and their control systems. Other contributing factors are more stringent fuel economy/emissions regulations, improved public awareness and acceptance, and high-profile providers such as Tesla.

The report notes that vehicle makers will be forced to continue to invest in multiple alternative technologies (hybrid systems, fuel cells and autonomous and connected cars) for the foreseeable future. It also opines that EVs will provide lower returns for manufacturers than the already-meager margins typical for vehicles powered solely by internal combustion engines.​​​​​​