Tougher anti-pollution regulations and breakthroughs in energy management and materials technology are powering the uptake of low-to-zero-emission vehicles. Looking further ahead, electric & autonomous vehicles and shared mobility are set to revolutionize our concept of transport.
Growing awareness of the harmful effects of air pollution has increasingly spurred government and companies into action. Transportation accounts for around 25% of global greenhouse gas emissions, with light vehicles alone responsible for 17%1. Beyond the soaring numbers of premature deaths from breathing dirty air, the associated economic and welfare costs of air pollution are rising rapidly, worsened by population growth and city density.
With internal combustion engine (ICE) emission technology improving only incrementally, electric vehicles (EV) increasingly offer an attractive alternative.
In pure economic terms, EV prices need to fall for sales volumes to overtake those of traditional vehicles. Thiemo Lang, Senior Portfolio Manager of the RobecoSAM Smart Mobility fund, says “EVs need battery power. Hence, for EVs to dominate, lighter, lower cost, energy-dense lithium battery production is a necessity.”
The auto industry consumed around 18% of global lithium output in 2016 and RobecoSAM estimates that this will rise to 50% by 2020. As the below chart shows, battery costs, which presently amount to approximately a third of the price of an EV, have already tumbled to around a fifth of their 2010 level.
With the downtrend continuing, the tipping point of cost parity with traditional cars is fast approaching. What’s more, EVs’ use of lightweight materials such as aluminum and polymer composite boosts energy efficiency, also making room for bigger batteries – hence adding vital range – as well as safety devices and onboard control systems that interface with external networks.
The benefits of EVs extend beyond low fuel costs and emissions; the drivetrain – the mechanism that converts battery power into movement – is much simpler and lighter than traditional ICE versions, cutting both assembly and ongoing maintenance costs. Pieter Busscher, deputy manager of the RobecoSAM Smart Mobility fund, explains, “These advantages are increasingly making EVs more price-competitive, boosting their mass appeal.” Unsurprisingly given the supportive backdrop, automakers have set ambitious performance and production targets for EV models.
EV technology is set to revolutionize mobility, literally from the inside out. Beyond the car’s internal design, technologies enabling interaction within a larger transport system will facilitate communication with centralized data hubs, helping to optimize performance, improve safety and reduce traffic congestion. Additionally, vehicle-to-grid applications will enable owners to optimize charging tariffs and help to stabilize the energy supply grid.
Software, sensors and semiconductors are at the heart of this transition, with today’s EVs already having around 10 times the semiconductor content of traditional ICE vehicles.
Looking ahead, we believe that both the sophistication of EVs and demand for them will intensify as consumers gradually embrace autonomous driving technologies. Vehicle architecture, manufacturing and engineering will undergo a complete overhaul. The capabilities of today’s cars are defined by pure mechanics, hydraulics and hydrocarbons, whereas cars of the future will be ‘computers on wheels’, driven by circuits, silicon and software.
These new generation vehicles will be safer, greener and, thanks to their connectivity, able to improve urban life and wider infrastructure. Thiemo Lang believes that the sector’s transformation presents exciting investment opportunities, commenting, “We believe that the EV revolution has only just got started. Soon it will foster radical new business models as consumers migrate away from outright ownership towards shared usage, changing people’s way of life for the better.”
1Credit Suisse Connection Series, “Drive Train to Supply Chain,” April 14, 2016, p. 40
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any US Person.
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) who are professional investors. By clicking “I Agree” below and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States (within the meaning of Regulation S under the Securities Act) and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States (within the meaning of Regulation S under the Securities Act) and (v) you are a professional non-retail investor.
Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States.
Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction.
We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States.This website has been carefully prepared by Robeco Institutional Asset Management B.V. (Robeco). The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use with the general public.