Crossroads - Back to the Future Day

Today marks #backtothefuture Day! Writer Bob gale had predicted the Cubs would win the World Series on Oct 21, 2015, although a year off, the nostalgia of this movie has lasted generations.

I remember watching Back to the Future II when Dr. Emmett Brown and Marty McFly time-traveled from the year 1985 to the future! They travelled in a DMC DeLorean “Time Machine” to the year 2015. The car was made of brushed stainless-steel with gull-wing doors and a futuristic look, which has adoring fans, even today.

This Time Machine was powered by a Mr. Fusion power-generation unit that used household garbage to generate one point two-one “jigawatts” (1.21 GW) of energy, feeding the Flux-Capacitor to obtain time travel. At the time it was inspiring to see how energy was being produced and that idea ignited the imaginations of an entire generation – alternative energy wasn’t science-fiction. ?

Twelve years ago, there were only two models that were exclusively powered by an electric battery.?In a few more years, Electric Vehicles (EV) are expected to exceed 130 models from all manufacturers. North American legacy brands, GM, Ford, and Chevrolet are preparing for this shift in consumer demand, with GM looking to end internal combustion engines by 2035 and offer more than 30 different models. Ford is targeting 40% of their models to be EV by 2030.

Although EV’s are synonymous with lifestyle brands like Tesla and Rivian, many are catching up. According to EV Volumes[i] Volkswagen is expected sell over 1.5 million units, which represents a 6-fold increase in sales by 2025. Compared to Tesla, the first to mass-produce and mass-market EVs, is projected to sell over 2.8 million units, and by 2040[ii] EVs will outsell fossil-fueled vehicles. ?

It’s important to note that EV adoption in the United States, one of the largest vehicle markets, has slowly increased over the years, but lags Europe and China. A recent report[iii] shows EV Sales, including Plug-in Hybrid Electric Vehicles (PHEV), grew at an annual rate of 28% in the U.S., compared to 51% in China and 41% in Europe. It will be interesting to see how American habits change as new EV Truck and SUVs replace their gas-guzzling behemoths over the next decade.

The environmental and social impacts of these developing technologies are also accelerating the demand for EVs and similar vehicles, as they are outfitted with better onboard information systems that help with passenger safety and have positive impacts on climate initiatives. As corporations and families see higher fuel prices squeeze their budgets there have been inflationary pressures on goods and services across most sectors. Various levels of government are offering rebates and tax credits that will help in the adoption and transition from gas- and diesel-powered vehicles to EVs.

Entering 2022 we are seeing a fundamental change in the kinds of energy we are using to power our vehicles. Moving away from fossil-fuels to more clean energy storage and sources, it is only a matter of time before battery technology and raw materials are secured for the rising demand.

In the meantime, an entire generation from the 80s, are still waiting for flying cars or a Mr. Fusion, but for now seeing a self-driving Electric Vehicles on our roads is pretty rad.

?Ashish Utarid

CIM?, PFP?, QAFP?, FCSI?

Assistant Vice-President - Investment Strategy

[i] EV Volumes,[ii] BloombergNEF,[iii] ING