Electric vehicles (EVs) are a secular trend and their sales volume will grow exponentially in the next few years. Autonomous vehicles will probably become the norm in the future, but regulatory measures will slow down their adoption. People are moving from owning vehicles to sharing or not owning at all.
The exponential growth of EVs will come not only from the well-reported case of China, the world's largest market for EVs. It will also be fired up by smaller countries in Asia. The continent is at the center of this rapid transformation and the economic consequences and opportunities are huge.
These are secular trends and contribute to the poor stock performance of the Big Three auto companies in recent times. For instance, Ford (NYSE:F) has a P/E ratio of only 5.39 and General Motors (NYSE:GM) an even lower one of 3.96. These are ridiculously low if one considers just their sales and profit numbers.
Young people are moving away from car ownership in the traditional model. Lyft (Private:LYFT) co-founder John Zimmer recently quoted figures of how in 1983 92% of Americans aged 20 to 24 had driving licenses. By 2014, that had declined to 77% and the rate of decline is set to quicken. Those that do remain driving will probably do so on the basis of car sharing rather than outright ownership.
He also recently predicted that by 2025 car ownership in U.S. cities will "all but end." One of his investors, GM, might not be so happy to hear this. It may have been more a wish than an accurate prediction as these trends will happen more rapidly in Asia than in the USA.
EVs and their development will likely lead to substantially lesser sales for the conventional car companies though. A recent study by the OECD found that such vehicles would reduce the number of cars required by over 80%.