The move to electric vehicles (EV) has been happening slowly for many reasons. One of the points of friction has been the lack of charging infrastructure. But there's one eye-popping number and a tipping point figure that should have EV investors thrilled, not just Tesla investors.
Eye-popping commitment
One of the biggest questions outside charging concerns that faced EV early adopters was the inflated price tag that came along with the cars themselves. Now, customers are finally starting to see signs that EVs are ready to go mainstream.
One such sign is that 26% of consumers who financed an EV were willing to commit to a price tag that topped $1,000 monthly, nearly double the rate of those financing a traditional gasoline vehicle, according to Edmunds. Also as of this year, consider that the 14% of gasoline-only vehicle consumers committing to $1,000 or more a month in payments was the highest on record.
That commitment signals a tipping point as EVs gear up to finally move mainstream: The demand and commitment is there. According to an analysis from Bloomberg, when EVs hit 5% of new car sales in a country, that has been the tipping point for when sales have rapidly accelerated. The U.S. crossed that threshold at the end of 2021.
But what does that mean exactly? Well, if the U.S. follows similar trends to the 18 countries that hit that threshold before it, EV sales could spike to represent 25% of new vehicle sales by the end of 2025.
What's in it for investors?
Let's not spend much time pointing out EV sales penetration jumping fivefold will benefit the likes of pure EV plays such as Tesla and Nio. It's clear the ballooning addressable market will fuel them in the short and long terms.
Beyond the obvious rising-tide-lifts-all-boats adage, there are more specific benefits for companies you might not expect, such as Ford Motor Company (F 0.47%) and General Motors (GM 4.37%). Both have traditionally driven much of their profits from massive gasoline-powered trucks and SUVs.
Once passenger cars hit mass adoption, consumers will see more options for zero-emissions trucks (ZETs), and that trend is already beginning. In 2019, only 20 models of medium and heavy-duty ZETs, or Class 2b-8, were available in the U.S. market. That figure jumped to 145 models in 2021 and is expected to increase again in 2023.
Already Ford's F-150 Lightning has hit the ground running since its June launch: The average time on dealer lots for these ZETs is just eight days and was America's best-selling electric pickup in September. The Blue Oval's E-Transit was also America's best-selling electric van in September, helping Ford's broader EV sales figure to nearly triple over the prior year's September.
Ford's F-150 Lightning. Image source: Ford Motor Company.
And if new EV sales are to spike to such a degree, the need for additional charging infrastructure will follow. Currently, the market has cooled on charging infrastructure plays such as ChargePoint Holdings (CHPT -1.47%) and Blink Charging (BLNK 2.17%) until the market becomes clearer.
An accelerating EV sales market could come just in time for Blink Charging, which is burning through cash while still making acquisitions for growth, innovating new products annually, and seeking out municipal and government contracts. Its second-quarter revenue jumped 164%, but if investors see the EV market start on the path of exponential growth, they'll be much more willing to buy in long term.
Similarly to Blink, ChargePoint's growth has been directly proportional to EV penetration. With over 200,000 activated ports, and over 355,000 ports through roaming reach, the company is the market leader in North America in commercial Level 2 AC chargers and you could argue it's the most capable of taking more of the growing pie than any charging infrastructure company.
The bottom line
No matter which angle you take when investing in the future of EVs, there's little question that more consumers committing to high EV price tags -- at the same time EV penetration hits a historical tipping point of 5% -- is fantastic news for the industry.
EVs are the future, and EV stocks might be about to accelerate faster than you realize.
