• Guido Fridland

The Rise of Electric Vehicles

Guido Fridland is an MBA’23 at London Business School. He is passionate about energy transition and thinks that venture capital is one of the keys to unlock the potential of growing cleaner companies and great founders. Before the MBA, Guido worked for the investor relations team at Vista Energy (NYSE:VIST) and was an investment banker.

Photo by Marc-Olivier Jodoin on Unsplash

Risks and Opportunities Towards Massive Adoption

A recent report by the United Nations stated that 73% of the global emissions are now tackled by net zero goals. But so far, actions have been far from words, with little to no impact around the world: after a slowdown in 2020 due to Covid-19, CO2 emissions from energy combustion and industrial processes picked up in 2021 to reach new all-time highs. As things stand right now, most projections show that the pace should slow down sooner than later, but is that enough to achieve the reduction of global warming to 1.5° Celsius?

Production, commercialisation, and use of Electric Vehicles (“EV(s)”) and Plug-In Hybrids (“PHEV(s)”) is the main answer to address emissions by the transportation industry, which accounts for 16% of global greenhouse emissions; being road transport the most relevant category, representing 12%. A deeper dive into risks and players on the path to global and rapid energy transition reveals that the industry is growing exponentially but there is a long way before it becomes the main road vehicle.

[1] Greenhouse emissions have consistently increased since the 1900s

So far, EVs and PHEV only represent 8.3% of global road vehicles sales, with China, Europe and the US leading the way (+90% of EVs sold), but with the rest of the world falling far behind. Luckily 2021 represented an acceleration of the trend, almost doubling from 4.2% in 2020 and more than triple the 2.5% in 2019 - the last year with no Covid-19 impact. Deloitte estimates that EVs and PHEVs will total 30% of global sales by 2030, but some car manufacturers cast some doubts and remain skeptical on such aggressive projections.




The main challenges preventing mass adoption of EVs in the developed markets relate to performance, range, and safety, and, on the other hand, lack of infrastructure also deters adoption in the rest of the world.

Battery Performance

EVs produce 65% less emissions that gasoline-powered vehicles, so there is no doubt that driving an EV is less harmful than driving gasoline cars. But the life cycle of a battery does not start when we all jump into our brand-new EV but way earlier, during production. As Florian Knobloch told the CNBC, “Producing electric vehicles leads to significantly more emissions than producing petrol cars. Depending on the country of production, that is between 30% to 40% extra in production emissions, which is mostly from the battery production”. Moreover, given that EVs have only been on the road for a few years, the duration of a battery is still to be discovered during the next years. EDF, a UK electricity provider, estimates they will last between 10 to 20 years, and for the whole industry to work, it is a must to find a secondary market. If it is not developed, the value chain is at risk of producing too many emissions. Although some studies have been conducted, the overall impact is still to be determined.

Range & Safety Issues

“A car is like a weapon,” starts a common saying, “if not managed well, it can be lethal.” EV users and potential customers have raised doubts regarding to potential safety issues all around the world. To start, these new vehicles are designed to operate within a narrower temperature range, making it necessary to create mechanisms and control the temperature of the batteries. Two other risks have been detailed by Kia: Thermal runaway - an unstoppable chain reaction causing a fire at temperatures of 60°C and above – and fire caused by electrolyte, which is highly flammable. All producers have been working on addressing all these issues and put their cars through strict testing before sending them onto the road. So far, data shows that EVs and PHEVs involved in fatal collisions have caught fire less times gasoline cars.

Range has been another major concern. Wallbox, an electric vehicle charger company based in Spain, put together an article to demystify many of the concerns from the public regarding the adoption of electric vehicles. People widely believe that fuel-powered vehicles are much more efficient than the surging competitors, but is it true? An average fuel vehicle has an autonomy of 482 kilometers per full tank, while there already are many EVs, like Hyundai Kona Electric or Tesla S long range, that can already go past this distance.

Charging infrastructure

With most car users travelling around 50 kilometers per day (and no more than 85), the charging infrastructure should not be one of the main concerns for the industry. Still, potential users consider it the main barrier for EV adoption. In the European Union it is expected that at-home charging shifts from the current 75% to as low as 40% by 2030, as the EV deployment gets to lower-income class without access to the network. China, Europe, and the US have been deploying their network and are keeping up the pace with the growth, but it would be difficult to develop other markets with lower income levels and longer travel distances with no previous investment in charging infrastructure.

Driving the change

As opposed to web-based startups, global EV adoption will only happen with a considerable investment in hardware and infrastructure. Given their cheaper access to financing, large companies and government must participate to guarantee a transition into cleaner transportation.

Global sustainable trends

CO2 emissions have exponentially increased for the last 170 years, with terrible consequences around the world, such as an increase of average global temperature by 0.85°C From 1880 to 2012. COP26 in late 2021 ended with the goal of keeping alive the 1.5°C target but understanding that strong action needs to be taken in the short term to achieve it.

Fortunately, following pressures from the most vulnerable countries and for the first time, COP will now try to phase down fossil fuels, which will increase the utilisation of EVs worldwide. Moreover, the commitment to provide financial support to emerging countries will play a key role in expanding the energy transition trend. This example not only reflects the necessity of certain actions to stop the projected increase in global temperatures by up to 3.2°C until 2100, but also the change in individuals’ behaviours around the world, who are already changing old-lasting habits into more sustainable ones.

Industries Majors: Manufacturers and E&P companies moving into energy transition

There are three main suppliers in the vehicle industries: extraction and production companies, downstream companies and vehicle manufacturers. Since oil & gas companies are usually integrated, many of them have announced exhaustive plans targeting energy transition. As most competitors, BP aims to become a net zero emissions company by 2050, increase their investment in low carbon by 10x to $5 billion, reduce oil & gas production by 40% and, provide 100,000 electric vehicle charging points, which is a cornerstone for the industry. To do so, the company has invested in or created a bunch of companies and alliances such as Aral, Amply Power, Piaggio and BluSmart Move (cleaner solution in one of the most polluted regions of the world: India). Other majors like Shell, Chevron and Equinor have announced similar plans. It is extremely important to highlight cases like Tesco, who was known in the UK as a grocery providing gas station services (as Walmart does in the US), but has reached its 500th EV charger connection in the UK.

Although integrated energy companies have a much harder time in changing and adapting their businesses than less integrated companies, vehicle manufacturers have also been through an internal transformation to make their business model more friendly to the climate. Most, if not all, are already in the process of manufacturing all plug-in hybrid vehicles and electric vehicles. Furthermore, GM plans to eliminate gas and diesel vehicles by 2035, before coming carbon neutral in 2040. The plan includes the deployment of a charging infrastructure, the investment and development in EV batteries, the increase and improvement of EV offer, and the transition into cleaner energies to power their operations.

Jumping to the other side of the ocean, Mercedes Benz will not launch any gas-powered vehicles after 2025, while its plan will also focus on batteries manufacturing, motor performance, charging infrastructure and neutrality of its whole supply chain. On the other hand, Toyota, BMW, and Stellantis, as the main cases, have raised some concerns regarding an all-in strategy with electric vehicles, stating that it is difficult to put all eggs in the same basket and that there is no certainty of a charging infrastructure to be in place when required.

The Public Sector

But efforts will be futile without the pressure of governments, which will be much more important during the upcoming years. The three main spheres of action are regulations, tax exceptions, and public infrastructure. All Chinese, European and US governments have limited the development of the gas-vehicles industry and fomenting the transition into electric vehicles. China, as an example, has been a pioneer in the production of EVs given its strong government push. Earlier in 2019, manufacturers were required to import or produce at least 10% of EVs, a figure that increased to 12% in 2020. At the same time, the government deployed an extensive and exhaustive charging network, which comprises 40% of the charging installed capacity of the country. The Chinese case regarding subsidies has actually been different. Quite high during the first years, subsidies have been reduced and are expected to reach close to zero by 2022, already relying on the strength of the industry and standards set through regulation.

In addition, the European Union, passed the Fit for 55, aiming at reducing by at least 55% the emissions by 2030, which will directly impact the EV adoption, while 17 UE member are now offering incentives for the purchase of these new vehicles. The United Kingdom, offers a GBP 1,500 grant as the Low-emission vehicles plug-in grant, and has done an outstanding job in deploying a public network: it is currently comprised of +28,000 chargers, 4 times the number in 2018 and a 9% increase compared to 2020. In the United States, California is requiring car manufacturers to produce at least 22% of EVs by 2025, setting an ambitious mid-term target, and President Biden has announced the plan to invest $15 billion to reach a network of 500,000 chargers around the country.

One can find success cases beyond these, too – but many more failures. Some countries such as India, Japan, New Zealand, or Chile have also made progress and expecting an increase in EVs once this policies impact, but many other countries are yet to take action. Some developed countries already have the necessary resources, but the transition to net zero should be a combined effort, with financing and support for emerging and frontier countries.

Opportunities: increasing capital flowing into the sector

When an industry goes through so many changes as the automotive one is going, many opportunities arise. Although flying cars might be the opportunity in which everyone thinks about, these might be the most prominent ones for the upcoming years:


Chargers are the most obvious solution – this one comes with a personal story. Late in 2021, I rented an electric car with some friends in Tuscany. The closer charger from our location was half an hour away. We spent one hour charging 15% of the battery, then lost 50% of the charged power in the one-hour return trip.

With governments planning to spend billions of dollars within the next year, targeting the public network charging sounds like a prominent idea. However, it is not the only one: many businesses plan to grow their own network, such as supermarkets, parking spaces and offices, which would create a bigger addressable market.

The charge-at-home customers are also potential targets, with most of the population still to switch to cleaner vehicles. Just to quantify, EY and Eurelectric project that Europe will need 65 million electric vehicles chargers by 2035, an investment of $134 billion, and Alix Partners expects a global investment of $300 billion worldwide to accommodate the growing stock of EVs. Although some strong players are already competing for the three biggest markets, there is still plenty of room to address empty ones around the world.

As the trend becomes global, local players with regional knowledge will need to emerge in order to facilitate the deployment of new networks, such as Statiq in India. But regarding developed markets, we can still find many opportunities. ev.energy, a growing company based in the UK which recently raised its Series A, has been doing an amazing job not in deploying a network but in creating an app that allows for smart charging. Bonnet, led by Patrick Reich, has also created an app providing a monthly subscription with access to a charger network, which reduces even more the cost of powering up your car.

AI – Self driving

An opportunity regardless of massive EV adoption, self-driving is already booming. It is well known that Tesla has developed its own technology that allows for current partial features, but as it is stated in their website, “All new Tesla cars have the hardware needed in the future for full self-driving in almost all circumstances. (…) The future use of these features without supervision is dependent on achieving reliability far in excess of human drivers as demonstrated by billions of miles of experience, as well as regulatory approval”.

But we have not seen the best so far: self-learning software and machine learning will impact the industry a lot and are expected to. A great example is Wayve: Not only have they created a robust product, but also, they are working in offering something to a wide range of brands, which might heavily reduce the necessary CAPEX in manufacturers to move onto the next wave: autonomous vehicles. As opposed to many past revolutions, it is highly probable that the massive adoption of autonomous vehicles and electric vehicles are complementary, instead of supplementary. For their project, Wayve has recently raised a $200 million Series B backed by world-known investors, a round that is estimated to have brought their valuation to $1 billion, becoming a unicorn.

Electric Buses and Integrated Companies

Just some time after electric vehicles, we expect the adoption of electric buses. In need of bigger investment in order to replace an older and heavier fleet, buses are not expected to fully fall in the first big transition but later. Although many cities, with London leading the way, are investing and will try to switch into an electric bus fleet, long-distance buses, trucks, and service providers will fall behind.

Aiming at reducing capital needs and, therefore, decreasing the cash flow exposure of these massive projects, comprehensive service providers will play a key role in facilitating next steps. Vemo Mobilidad, with an experienced team in the energy industry leading the way, is already working to electrify the network, place charging stations, buy and lease electric buses, and work on the maintenance of the fleet. Backed by Riverstone and led by Roberto Rocha as CEO and German Losada as Chairman, they are already in the path to expand all around Latin America.


With the recent increase in batteries’ raw materials, their prices have skyrocketed. As per a recent article by the Financial Times, EVs represented 60% of the global demand for lithium, a level that could go all the way up to 85% by 2025. Prices are a global concern, but also is the waste these batteries generate. In case nothing is done when the useful life is over, their impact on emissions could be terrible, heavily reducing the benefits of electric vehicles. Redwood Materials, based in the US, is already many steps ahead. They have already put together a process to recycle and reuse secondhand batteries coming from many sources, including electric vehicles. These kinds of competitors are the ones that will allow for the growth of the industry without worrying about not being net zero.

Lack of Information

In the era of information, one underestimated topic, if not the most, for the development of the electric vehicle industry is precisely information. Full of components of which the average user knows nothing about, how does the early majority get to know the fair price of this innovative vehicle? There are a bunch of services out there for other industries, like Skyscanner for flights or websites comparing internet and electricity providers, but who does it with EVs? Digital Motors hits right on the spot, since it is heavily invested in clearing all the buying process and will probably have a larger impact as the EV industry gets larger around the world. Having raised a round by two of the main funds in the energy transition industry, InMotion and Autotech Ventures, they are already in their way to create a more transparent market

Wrap up

With the global hard stop of the economy due to Covid-19 in 2020, greenhouse gas emissions dropped by 6%, which is still short of the 7.6% required to achieve the 1.5°C target. Even more surprisingly, global investment in fossil fuels remained higher than investment in climate activities. EVs are one of the most innovative and impactful solutions for the short and midterm. Because it is a capital intense industry, it is imperative that key players and more VC funds invest in infrastructure and technology to transit into a cleaner mobility all around the world, while making the most profit of the opportunities in the market.


[1] IEA, CO2 emissions from energy combustion and industrial processes, 1900-2021, IEA, Paris https://www.iea.org/data-and-statistics/charts/co2-emissions-from-energy-combustion-and-industrial-processes-1900-2021 IEA (2021), Global EV Outlook 2021, IEA, Paris https://www.iea.org/reports/global-ev-outlook-2021 [2] https://www.ev-volumes.com/ [3] https://www2.deloitte.com/us/en/insights/focus/future-of-mobility/electric-vehicle-trends-2030.html; Source: Deloitte analysis, IHS Markit, EV-Volumes.com