With enhanced environmental awareness, more and more individuals are choosing to switch from gasoline-powered vehicles to electric vehicles (EV) each year, thereby boosting EV sales substantially. Globally, EV sales are estimated to grow 50% or more in 2021, as predicted by analysts at Morgan Stanley, quoted in a MarketWatch article.
Such growth projections should encourage investors to keep an eye on
Utilities
that are operating in the EV market.
Role of Utilities in EV Market
Rising use of EVs has boosted demand for EV charging stations. Utilities play a vital role in the EV market as they possess the expertise and advantage in setting up faster and more efficient charging stations.
Since rising EVs on the road means increased strain on the electric grid, electric utilities, with deep rooted knowledge in maintaining such grids may help in successful transformation of the grid for the EV revolution.
U.S. EV Market Outlook
Favorable government policies and support in terms of subsidies and grants, tax rebates and other non-financial benefits in the form of car pool lane access along with declining battery prices have been boosting the EV market.
Notably, the U.S. EV market is expected to reach 6.9-million unit sales by 2025, reflecting a significant improvement from 1.4-million-unit sales forecast for 2020, as estimated by Frost & Sullivan’s recent analysis.
Utilities’ Initiatives
Such an impressive outlook surely encourages Utility providers involved in the EV market to invest in construction of more charging stations across the United States. Notably in the United States, through May 2020, 45 utilities across 26 states have been approved to invest nearly $1.5 billion in EV charging-related programs, as stated by a Natural Resources Defense Council (NRDC) report.
In November 2020, a group of major U.S. utilities along with
Tesla
TSLA
,
Uber Technologies
UBER
, automakers like Lucid Motor along with EV battery maker
Albemarle
ALB
and a few others announced the launch of Zero Emission Transportation Association to lobby for national policies to boost EV sales (as reported by Reuters). Utilities like
Consolidated Edison
ED
,
Duke Energy
DUK
and
Pacific Gas and Electric
PCG
are part of this group.
Such developments along with growing EV sales will surely benefit the aforementioned utilities in the days ahead.
Stocks to Gain
Herein below we discuss a handful of utility stocks that are taking notable initiatives to expand their footprint in the EV market and considering the forecast for global EV sales, these stocks are likely to gain in 2021.
Edison International
‘s
EIX
subsidiary, Southern California Edison (SCE) received regulatory approval in August 2020 from the California Public Utilities Commission for the expansion of its Charge Ready 2 EV charging infrastructure program worth $436 million. The program aims to add about 38,000 new chargers throughout the utility’s 50,000-square-mile service area. By 2030, every passenger car and small-to-midsize SUV in SCE’s fleet will be electric, as predicted by the company. Additionally, the electric utility will convert 30% of medium-duty vehicles and pickup trucks, 8% of heavy-duty trucks and 60% of forklifts from fossil fuel to electric power.
Duke Energy
currently has more than 600 electric vehicles in its fleet, including over 220 on-road vehicles. By 2030, the company intends to convert 100% of its nearly 4,000 light-duty vehicles to electric and 50% of its approximately 6,000 combined fleet of medium-duty, heavy-duty and off-road vehicles to EVs, plug-in hybrids or other zero-carbon alternatives as more of these options become available.
Pacific Gas & Electric
’s EV Charge Network program aims to install up to 7,500 Level 2 EV chargers at multi-unit dwelling and workplaces between 2018 and 2020. The company’s goal is to convert 700 sites to electric fleet vehicles by 2023 to support the adoption of 6,500 medium- and heavy-duty electric vehicles.
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