The real reason why the new $1.4 trillion electric car industry is so big: it’s so expensive

By Emily L. JohnsonNovember 17, 2019 10:48:38While electric vehicles are starting to show up on the road, it’s unclear how many of them will actually be sold.

But that could be about to change.

A new report from research firm IHS predicts that electric vehicle sales could surpass the $1 trillion mark by 2040.

It also says the industry is set to grow to $1,200 billion by 2060.

That’s a massive jump from the $600 billion figure that’s been used to project the growth of the industry over the last three decades. 

IHS says it’s not too late for the industry to catch up to Tesla and other electric car companies, but it’s important to keep the momentum going.

“We think the industry needs to accelerate to get to $2 trillion in sales by 2035, as it has done historically,” says Peter Neumark, IHS’ chief technology officer.

“The growth of electric vehicles will only accelerate over time.”

Electric vehicle sales in 2020 (Source: IHS)While Tesla and many other companies have been pushing to become the industry leader, the report says there’s a lot more work to be done to keep up.

“For instance, electric vehicle manufacturers need to improve battery quality and safety, increase range and reliability, and deliver electric vehicle charging infrastructure, among other things,” the report states. 

The IHS report also suggests that the industry’s overall sales growth is slowing down as a result of an increase in government regulation and a lack of incentives for manufacturers to develop new technologies. 

Tesla is currently facing a series of lawsuits from states, including Washington state and Michigan, over its lack of a state-backed electric vehicle mandate.

Tesla was forced to issue a statement saying it would comply with all laws and regulations.

IHS expects that to continue to be the case, and the industry will continue to rely on a lack or lack of regulatory support for future electric vehicle releases. 

What’s next for electric vehicles? 

Tesla’s recent announcement that it would invest $1 billion in building a new factory in Mexico has already prompted the industry and automakers to look to the United States for their next growth opportunities.

Tesla’s CEO Elon Musk said he expects to see more investments in the US by 2020, and said he would like to see automakers make it easier for their customers to buy EVs. 

In a statement, ICA said it was “confident that this will have a positive impact on electric vehicle adoption and sales, as well as on global supply chains.”

IHS believes the company will be successful in its efforts.

“There’s a great deal of investment in electric vehicles in the U.S. but very little in Mexico,” Neumarck said.

“That’s because we think it’s going to take a few years for manufacturers in the country to catch on to the technology, the quality, and safety of the vehicles that are being produced.”

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