3 reasons to be optimistic in 2026

00:00 Speaker A

So I feel like this year is really important for the electric vehicle industry, and not necessarily in a good way. In your opinion, have we really seen a fundamental shift in not just policy support, but consumer demand for electric vehicles?

00:30 Speaker B

Absolutely. Thank you for being me. In the near term, there’s no question that the on-demand environment is going to be challenging. Companies generally expect EV adoption to account for at least 5 to 7% of new vehicle sales in the near term. But our message over the next two years is not to sleep on the US EV market. While the near term is likely to be very difficult and there is not a whole lot of visibility in the next few months. There are several tailwinds that we think are still there that provide a more optimistic backdrop for the next few years. Um, so I think we’re still optimistic that EV adoption can increase over the next few years. And to your point, much of it will be driven in the past, actually by consumer demand and new product.

01:21 Speaker A

Well, then you have some reasons to be optimistic. Let’s go through them. Ah, what you see are the consumer demand indicators that you see that that desire for EVs is still there because we’ve seen hybrids really take off in a different way, in a faster way, but that’s not necessarily happening for EVs and we’ve seen car manufacturers pull back from their plans.

01:54 Speaker B

Absolutely. There are three reasons to be more optimistic over the next two years. One should not forget that the US is a very dense auto market. We have an average of two vehicles per household, which is more than any other country. And so the burden of EV adoption is simply more consumers waking up and concluding that you can have the best of both worlds. If one of your vehicles is a combustion or hybrid, and the other is an electric vehicle. If you start to see more consumers make those decisions, and we’re seeing that in some areas of the US, you can model very strongly for US EV sales, you know, a decade or more of US EV sales and still be left with a society that has an EV at home and then a combustion or hybrid at home. This is a very overlooked tailwind that we may have structurally as a country over the next few to many years. The second reason is that when you look at the loyalty of EVs, meaning what current EV owners are doing when they’re returning to the market, they’re still buying EVs at a higher clip than we’re seeing in other ratio systems, including um hybrids. And so EV to EV loyalty uh being that high is an indication that we’re not really seeing consumer remorse or people moving back from their previous EV purchases. Once you buy an EV, it will be very sticky. And the third reason is really the product. Uh we’ve seen automakers pull back in the near term, uh we’ll probably see more restructuring actions. Uh there are still a lot of investments in next generation products and we can’t forget that EVs are still innovating at a very fast pace where each generation is better and cheaper than the one before. So think about upcoming vehicles like the Rivian R2, of course the Tesla CyberCab, uh Ford, well, making their mid-size uh truck investments that will start in 2027 with prices starting at $30,000 or so, and GM investing in next-gen batteries and products as well. And within that, the final point is autonomy. As you know, we’re very bullish on consumer autonomy over the next few years, and autonomy correlates well with EVs. And so if autonomy takes off at the consumer level in the next few years and really kind of picks up, you’re going to see a potential tailwind of EV adoption off the back of that as well.