Today, I’d like to share my research framework and investment roadmap for the electric vehicle (EV) industry in Europe and the United States. Over the past two years, this sector has been widely discussed in markets, yet many investors still focus on surface-level indicators such as penetration rates and delivery growth. In reality, the Western EV industry is standing at the threshold of a structural inflection point. Without a clear grasp of the underlying industrial rhythm, it’s easy to get distracted by short-term news flow and miss the real medium-term beta opportunities.
1. Two Models, Two Timelines
China’s EV boom followed a “subsidy-led demand → supply chain catch-up” model. Europe and the U.S. are taking a different route — a “policy certainty → supply chain build-out → consumer adoption” pathway, driven from the top down.
On the policy front, Europe’s Carbon Border Adjustment Mechanism (CBAM), the 2035 ICE ban, and the U.S. Inflation Reduction Act (IRA) have already laid a solid foundation for the next decade. Supply chain relocation and capacity expansion are no longer conceptual—they’re underway.
While China’s early growth was policy-fueled and demand-led, Europe and the U.S. are following a more deliberate path. Growth may look slower in the early stages, but the combination of policy visibility and capacity ramp-up sets the stage for a much stronger mid- to late-cycle surge.
We can clearly break this timeline into three phases:
2022–2024: Policy anchoring — subsidies, regulations, and legislation take shape.
2025–2028: Capacity build-out — Gigafactories ramp up rapidly.
Post-2028: Consumer acceleration — penetration rises sharply, triggering structural growth.
This timeline also defines the order in which investment themes will unfold.
2. Market Size and Policy Landscape
Based on data from the IEA and ACEA as of mid-2025:
Europe: BEVs account for roughly 15.6% of new registrations; including PHEVs, total electrification stands at around 24%.
United States: BEVs make up 8–10% of new sales, with recent fluctuations tied to IRA subsidy adjustments and seasonal factors.
2025 H1 European New Energy Vehicle Order
Looking to 2030, mainstream forecasts suggest:
Europe: 55–65% penetration, depending on infrastructure and policy execution.
United States: 40–45% penetration, with IRA implementation and state-level divergence being key swing factors.
Corresponding battery demand is expected to rise from around 1,200 GWh today to roughly 3,000 GWh, placing Western markets in a “early acceleration phase” similar to China between 2016 and 2020 — but with stronger policy certainty and more mature technology.
3. Industry Structure: Divergence at the OEM Level
On the vehicle side, the competitive landscape is diverging rapidly.
Tesla remains the cost and technology benchmark, with leadership spanning 4680 batteries, software-defined architecture, and a closed-loop ecosystem of supercharging and energy storage.
Legacy OEMs — Volkswagen, Stellantis, GM, Ford — are investing heavily in electrification, but they lag meaningfully in software capabilities and supply chain coordination. GM’s 2025 EV strategy revision and related write-downs underscore this reality.
The industry is heading toward a “winner takes the premium, laggards get marginalized” dynamic, reminiscent of the early smartphone era.
For this reason, I view Tesla less as a core holding and more as a sentiment and strategic bellwether. The real investment opportunities lie deeper in the supply chain.
4. Core Investment Themes
(1) Upstream Resources & Materials — Highest near-term visibility
The IRA is reshaping domestic battery supply chains, making upstream players the first clear beneficiaries.
Resources: Albemarle (lithium), Livent (lithium compounds), MP Materials (rare earths).
Materials: Umicore (cathode), BASF Battery Materials (Germany), plus a wave of emerging U.S. anode and electrolyte suppliers.
As local Gigafactories come online, these companies should see the first tangible earnings uplift.
(2) Midstream Battery Manufacturing & Equipment — 2025–2028 Beta Trade
This is the heart of the capacity build-out cycle. Northvolt, LGES, SK On, and Panasonic are planning over 1,000 GWh of combined capacity.
Cell manufacturing: Panasonic (deep Tesla ties), LGES / SK On (serving legacy OEMs), Northvolt (leveraging European policy tailwinds despite ongoing restructuring).
Equipment & process: Schuler (press), Manz, PNE and other European equipment suppliers stand to benefit from factory ramp-ups.
Historically, valuations in this segment re-rate ahead of earnings delivery, offering high-conviction beta.
(3) Vehicle Intelligence & Electronics — Long-term alpha
Software and semiconductor content will be the structural alpha driver in the next leg. Traditional Tier-1s like Bosch and ZF are slow to pivot, leaving white space for new leaders.
Power semiconductors: Infineon, ON Semi, STMicro, Wolfspeed — accelerating adoption of SiC and GaN technologies.
Sensors & compute: Mobileye (ADAS), Nvidia (autonomous driving stack), Luminar / Innoviz (LiDAR) — holding key technology positions.
This segment is gradually redefining Tier-1 dynamics, creating long-duration growth opportunities.
5. Strategy Roadmap
0–2 years (short term): Prioritize upstream resource & materials names. Policy support + capacity localization offer the cleanest visibility.
2–4 years (mid term): Track Gigafactory commissioning closely; position ahead of the battery and equipment beta wave.
4+ years (long term): Build exposure to power semis, sensors, and intelligent driving platforms to capture structural alpha.
The Western EV investment story isn’t a short-term subsidy trade. It’s a multi-stage industrial transformation driven by the interplay of policy certainty, capacity cycles, and technological milestones.
Investors who align with this rhythm can front-run the medium-term beta, filter out short-term noise, and seize the opportunities emerging from a once-in-a-generation supply chain realignment.
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