The electric vehicle (EV) market is accelerating rapidly, with sales reaching 14 million in 2023, up from just 4% of total sales in 2020 to 18% in 2023. In 2024, EV sales were projected to hit 17 million, marking a 20% year-on-year growth.
With rising demand, government incentives, and increasing price competition, EVs could soon dominate the automotive industry. As adoption expands, the EV sector is set to reshape global markets, potentially displacing nearly 6 million barrels of oil daily by 2030.
Let's understand if this momentum could make EV stocks the driving force of the stock markets.
What are EV stocks?
EV stocks represent shares of companies involved in the electric vehicle industry, including automakers, battery manufacturers, charging infrastructure providers, and EV component suppliers. EV stocks gain from rising global demand for clean energy transportation, government incentives, and advancements in battery technology.
Impact of major EV manufacturers on stock indices
Tesla's weight in the S&P 500 drives volatility
Tesla's 15.4% drop to $222.15 marks its lowest level since October 2024, contributing to S&P 500 instability. With a 45% decline in 2025, it remains the index's least performer. Tesla's influence is significant due to its high market cap, making fluctuations impactful.
Delivery concerns, Cybertruck losses, and Musk's political controversies have added to investor uncertainty. Meanwhile, skepticism over self-driving technology and falling demand for older models add pressure. Given Tesla's past sharp recoveries, volatility remains a defining factor. The EV giant's movements affect tech-heavy indices, influencing broader market sentiment and investor confidence in the EV sector.
BYD's rapid growth influences Asian markets
BYD led global EV sales in 2024, selling 4.48 million vehicles, a 43.9% YoY increase, surpassing Tesla's 1.99 million units (+5.4% YoY). Geely ranked third with 1.35 million sales.
Chinese EVs held 6% of the Southeast Asian market in 2023 and are projected to reach 13% by 2030. Despite $3,000 in Thai subsidies, EV sales fell 9.3% YoY. BYD's Indonesian plant of $1.3 billion also aims to increase production. While middle-class interest grows, high prices and infrastructure gaps hinder widespread adoption. This will require localized strategies for sustainable market penetration.
Rivian and Lucid's swings impact Nasdaq
Lucid (traded on Nasdaq) saw Q3 2024 deliveries surge 91% YoY to 2,781 vehicles, driven by aggressive factory incentives averaging $19,403 per vehicle. Production increased 16% YoY to 1,805 units, helping clear inventory.
In contrast, Rivian (also traded on Nasdaq) reported a 36% YoY drop in deliveries to 10,018 vehicles and slashed its 2024 production forecast from 57,000 to 47,000-49,000 units due to supply shortages. Despite the setback, Rivian reaffirmed its full-year delivery target of 50,500–52,000 vehicles. The volatile performance of both stocks adds uncertainty to the Nasdaq, reflecting the risks and rewards of investing in emerging EV players.
Traditional automakers' EV shift affects Dow Jones
Legacy automakers are slowing their EV transition due to regulatory uncertainty, high production costs, and shifting consumer demand. Ford postponed $12 billion in EV investments, while GM cut its 2024 EV production targets.
US EV sales growth slowed to 47% in 2023, down from 75% in 2022. Meanwhile, China's NEVs captured 38% of the global market, challenging US and European manufacturers. Tariff threats on imports could further impact pricing and gains. As EV adoption stalls, Dow Jones-listed automakers face stock volatility. This reflects market concerns over gains and long-term sustainability in a changing industry.
Global trends in EV sales and market penetration
Tesla's dominance drives market volatility
Tesla remains the leader in the EV market, holding a 16% share in 2019, up from 12% in 2018. Its Model 3 accounted for 13% of global EV sales. However, Tesla's expansion into new markets and reliance on regulatory incentives introduce volatility.
As seen in the US, Tesla's sales declined in 2019 due to a federal tax credit phaseout. Overseas, Tesla's market entry in China and Europe has influenced local competition. This had made its stock prices susceptible to policy shifts, production challenges, and competitive pressures.
Regional EV shifts impact global stock trends
Regional disparities in EV adoption affect global stock trends. Europe has emerged as the fastest-growing EV market, expanding by 44% in 2019, while China's EV growth stagnated due to subsidy cuts. The US faced a 12% decline as Tesla shifted focus to global markets.
These shifts impact automaker valuations, with European companies gaining momentum while US and Chinese firms face uncertainty. Investors closely watch regional policies and market preferences as shifts in demand influence automaker stocks and investment flows.
Regulatory changes fuel automaker stock swings
Government regulations play a critical role in EV adoption and stock market performance. In 2019, China cut EV subsidies, slowing market growth. In contrast, Europe's strict emission targets and purchase incentives increased EV sales.
The US, meanwhile, rolled back fuel-economy standards, discouraging EV adoption. Such regulatory changes influence investor sentiment, causing automaker stock prices to fluctuate. Companies that align with evolving policies and protect regulatory advantages are better positioned to attract investment and sustain growth.
Battery supply chain investments reshape valuations
In 2019, the lithium-ion battery market grew by 17%, with Chinese firm CATL holding a 28% share. European manufacturers increased local production, reducing reliance on Asian suppliers.
Investments in battery factories, like Tesla's Gigafactories and LG Chem's US expansion, are reshaping automaker valuations. Companies protecting battery supplies gain a competitive edge, while supply shortages or geopolitical risks can negatively impact stock performance.
Government policies dictate EV stock movements
EV stock performance is susceptible to government policies. In China, extended tax exemptions and infrastructure investments have supported EV sales despite earlier subsidy cuts.
In Europe, stringent emission norms and high purchase incentives drive demand.
The US, however, has seen weaker growth due to regulatory rollbacks. Automakers that align with favorable policies and adapt to shifting regulations gain from increased investor confidence. However, those facing policy setbacks experience a decline in risk valuation.
New EV models boost automaker stock growth
The introduction of new EV models has fueled automaker stock performance. In 2019, 143 new EV models were launched, with plans for 450 more by 2022. Tesla's Model 3 dominated sales, while European automakers like Volkswagen and Audi expanded their offerings.
As emission regulations tighten, automakers investing in diverse EV portfolios see increased investor interest. Companies with strong innovation pipelines and competitive pricing strategies are likely to experience stock growth. However, those lagging in EV adoption risk falling behind.
2025 projections for the EV stock market
The global EV market is set for significant growth in 2025. According to EV Volumes, EVs are expected to account for 22.6% of total light-vehicle sales worldwide. Looking ahead, the market is projected to expand rapidly, reaching 44.6% by 2030 and 69.5% by 2035. This growth is driven by advancements in battery technology, increasing government incentives, and expanding charging infrastructure.
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