At Global X ETFs, we believe a chart is worth a thousand words, and then some, when it comes to our changing world. Charting Disruption, our annual thematic research project, depicts the disruptive themes changing our world through charts, graphics, and much more. While the topics of the four main sections, including Personalized Medicine, A Greener Economy, Experiential Technologies, and FinTech, Blockchain, & Web3 are each unique, they are connected by innovation and the ability to transform the world.

Widespread cost parity remains a contentious point. We are still in the early stages of BEV development, with multiple scale, manufacturing efficiency, and design improvements to be made across the vehicle, from chassis to powertrain. Battery costs are the main driver, of course, and some original equipment manufacturers (OEMs) foresee battery costs dropping to as low as $70 per kilowatt hour (kWh).³ However, if raw material mining and processing capacity is insufficient, supply will become constrained and battery prices will rise. Generous incentives, such as those in the Inflation Reduction Act (IRA), can help mitigate costs and potentially help certain segments reach price parity by the end of the decade. Price parity in smaller segments will be more difficult due to razor-thin margins and very competitive pricing, at present.

At Rho Motion, we expect total cost of EV ownership to be lower than ICE vehicle ownership by 2029-2030 and remain so thereafter. However, higher electricity prices in Europe narrowed this gap recently, and there is disparity between those consumers with ability to charge at home overnight and those who rely exclusively on public charging. Higher energy prices combined with access to charging may cause challenges on the way to mass EV adoption, if it means total cost of ownership improves for some and not for others compared to ICE vehicles.

In terms of use of sodium in solid-state batteries, sodium ions are a less viable choice than lithium due to their size. When the sodium ions are inserted into the cathode material during discharge, the cathode expands significantly to accommodate the large sodium ions. Subsequently, when the sodium is removed during charge, the cathode then contracts. This constant expansion and contraction would be an issue, especially with solid state, because it would cause cracking of and disconnection from the solid electrolyte.

Future innovations are key for the continued adoption of EVs, with cost being one of the biggest considerations if EVs are to become standard for everyone. Currently, the component in EV battery packs that contributes the most to mass and cost is the cathode.⁴ Hence, companies are already working to reduce the amount of critical material used in cathodes, such as through the removal of cobalt, and they’re working to increase the use of more abundant and cheaper metals. For example, there is increasing adoption of LFP cathodes where the iron sulphate precursor used in the manufacturing of LFP is a by-product of steel and titanium dioxide manufacturing.

We expect further advancements in cathode technology will continue to reduce critical metal content, driving down cost and demand constraints while improving performance characteristics. LFP is better for the bottom line and safety than nickel-based cathode chemistries, but it is less energy dense and less conductive. There is work being done to explore modifications that can improve LFP performance, such as doping with metals like manganese (LMFP) or altering the cathode surface, such as carbon coating, to improve electronic and ionic conductivity.

Arguably the most promising future innovation to consider for EVs is solid state. Use of solid electrolytes in EV batteries can reduce the overall weight of battery packs and allow for higher capacity electrodes. Solid electrolytes remove the need for separator materials and take up less volume than their liquid counterparts. Solid electrolytes also create the opportunity to use lithium metal anodes, which offer high specific capacity at 3860 milliampere-hours per gram mass (mAh/g). They help prevent the growth of dendrites that occurs uncontrollably on lithium metal when using traditional liquid electrolytes, which has a catastrophic effect on cycle life. Lithium metal anodes’ superior volumetric and gravimetric energy densities allows for smaller and lighter battery cells.

A key driver of this progress was the 2020 reduction to the European Union’s CO₂ emissions standard from 130 grams per kilometer (g/km) CO₂ to 95g/km CO₂, the New European Driving Cycle (NEDC). This stricter target required OEMs to mobilize quickly to lower their average fleet emissions in order to avoid fines. The only way OEMs could comply was to sell more BEVs and PHEVs. In 2021 and 2022, the 95g/km CO₂ standard became even more difficult to achieve given the reduction in incentives, including super-credits and eco-innovation credits.

When the world shut down to combat COVID-19 in the first and second quarters of 2020, so did the EV market. Sales dropped drastically, first in China, and then in the rest of the world. However, sales recovered strongly as governments in many major markets introduced huge COVID relief stimulus packages that included an emphasis on funding for environmental technologies, including those in the EV market. Importantly, some of Europe’s biggest auto markets showed their commitment. Germany’s relief package increased the country’s EV subsidy to a maximum of €9,000 (~ $9,482 at time of publishing).⁷ France’s relief package increased the country’s maximum EV subsidy to €7,000 (~ $7,375 at time of publishing).⁸ As a result, sales started to increase sharply in the second half of 2020, with the European market growing very strongly.⁹

We expect limited traction for hydrogen within the passenger car (PC) & light-duty vehicle (LDV) segment, where most vehicles will transition to BEVs. The key limitations in this segment are the lack of refilling stations and the cost to install them, the high price of FCEVs themselves, and how costly they are to the manufacturer. The three major FCEVs in the PC & LDV segment are the Toyota Mirai, Hyundai Nexo, and Honda Clarity. BMW may launch its iX5 FCEV at some point after it introduced the vehicle in 2021, although it remains in testing as of December 2022.

The key selling point for FCEVs versus BEVs is that the energy density in a fuel cell stack is far greater than that offered by current and even future battery technologies. For comparison, top specification batteries in the market today offer a gravimetric energy density of roughly 280 watt-hour per kilogram (Wh/Kg), while fuel cells can go as high as 3,000 Wh/Kg, depending on efficiency losses. To put both technologies in perspective, diesel offers roughly 13,000 Wh/Kg before efficiency losses in combustion, which helps explain why the technology will be difficult to displace for long-haul heavy-duty commercial vehicles.

Another key advantage for FCEVs in the commercial segment is that refilling takes practically the same time as a diesel or gasoline vehicle and is arguably more intuitive to consumers used to refilling with fossil fuels. This feature is especially important for long-haul commercial transit because it results in less downtime compared to charging and a potentially higher utilization rate for the driver, a key cost consideration. These advantages also apply to passenger cars used for commercial applications.

DRIV: The Global X Autonomous & Electric Vehicles ETF  seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (“EVs”), and EV components and materials.  This includes companies involved in the development of autonomous vehicle software and hardware, as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt.