EVs and the autonomous revolution

Electrified transport has been a major sector driving global energy transition investment, accounting for US$757 billion in 2024, according to BloombergNEF’s Energy Transition Investment Trends report.

In January, the Consumer Electronics Show highlighted the convergence of EVs and autonomous driving, with Google’s (NASDAQ:GOOGL) EV subsidiary Waymo announcing an expansion of its partnership with Hyundai Motor (OTC Pink:HYEVF,KRX:005380) and a new collaboration to integrate the Zeekr RT into its fleet.

NVIDIA (NASDAQ:NVDA) CEO Jensen Huang, who kicked off the event by delivering a keynote speech, touted the success of Waymo and Tesla (NASDAQ:TSLA) as a symbol of the “arrival” of autonomous vehicles.

Huang later disclosed during an interview with Yahoo Finance’s Dan Howley that NVIDIA's technology for autonomous driving is projected to generate US$5 billion in annual sales.

Waymo has since announced plans to expand its self-driving testing to 10 more cities in the US this year and has expanded its services in the San Francisco Bay Area.

In March, the company teamed up with Uber (NYSE:UBER) to offer robotaxis in Austin, Texas — ahead of Tesla’s planned June launch — with plans to expand into Atlanta later this year.

Mixed performance for Tesla

Tesla faced a period of mixed performance in Q1, with its share price experiencing a 2.9 percent drop after Bank of America Global Research changed its rating from “buy” to “neutral” in early January. Analysts cited high execution risks as a near-term growth impediment, mentioning the delayed launch of Tesla's robotaxi and low-cost models.

A National Highway Traffic Safety Administration investigation into Tesla's Smart Summon system initiated a further downturn in its share price. This was compounded by a substantial drop in the week of January 20 amid Trump’s declaration of an “energy emergency” and evolving policy conditions.

Subsequently, Brand Finance indicated in February that Tesla's brand value was weakening due to revenue shortfalls and heightened competition, particularly from China, where companies like BYD (OTC Pink:BYDDF,SZSE:002594) and Xiaomi (OTC Pink:XIACF,HKEX:1810) have eaten into its market share. BYD surpassed Tesla’s revenue for 2024's fourth quarter, and analysts predict it will lead in global battery EV market share for the full year.

In addition to that, BYD unveiled a new EV battery system and platform in March that boasts an ultra-fast charging capability, which will be featured in its new series launching in April.

Xiaomi, another significant Chinese player in the EV market, reported 365.9 billion Chinese yuan (US$50.6 billion) in annual revenue in its 2024 earnings report, with 10 percent from its new EV division.

Xiaomi also lifted its 2025 delivery target for EVs to 350,000, up from an earlier figure of 300,000, with plans to release an electric SUV this summer, pitting it against Tesla’s recently refreshed Model Y.

Tesla, which has plans to launch in Saudi Arabia on April 10, didn’t provide a vehicle delivery estimate in its Q4 report, saying only that it expects to see a “return to growth."

Musk's DOGE work weighs on Tesla

Tesla CEO Elon Musk’s involvement in US politics has also weighed on the company.

Daniel Ives, a Wedbush Securities analyst who has been bullish on Tesla for the last four years, has reduced his Tesla share price target to US$315 from US$550. In a client report shared by Bloomberg on April 6, Ives said his reason for doing so was a "brand crisis" created by Musk’s connection to Trump’s trade policies.

Protests have erupted across the US and in Canada in reaction to Musk’s increasingly prominent role in the Trump administration, with participants honing in on his seemingly unrestricted access to sensitive government data and his efforts to shut down agencies and implement massive funding cuts.

Reports of vehicle and storefront vandalism surfaced as activists called for Tesla drivers to sell their vehicles and dump shares as a form of protest against Musk’s involvement. This sentiment resulted in substantial declines in Tesla’s share price on multiple occasions throughout March, the largest of which (15.43 percent) occurred on March 10, when Trump confirmed his intention to move forward with tariffs on goods from Canada and Mexico.

Tesla "least exposed" to auto tariffs

Global tariffs announced on April 2 have added another layer to the challenges global trade poses to the cleantech sector, particularly for the auto industry. While the situation is unfolding and some political analysts are hopeful that negotiations will result in lower levies, many economists say high tariffs could devastate the sector.

CFRA Research analyst Garrett Nelson’s latest work on the subject describes how Tesla is the “least exposed” to automobile tariffs and could even stand to benefit. “There are very few winners,” Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions, said in a telephone interview with Bloomberg. “Consumers will be losers because they will have reduced choice and higher prices.”

Renewable energy under the Trump administration

Recent efforts to bolster the renewable energy sector have seen gradual success, as demonstrated by new data from the International Renewable Energy Agency showing that added renewable energy capacity accounted for more than 90 percent of total global power expansion last year at 585 gigawatts,

Solar and wind energy grew at the highest rate, with the US adding a 54 percent increase in solar capacity.

BloombergNEF's Energy Transition Investment Trends report, which was released on January 30 and includes data likely compiled before Trump's inauguration and subsequent policy changes, names solar and wind power as a “mature” part of the energy transition and states that they are likely to continue receiving funding in 2025; however, under the Trump administration, the near-term future of both industries appears uncertain.

Wood Mackenzie's David Brown told the Globe and Mail in January that despite the current strong growth in US solar capacity, the effects of policy uncertainty and incentive cuts might be more pronounced after the next 12 to 18 months.

Along with pausing IRA funding earmarked for climate programs, Trump has ordered the suspension of wind and solar power projects. Wood MacKenzie recently cut its five year outlook for new wind energy projects by 40 percent, citing economic concerns and the current administration’s policies as hurdles.

Within this evolving landscape, Plug Power, a hydrogen manufacturer that secured a loan guarantee of almost US$1.7 billion to build hydrogen power plants before Biden left office, was able to claim tax benefits after this order took effect. The company added US$30 million to its liquidity pool on January 24 through the transfer of the Federal Investment Tax Credit; however, a US$200 million funding gap prompted a Seeking Alpha contributor to name it a high-risk bet.

Cleantech outlook for 2025

Wood Mackenzie’s latest energy transition outlook suggests that North America's power sector emissions could be reduced by 20 percent by 2030, although factors like tariffs and policy could impede this progress.

While bank financing for low-carbon energy technologies nearly matched that of fossil fuels in 2023, a potential funding threat has emerged as all major US banks have withdrawn from the Net Zero Banking Alliance. Additionally, BlackRock (NYSE:BLK) announced its decision to leave the Net Zero Asset Managers initiative in January.

The current political and economic outlook presents a landscape rife with questions for the cleantech industry.

A District Court judge in Rhode Island blocked the order to freeze IRA funding in late January, but comments from the administration suggest the battle is far from over. Even so, progress continues on several fronts. A note by Citigroup (NYSE:C) ESG analysts asserts that the energy transition is further along now than it was during Trump’s first term, and his policies will not be able to hold back the progress that has already begun.

Meanwhile, companies are continuing to expand. Revel CEO Frank Reig told Axios there's still plenty of financing support for EV charging from local governments and state utilities, despite the cutbacks in federal funding. The electric taxi company recently opened its first EV fast-charging station outside of New York City in San Francisco's Mission District, with plans to add another 125 chargers at seven sites in the Bay Area within the year.

For its part, EV maker Rivian (NASDAQ:RIVN) is proceeding with its US$6.6 billion IRA-backed Georgia factory despite earlier state-level uncertainty. Rivian has also spun out a new micromobility startup, securing US$105 million in funding with investment from venture capital firm Eclipse. Researchers at BloombergNEF predict that by 2050, three out of four global sales of two and three wheelers will be EVs, compared to approximately half in 2024.

Despite potential headwinds for renewables, Petar Pejovic, senior portfolio manager with Pejovic Bighill Private Wealth at Wellington-Altus Private Wealth, has suggested that energy demands for artificial intelligence (AI) infrastructure are likely to support a diverse energy mix, including green sources.

Nuclear energy is gaining traction as a sustainable option, with nuclear fusion and small modular reactors identified as high-growth areas by the Cleantech Group at its annual North American forum.

Electric mobility and hydrogen could face slower growth due to manufacturing hurdles and demand issues, respectively. However, investment opportunities are anticipated in hydrogen for long-term decarbonization.

The intersection of AI and cleantech is strengthening, attracting increased investment. Furthermore, the cleantech and defense sectors are converging on dual-use technologies. The growing awareness of the health impacts of climate change is also expected to drive further attention and investment in cleantech solutions.

The coming months will be critical in determining the trajectory of the cleantech industry as it navigates policy shifts, market competition and technological advancements.