The recent news of slowing EV sales, particularly from Ford, has reignited skepticism about the long-term viability of electric vehicles. While some may see this as a sign of a declining market, it's important to s consider the broader context and the inherent advantages of EVs.

Let's start with the factors we have known for a while: Electric motors are simpler, require less maintenance, and have a longer lifespan. Additionally, they produce less heat, eliminating the need for complex cooling systems. The single-speed transmission used in EVs further simplifies their design and reduces maintenance costs. These factors contribute to a more responsive and efficient driving experience.

Recent advancements in battery technology have largely addressed concerns about range anxiety. Modern EVs can now travel significant distances on a single charge, making them suitable for most daily commutes. Furthermore, the charging infrastructure is rapidly expanding, providing convenient options for drivers.

Still, EVs appear to be on a retreat, or at the least, its secular story seems to have run the course. The segment is about to embark on a new, sharp, secular wave because of autonomous driving.

EVs are crucial for the development of fully autonomous vehicles (AVs). Integrating the complex computer systems and advanced sensors needed for autonomous driving is far more straightforward with the simpler architecture of electric powertrains. This compatibility is fundamental for seamless operation and high reliability in self-driving cars.

While it's technically possible to build autonomous vehicles based on traditional ICE platforms, the integration with EVs is far smoother and more efficient. This synergy between EVs and AVs is set to become a powerful, long-term growth driver for the EV market, even in the face of temporary setbacks in sales.

China has taken a leading role in the development of autonomous driving technology. With clear regulations and testing guidelines, the country has made significant strides in deploying driverless robo-taxis. China's recent authorization of driverless autonomous robo-taxis in Shanghai without safety supervisors marks a significant milestone in developing Level 4 FSD capability. This move puts China on par with the US in terms of autonomous driving technology, with companies like Waymo and GM in the US and Baidu in China demonstrating Level 4 FSD capabilities. Tesla, by comparison, is estimated to be at Level 2/3.

With GenAI, the AV technology is entering a phase of sharp progress, and the EVs are somewhat tied at hips with these.