Electric-powered cars are gaining popularity rapidly, propelled by their cutting-edge technology and growing affordability. As more auto giants step into the electric vehicles market space in order to keep investments flowing, the global electric cars fleet is bound to increase at a fast pace in the near future.

New laws passed with the aim to control pollution and technological advancement has made electric cars all the more desirable. In this time of shifting consumer taste and popularity from internal-combustion-engine-powered vehicles to electric-powered vehicles, it would be prudent to note a few major auto stocks that are investing in the electric vehicle space.

Electric Vehicles Market Set for High Growth

According to McKinsey’s Electric Vehicle (EV) Index, sales of electric vehicles worldwide crossed a million units for the first time in 2017. New regulations passed by governments globally, that include the United States and China, in a bid to control emission from gasoline-powered vehicles is a major reason for the rise in electric vehicles roll out. This is one of the aspects that could lead the global electric vehicles market to register high growth in the next five years.

The decrease in cost of lithium-ion batteries is a crucial factor that could make the jump from internal combustion engines (ICE) to electric vehicles easy. Lithium-ion battery costs have fallen 24% from its 2016 levels and are expected to slide as much as 90% by 2020. According to Tesla, Inc. (TSLA), this drop in battery costs will allow EVs and ICEs to have a comparable upfront purchase price.

In addition, the rise in battery capacity, the longevity of electric car battery packs, more reliability of EVs against ICEs by virtue of their mechanism and cheaper cost of electricity against fossil fuel are some of the tailwinds driving the electric vehicles market.

Being the world’s largest auto market, China is expected to emerge as the biggest market for electric vehicles globally. A major reason behind this development could be China’s increased global electric mobility.

China ranks second in McKinsey’s Market Electric Vehicle Index. Norway tops the index. Other major players include Switzerland, Sweden, the Netherlands, the United States, France, and the United Kingdom.

Global Electric Vehicle Growth Projections

The entry of several leading automotive companies in the electric vehicles market has made the space highly competitive. The need for making their products lucrative to consumers has given rise to the production of highly-equipped and affordable vehicles.

According to a report by MarketResearchFuture released earlier this month, the electric vehicles market worldwide is set to witness high growth during the 2018-2023 period. The EV market was valued at 106.5 billion in 2016 and is expected to register compound annual growth of 18.96% along with doubling its revenues over the 2018-2023 forecast period.

The report further states that a surge in fuel prices combined with the growing popularity of electric vehicles is helping to boost demand for EVs. An increase in personal car ownership and demand for personal cars are also benefiting the electric vehicles market. The government’s anti-pollution regulations are also making electric vehicles lucrative, as a result boosting the EV market.

Some of the major automotive companies that are making huge investments in the electric vehicles market include General Motors (GM - Free Report) , Tesla, Ford Motor Company (F - Free Report) , Volkswagen (VLKAY - Free Report) , Nissan Motor Company (NSANY - Free Report) , Daimler AG (DDAIF - Free Report) and Toyota Motor Corporation (TM - Free Report) , the report stated.

5 Auto Companies Set to Benefit From Electric Car Boom

We have hand-picked 5 automotive stocks that could make the most of the electric vehicles market in the near future, driven by their investments and initiatives in electric vehicles market and technology.

General Motors plans to shut down five of its facilities in the United States, stopping production of six of its Sedans by the end of 2020. The company intends to double its investments in self-driving vehicles and electric cars, per a Forbes report. General Motors carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the current year has advanced 5.9% over the past 60 days.

Tesla’s plans to build 1 million electric cars in 2020 are ambitious, but its Model 3 that starts at $35,000 is affordable. Tesla carries a Zacks Rank #3 (Hold) and its expected earnings growth rate for the current year is 85.8%.

Volkswagen plans to roll out 3 million electric cars annually by 2025. The company carries a Zacks Rank #3 and its expected earnings growth rate for the current year is 7%.

Ford Motor is making investments of $11 billion in electrification. The company announced earlier this year that it was working on its first all-electric car inspired by its iconic Ford Mustang. Ford carries a Zacks Rank #3 and the Zacks Consensus Estimate for the current year has advanced 0.7% over the past 60 days.

Toyota is aiming to generate sales of 5.5 million from electric vehicles and hybrid by 2030. The company carries a Zacks Rank #3 and the Zacks Consensus Estimate for the current year has advanced 1.5% over the past 60 days.