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Opinion
Conor Sen

Investor Pressure Is Speeding the Arrival of Electric Vehicles

Even as gasoline-powered models rake in the cash, shareholders will reward spending on the future rather than a soon-to-be-dying business.

Out with the old.

Out with the old.

Photographer: Joe Klamar/AFP via Getty Images

As the automobile industry evolves toward an electric future, incentives will be a big driver of the transition — not just potential tax credits to accelerate demand, but investor behavior that helps shift automakers' priorities.

Manufacturers are going to try to ramp up spending on future electric models while maintaining profit at a level acceptable to their shareholders. That will inevitably lead to fewer dollars spent on their gasoline-powered models, and eventually product stagnation in that segment. Businesses can have a dominant market share but still be starved of capital when they're seen to be in secular decline. Just look at the list of brick-and-mortar retailers that have traded at distressed valuations despite sizable revenue bases.