Tesla EV Network Shows a $2.7 Trillion Gap, Morgan Stanley Says

(Bloomberg) -- A $2.7 trillion chasm stands between electric vehicles and the infrastructure needed to make them popular.

That’s how much Morgan Stanley says must be spent on building the supporting ecosystem for EVs to reach its forecast of 526 million units by 2040.

The estimate, projected by scaling up Tesla Inc.’s current network of charging stations to assembly plants, shows how infrastructure can be the biggest bottleneck for the industry’s expansion, Morgan Stanley said in a Oct. 9 report.

To support half a billion EVs, the projected investment will require a mix of private and public funding across regions and sectors, and any auto company or government with aggressive targets will be at risk without the necessary infrastructure, the report said.

The industry shift to battery-powered cars is being helped by government efforts to reduce air pollution by phasing out fossil fuel-powered engines. China, which has vowed to cap its carbon emissions by 2030 and improve air quality, recently joined the U.K. and France in seeking a timetable for the elimination of vehicles using gasoline and diesel.

China will become the largest EV market, accounting for about a third of global infrastructure spending by 2040, according to Morgan Stanley.

Which companies stand to gain from the shift?

The report names PG&E Corp. and PPL Corp. among U.S. utility firms to benefit from the EV infrastructure spend. Shenzhen Inovance Technology Co. will eye opportunities in China’s electric equipment space, while Japan’s Fanuc Corp. and Yaskawa Electric Corp. will profit from robotics demand, the report said.