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Net Element Inc. (NASDAQ: NETE) Well-Poised to Capitalize as EV Market Set to Grow by 29% per Annum Over Next Decade

  • Net Element’s reverse merger with EV manufacturer Mullen Technologies expected to close by 4Q2020
  • Mullen expects to begin marketing Dragonfly K50, sold in conjunction with JV partner Qiantu Motors from 2Q2021 followed by its own EV SUV in 2022
  • Deloitte expects annual EV sales to rise from 2.5mn in 2020 to 31.1mn in 2030, implying 29% CAGR over next ten years
  • By 2030, EVs expected to account for 32% of all automobile sales globally, approximately 27% in United States

Net Element (NASDAQ: NETE), a financial technology company which has recently transformed its business model to become a pure-play electric vehicle (“EV”) manufacturer through its merger with privately-held Mullen Technologies Inc., is set to begin marketing its initial vehicle model – the Dragonfly K50 in 2Q2021. The car model, developed in conjunction with China’s Qiantu Motors, will mark Net Element’s initial foray into the North American electric vehicle market—a venture which the company will further reinforce through the launch of its self-manufactured EV SUV, the Mullen MX-5, by the second quarter of 2022.

In an extensive report centered around the battery electric vehicles segment, Deloitte recently forecast that the electric vehicle market is set to reach a tipping point in 2022 – a point of time at which the consultancy expects the cost of ownership for a battery-powered vehicle to be on par with its internal combustion engine-powered counterparts, thereby reducing relative cost differences as a barrier to purchase. With that in mind, it is noteworthy to explore the potential target market size for Net Element as it makes its initial foray into the global EV marketplace (https://ibn.fm/dVlgo).

By 2030, Deloitte anticipates that EV sales could rise from 2.5 million vehicles per annum in 2020 to 31.1 million vehicles per annum—implying a compounded annual growth rate of 29 percent over the next ten years. Moreover, they expect that electric vehicles will secure a market share of 32 percent of total automotive sales by 2030, with battery electric vehicles accounting for 81 percent (25.3 million units) of all new electric vehicles sales and the balance share made up of plug-in hybrid electric vehicles.

However, while electric vehicles are set to grow as a proportion of total automotive sales, their geographic distribution will vary significantly. Deloitte expects EVs to capture a domestic market share of around 48 percent within China by 2030 – almost double that of the United States (27 percent)—with EV sales in Europe accounting for 42 percent of total auto sales in that region.

There are four key factors identified by Deloitte as being key drivers in determining the adoption rate of electric vehicles going forward. First is the shift which is currently being witnessed within consumer sentiment – driving range, a perennial point of contention in the past, has increasingly become less of a concern for potential consumers, with EV driving ranges enjoying a considerable uplift in line with new battery technology breakthroughs. Rather, the primary constraint for future growth may relate to a perceived lack of charging infrastructure, an issue which governments worldwide are seeking to tackle. Germany has recently designated $2.8 billion towards EV charging infrastructure investment while China has recently announced an additional $378 million investment in the technology.

Second is the role of government policy, wherein the widespread adoption of EVs has become a necessary step for governments seeking to achieve their climate-change goals, such as those set by the 2015 Paris Agreement. As a result, a number of governments have offered compelling financial incentives to consumers to make the switch to electric vehicles with other governmental bodies imposing bans, or punitive taxes, on users of older internal-combustion engines to address concerns about toxic air pollution.

The third factor relates to the commercial strategies adopted by various automotive OEMs (original equipment manufacturers). Over the past year, a number of major automotive OEMs have committed to significant upfront investments in developing their EV portfolios, with the likes of Ford announcing that it would invest $11.5 billion on EV models by 2022 while the Volkswagen Group has forecast achieving 1 million EV sales by 2023. More importantly, a greater focus on EVs has led to a greater proliferation of choice available to consumers, with HIS Markit predicting that there will be 130 EV models available to US consumers by 2026, from 43 different automobile manufacturers (https://ibn.fm/esdoB).

Lastly, Deloitte has highlighted the importance of major corporations in helping EV sales transition into the mainstream with the consultancy previously revealing that the sale of new cars to businesses would account for 63 percent of total new car sales across Western Europe by 2021 (https://ibn.fm/qYCbJ).

With traditional company car schemes and car hire operators accounting for a significant proportion of the client wallet for automobile purchases, a greater emphasis on alleviating emissions could result in a significant uplift in EV demand across the corporate spectrum.

Following the completion of the merger between Net Element and Mullen Technologies, the company aims to reach a production threshold of 35,000 vehicles per annum by 2026. With its initial two models already in the works and with the global EV sector set to skyrocket in terms of value over the course of the next decade, Net Element finds itself in the ideal position to capitalize from one of the biggest shifts in consumer behavior the world has ever seen.

For more information, visit the company’s website at www.NetElement.com.

NOTE TO INVESTORS: The latest news and updates relating to NETE are available in the company’s newsroom at http://ibn.fm/NETE

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