technology sector research report

RESEARCH REPORT

Technology Vision 2024

Human by design

15-minute read

January 9, 2024

• Technology is becoming human by design, and enterprises that prepare now will win in the future.
• How people access and interact with information is radically changing as human-like, AI-powered chatbots synthesize vast amounts of information and provide answers and advice.
• AI is starting to reason like us, and will soon comprise entire ecosystems of AI agents who will work with one another and act for people and organizations alike.
• A new spatial computing medium is emerging, letting the digital world reflect what it means to be human and in a physical space.
• The challenge of tech not understanding us and our intent is disappearing: machines are getting much better at interacting with humans on their level.

Human by design: How AI unleashes the next level of human potential

It’s time to make technology human by design..

This is a moment for reinvention. In the coming years, businesses will have an increasingly powerful array of technologies at their disposal that will open new pathways to unleash greater human potential, productivity, and creativity. Early adopters and leading businesses have kick-started a race toward a new era of value and capability. And their strategies are underpinned by one common thread – the technology is becoming more human.

It sounds counterintuitive: after all, wasn’t technology built by, and for, humans? Creating tools that expand our physical and cognitive abilities is so unique to humanity that some argue it defines us as a species.

Despite this, the tools we build are often distinctly unhuman, filling gaps by doing and being what we couldn’t, and in the process radically transforming our lives. Automobiles expanded our freedom of mobility. Cranes let us build skyscrapers and bridges. Machines helped us create, distribute, and listen to music.

Technology’s unhuman nature can also be its drawback. Extended use of hand tools can lead to arthritis. Years of looking at screens can accelerate vision problems. We have amazing navigational tools, but they still distract us from driving.  Granted, there have been efforts to create tools that are more ergonomic or easier to use.  But even so, time and again we see and make decisions about our lives based on what is best for a  machine  rather than optimizing human potential.

Now, for the first time in history, there’s strong evidence to indicate that we are reversing course—not by moving away from technology, but rather by embracing a generation of technology that is more human. Technology that is more intuitive, both in design and its very nature, demonstrates more human-like intelligence, and is easy to integrate across every aspect of our lives.

Generative AI has the potential to impact much more than just the task at hand. It’s also starting to profoundly reshape organizations and markets.

Consider the impact generative AI and transformer models are having on the world around us. What began as chatbots like ChatGPT and Bard has become a driving force in making technology more intuitive, intelligent and accessible to all. Where AI once focused on automation and routine tasks, it’s now shifting to augmentation, changing how people approach work, and is rapidly democratizing the technologies and specialized knowledge work that were once reserved for the highly trained or deep pocketed.

Of course, the advent of more human technology isn’t limited to AI: It’s starting to address many of the pain points that exist between us and technology, paving the way for greater human potential.

Technology that is human by design will reach  new  people and expand access to knowledge, which will enable ongoing innovation. Think of all the people historically alienated by technology who will be able to contribute to the digital revolution. As technology becomes more intuitive, we can tap into these people as new customers and new employees.

Make It Human—the 2024 Trends

A match made in AI

People are asking generative AI chatbots for information – transforming the business of search today, and the futures of software and data-driven enterprises tomorrow.

Meet my agent

AI is taking action, and soon whole ecosystems of AI agents could command major aspects of business. Appropriate human guidance and oversight is critical.

The space we need

The spatial computing technology landscape is rapidly growing, but to successfully capitalize on this new medium, enterprises will need to find its killer apps.

Our bodies electronic

A suite of technologies – from eye-tracking to machine learning to BCI – are starting to understand people more deeply, and in more human-centric ways.

of executives agree that making technology more human will massively expand the opportunities of every industry.

Leaders will face familiar questions: Which products and services are ripe for scaling? What new data is at your disposal? What transformative actions can you take? But they will also be at the center of answering questions they may have never expected: What kind of oversight does AI need? Who will be included in the digital transformation? What responsibilities do we have to the people in our ecosystem?

Human by design is not just a description of features, it’s a mandate for what comes next. As enterprises look to reinvent their digital core, human technology will become central to the success of their efforts. Every business is beginning to see the potential emerging technologies have to reinvent the pillars of their digital efforts. Digital experiences, data and analytics, products, all stand to change as technologies like generative AI, spatial computing, and others mature and scale.

In this moment of reinvention, enterprises have the chance to build a strategy that maximizes human potential, and erases the friction between people and technology. The future will be powered by artificial intelligence but must be designed for human intelligence. And as a new generation of technology gives enterprises the power to do more, every choice they make matters that much more too. The world is watching. Will you be a role model or a cautionary tale?

of executives agree that with rapid technological advancements, it is more important than ever for organizations to innovate with purpose.

Trend 1 - A match made in AI: Reshaping our relationship with knowledge

The big picture.

Our relationship with data is changing—and with it, how we think, work, and interact with technology.  The entire basis of the digital enterprise is getting disrupted.

The search-based “librarian” model of human-data interaction is giving way to a new “advisor” model. Rather than running searches to curate results, people are now asking generative AI chatbots for answers . Case in point: OpenAI launched ChatGPT in November 2022, and it became the fastest-growing app of all time.  Large language models (LLMs) had been around for years, but ChatGPT’s ability to answer questions in a direct and conversational manner made a huge difference.

Data is one of the most important factors shaping today’s digital businesses. And the new chatbots—that can synthesize vast amounts of information to provide answers and advice, use different data modalities, remember prior conversations, and even suggest what to ask next—are disrupting that undercurrent. Ultimately, these chatbots can operate as LLM-advisors, allowing companies to put one with the breadth of enterprise knowledge at every employee’s fingertips. This could unlock the latent value of data and finally let enterprises tap into the promise of data-driven business.

With generative AI, a digital butler is finally in the cards.

Companies possess valuable, unique information they  want  customers, employees, partners, and investors to find and use. But whether it’s because we don’t recall the right search terms, we can’t write the query, the data is siloed, or the documents are too dense, a lot of that information is hard to access or distill. For the data-driven business of today, that’s serious untapped value that generative AI could bring in.

However, the true disruption here isn’t just in how we access data; it’s in the potential to transform the entire software market. What if the interface to every app and digital platform became a generative AI chatbot? What if that became the way we read, write, and interact with data, as a core competency of all platforms?

To truly reap the benefits of generative AI and build the data-and-AI powered enterprise of the future, businesses need to radically rethink their core technology strategy. How they gather and structure data, their broader architectures, and how they deploy technology tools and the features they include need to be rethought. And new practices like training, debiasing, and AI-oversight must be built in from the start.

of executives believe generative AI will compel their organization to modernize its technology architecture.

The technology: Unlocking your data-driven enterprise

Shoring up your data foundation.

New technologies and techniques can help enterprises shore up their data foundation and prepare for the future of data-driven business. Wherever companies start from, LLM-advisors will demand a data foundation that’s more accessible and contextual than ever.

The knowledge graph is one of the most important technologies here. It’s a graph-structured data model including entities and the relationships between them, which encodes greater context and meaning. Not only can a knowledge graph aggregate information from more sources and support better personalization, but it can also enhance data access through semantic search.

In addition to knowledge graphs, data mesh and data fabric are two ways to help map and organize information that businesses should consider as they update their overall architecture.

Exploring LLMs as your new data interface

On their own, knowledge graphs, data mesh, and data fabric would be a huge step up for enterprise knowledge management systems. But there’s much value to be gained in taking the next step and shifting from the librarian to advisor model. Imagine if instead of using a search bar, employees could ask questions in natural language and get clear answers across every website and app in the enterprise. With an accessible and contextual data foundation, enterprises can start to build this—and there are a few options.

First, companies can train their own LLM from scratch, though this is rare given the significant resources required. A second option is to “fine-tune” an existing LLM. Essentially, this means taking a more general LLM and adapting it to a domain by further training it on a set of domain-specific documents. This option is best for domain-specific cases when real-time information is not necessary, like for creative outputs in design or marketing.

Enterprises are also beginning to fine-tune smaller language models (SLMs) for specialized use cases. These SLMs are more efficient, running at lower cost with smaller carbon footprints, and can be trained more quickly and used on smaller, edge devices.

Lastly, one of the most popular approaches to building an LLM-advisor has been to “ground” pre-trained LLMs by providing them with more relevant, use case-specific information, typically through retrieval augmented generation (RAG).

The field of generative AI and LLMs is moving fast, but whatever way you choose to explore, one thing will stay constant: your data foundation needs to be solid and contextual, or your LLM-advisor will never live up to its promise.

The implications: The future of enterprise knowledge

Understanding and mitigating risks.

First and most importantly, as businesses begin to explore the new possibilities LLM-advisors bring, they need to understand the associated risks.

Take “hallucinations,” an almost intrinsic characteristic of LLMs. Because they are trained to deliver probabilistic answers with a high degree of certainty, there are times when these advisors confidently relay incorrect information. And while hallucinations are perhaps LLMs’ most notorious risk, other issues must be considered. If using a public model, proprietary data must be carefully protected so that it cannot be leaked. And for private models too, data cannot be shared with employees who should not have access. The cost of computing is something that needs to be managed. And underlying everything, few people have the relevant expertise to implement these solutions well.

All that said, these challenges shouldn’t be taken as a deterrent, but rather as a call to implement the technology with appropriate controls.

The data going into the LLM—whether through training or the prompt—should be high quality data: fresh, well-labeled, and unbiased. Training data should be zero-party and proactively shared by customers, or first-party and collected directly by the company. And security standards should be implemented to protect any personal or proprietary data. Finally, data permissions must also be in place to ensure that the user is allowed to access any data retrieved for in-context learning.

Beyond accuracy, the outputs of the generative AI chatbot should also be explainable and align with the brand. Guardrails can be put in place so that the model does not respond with sensitive data or harmful words, and so that it declines questions outside its scope. Moreover, responses can convey uncertainty and provide sources for verification.

Finally, generative AI chatbots should be subject to continuous testing and human oversight. Companies should invest in ethical AI and develop minimum standards to adhere to. And they should gather regular feedback and provide training for employees as well.

Security implications

Among the many other security implications already discussed in this trend, companies should also think about how LLM-advisors may change user data dynamics.

We have an opportunity to reinvent the ethos of search and restore trust between businesses and their customers. Companies can now act as stewards of their own information—storing, securing, analyzing, and disseminating their data and institutional knowledge directly to customers through digital advisors. This is a big responsibility: your company must ensure that your data remains secure while yielding high-confidence responses in your advisory services. It’s an even bigger opportunity: without search providers mediating the exchange of information, companies can serve as a direct source of reliable insight and win back their customers’ trust.

Generative AI is the ultimate game-changer for data and software. LLMs are changing our relationship with information, and everything from how enterprises reach customers to how they empower employees and partners stands to transform. Leading companies are already diving in, imagining and building the next generation of data-driven business. And before long, it won’t just be leaders. It’ll be the new way digital business works.

Trend 2 - Meet my agent: Ecosystems for AI

AI is breaking out of its limited scope of assistance to engage more and more of the world through action . Over the next decade, we will see the rise of entire agent ecosystems—large networks of interconnected AI that will push enterprises to think about their intelligence and automation strategy in a fundamentally different way.

Today, most AI strategies are narrowly focused on assisting in task and function. To the extent that AI acts, it is as solitary actors, rather than an ecosystem of interdependent parts. But as AI evolves into agents, automated systems will make decisions and take actions on their own. Agents won’t just advise humans, they will act on humans’ behalf. AI will keep generating text, images, and insights, but agents will decide for themselves what to do with it.

As agents are promoted to become our colleagues and our proxies, we will need to reimagine the future of tech and talent together.

While this agent evolution is just getting underway, companies already need to start thinking about what’s next. Because if agents are starting to act, it won’t be long until they start interacting  with each other . Tomorrow’s AI strategy will require the orchestration of an entire concert of actors: narrowly-trained AI, generalized agents, agents tuned for human collaboration, and agents designed for machine optimization.

But there’s a lot of work to do before AI agents can truly act on our behalf, or as our proxy. And still more before they can act in concert with each other. The fact is, agents are still getting stuck, misusing tools, and generating inaccurate responses—and these are errors that can compound quickly.

Humans and machines have been paired at the task-level, but leaders have never prepared for AI to operate our businesses—until today. As agents are promoted to become our colleagues and our proxies, we will need to reimagine the future of tech and talent together. It’s not just about new skills, it’s about ensuring that agents share our values and goals. Agents will help build our future world, and it’s our job to make sure it’s one we want to live in.

of executives agree leveraging AI agent ecosystems will be a significant opportunity for their organizations in the next 3 years.

The technology: From assistance to actions to ecosystems

As AI assistants mature into proxies that can act on behalf of humans, the resulting business opportunities will depend on three core capabilities: access to real time data and services; reasoning through complex chains of thought; and the creation of tools—not for human use, but for the use of the agents themselves.

Starting with access to real time data and services: When ChatGPT first launched, a common mistake people made was thinking the application was actively looking up information on the web. In reality, GPT-3.5 (the LLM upon which ChatGPT was initially launched) was trained on an extremely wide corpus of knowledge and drew on the relationships between that data to provide answers.

But new plugins to enable ChatGPT to access the internet were soon announced that could transform foundation models from powerful engines working in isolation to agents with the ability to navigate the current digital world. While plugins have powerful innovative potential on their own, they’ll also play a critical role in the emergence of agent ecosystems.

The second step in the agent evolution is the ability to reason and think logically—because even the simplest everyday actions for people require a series of complex instructions for machines. AI research is starting to break down barriers to machine reasoning. Chain-of-thought prompting is an approach developed to help LLMs better understand steps in a complex task.

Between chain-of-thought reasoning and plugins, AI has the potential to take on complex tasks by using both tighter logic and the abundance of digital tools available on the web. But what happens if the required solution isn’t yet available?

When humans face this challenge, we acquire or build the tools we need. AI used to rely on humans exclusively to grow its capabilities. But the third dimension of agency we are seeing emerge is the ability for AI to develop tools for itself.

The agent ecosystem may seem overwhelming. After all, beyond the three core capabilities of autonomous agents, we’re also talking about an incredibly complex orchestration challenge, and a massive reinvention of your human workforce to make it all possible. It’s enough to leave leaders wondering where to start. The good news is existing digital transformation efforts will go a long way to giving enterprises a leg up.

The implications: Aligning tech and talent in the workforce

What happens when the agent ecosystem gets to work? Whether as our assistants or as our proxies, the result will be explosive productivity, innovation and the revamping of the human workforce. As assistants or copilots, agents could dramatically multiply the output of individual employees. In other scenarios, we will increasingly trust agents to act on our behalf. As our proxies, they could tackle jobs currently performed by humans, but with a giant advantage—a single agent could wield all of your company’s knowledge and information.

Businesses will need to think about the human and technological approaches they need to support these agents. From a technology side, a major consideration will be how these entities identify themselves. And the impacts on human workers—their new responsibilities, roles, and functions—demand even deeper attention. To be clear, humans aren’t going anywhere. Humans will make and enforce the rules for agents.

Rethinking human talent

In the era of agent ecosystems, your most valuable employees will be those best equipped to set the guidelines for agents. A company’s level of trust in their autonomous agents will determine the value those agents can create, and your human talent is responsible for building that trust.

But agents also need to understand their limits. When does an agent have enough information to act alone, and when should it seek support before taking action? Humans will decide how much independence to afford their autonomous systems.

What companies can do now

What can you do now to set your human and agent workforce up for success? Give agents a chance to learn about your company, and give your company a chance to learn about agents.

Companies can start by weaving the connective fabric between agents’ predecessors, LLMs, and their support systems. By fine-tuning LLMs on your company’s information, you are giving foundation models a head-start at developing expertise.

It's also time to introduce humans to their future digital co-workers. Companies can lay the foundation for trust with future agents by teaching their workforce to reason with existing intelligent technologies. Challenge your employees to discover and transcend the limits of existing autonomous systems.

Finally, let there be no ambiguity about your company’s North Star. Every action your agents take will need to be traced back to your core values and a mission, so it is never too early to operationalize your values from the top to the bottom of your organization.

From a security standpoint, agent ecosystems will need to provide transparency into their processes and decisions. Consider the growing recognition of the need for a software bill of materials – a clear list of all the code components and dependencies that make up a software application – so as to let companies and agencies under the hood. Similarly, an agent bill of materials could help explain and track agent decision-making.

What logic did the agent follow to make a decision? Which agent made the call? What code was written? What data was used and with whom was that data shared? The better we can trace and understand agent decision-making processes, the more we can trust agents to act on our behalf.

Agent ecosystems have the potential to multiply enterprise productivity and innovation to a level that humans can hardly comprehend. But they will only be as valuable as the humans that guide them; human knowledge and reasoning will give one network of agents the edge over another. Today, artificial intelligence is a tool. In the future, AI agents will operate our companies. It is our job to make sure they don’t run amok. Given the pace of AI evolution, the time to start onboarding your agents is now.

Trend 3 - The space we need: Creating value in new realities

Spatial computing is about to change not just the course of technology innovation, but also the ways people work and live. Whereas desktop and mobile used screens as portals to the digital world, spatial will finally combine our disparate realities, fusing digital and physical together. Apps built for this medium will let people immerse themselves in digital worlds with a physical sense of space, or layer content on top of their physical surroundings.

So, why doesn’t it feel like we’re at the beginning of a new technology era? Why are we inundated instead with talk of a “metaverse slump”? The metaverse is one of the best-known applications of spatial computing. But just look at the price of digital real estate, booming in 2021 and 2022, and down 80-90% in 2023.

Spatial computing is about to change the course of technology innovation and the ways people work and live.

Some enterprises are holding off, content to say metaverse hype outpaced technology maturity. But others are racing ahead, building the technology capabilities. Meta has been rapidly developing VR and AR products, and introduced Codex Avatars, which use AI and smartphone cameras to create photorealistic avatars. Epic’s RealityScan App lets people scan 3D objects in the physical world with just their phone and turn them into 3D virtual assets.

Underlying it all, advancing technologies like generative AI continue to make it faster and cheaper to build spatial environments and experiences. And, perhaps quietly, these technologies are already being proven out in industrial applications. Digital twins for manufacturing, the growth of VR/AR in training and remote operation, and the establishment of collaborative design environments are all already having practical – and valuable – impacts on industry.

The truth is that new mediums don’t come very often, and when they do, the uptake is slow. But the payoff for diving in early is nearly immeasurable.

of executives agree their organization plans to create a competitive advantage leveraging spatial computing.

The technology: Today’s spatial technology landscape

Critically, new standards, tools and technologies are making it easier—and cheaper—to build spatial apps and experiences that feel familiar.

Think about the websites you frequent or your favorite apps on your phone. Even if their purposes are different, something feels undeniably universal across even the most disparate experiences. Why? They all used the same foundation.

For a long time, spatial never had such a foundation. Enter Universal Scene Description (USD), or what can best be described as a file format for 3D spaces. Developed by Pixar, USD is a framework that lets creators map out aspects of a scene, including specific assets and backgrounds, lighting, characters and more. Since USD is designed around bringing these assets together in a scene, different software can be used across each one, enabling collaborative content building and non-destructive editing. USD is quickly becoming central to the most impactful spatial applications, notably within industrial digital twins.

Enterprises need to understand they will not be operating spaces in isolation. Just as no webpage or app exists on the internet alone, the next iteration of the web promises to bring these parallel experiences even closer together.

Sense of place

One emerging capability that differentiates spatial computing from its digital counterparts is engaging our senses. New technologies are letting engineers design experiences that address all types of senses, like touch, smell and sound.

In past VR attempts, adding haptics, or touch, could be bulky or underwhelming. But University of Chicago researchers recently proposed using electrodes to better mimic touch. 

Scents can make digital spaces lifelike, too, by evoking memories or triggering the all-important fight-or-flight response. Scentient, a company trying to bring olfactory senses to the metaverse, have been experimenting with the technology for training firefighters and emergency responders, where smells, like the presence of natural gas, can be critical for evaluating an emergency.

Of course, sound, or spatial audio, is also critical to realistic digital scene-building. Lastly, immersive spatial apps will need to respond to how we naturally move.

The implications: Spatial’s killer applications

Spatial computing is not coming to replace desktop or mobile computing, but it is becoming an important piece of the computing fabric that makes up enterprise IT strategy.

We’ve already seen the early stages. Digital twins make more sense when you walk through them. Training is more impactful when you can live the experience rather than watch a video. While these were often standalone pilots, a careful consideration of the unique advantages of spatial computing can help shape and guide enterprise strategy. The market is still maturing, but it is quickly becoming clear that spatial apps thrive when applied in three ways: conveying large volumes of complex information; giving users agency over their experience; and, perhaps counterintuitively, allowing us to augment physical spaces.

When it comes to conveying complex information, the advantage of the spatial medium over the alternatives is probably clearest. Since a space can let users move and act naturally, information can be conveyed in more dynamic, immersive ways. We’ve already seen it in action. Some of the earliest examples of successful spatial apps were industrial digital twins, virtual training scenarios, or real-time remote assistance.

The second advantage spatial has over older mediums is the ability to give users agency to shape their in-app experiences. Because spatial computing lets us build digital experiences that embody a physical sense of space, we can design experiences that give users more flexibility to move and explore.

Lastly, spatial applications bring advantages to physical spaces; they can augment, enhance, and extend physical places without materially changing them. Imagine a future office where physical monitors, projectors, and displays are replaced by spatial computers and apps. People will have the flexibility to design simpler spaces, lowering overhead costs, and to change their surroundings more easily.

As the working world goes spatial, businesses will also need to think about security. There will be more devices than ever – employees will use spatial devices for work, customers will use them to access experiences. And with this ever expanding device ecosystem there will be more entry points for attackers too. So how do you put borders on the borderless? Businesses’ spatial strategies will need to be designed with zero trust principles.

Additionally, businesses should recognize that spatial is unfamiliar territory, so both vendors and users should expect to have blind spots. One line of defense won’t be enough, but Defense in Depth strategies that leverage multiple layers of security (like administrative, technical, and physical) can be deployed to defend this new frontier.

Spatial computing is about to hit its stride, and the race is on for leaders to get ahead. To position themselves at the top of the next era of technology innovation, enterprise leaders will need to rethink their position on spatial and recognize the effect recent technology advances are about to have. New computing mediums are few and far between, and they can have immeasurable impact on businesses and people for decades. Are you ready to immerse yourself in the moment?

Trend 4 - Our bodies electronic: A new human interface

Failing to understand people is a limiting factor for many of technologies we use today. Just think about the robots and drones that humans can only control if we translate what we want into commands they recognize. The fact is, when tech struggles to connect with us, it’s often because people—what they want, expect, or intend—are an enigma.

Now, innovators are trying to change that. Across industries, they’re building technologies and systems that can understand people in new and deeper ways. They’re creating a “human interface,” and the ripple effect will go far beyond, say, improving smart homes.

Look at how neurotech is beginning to connect with people’s minds. Recently, two separate studies from researchers at the University of California San Francisco and Stanford University demonstrated using neural prostheses—like brain-computer interfaces (BCI)—to decode speech from neural data. This could help patients with verbal disabilities “talk” by translating attempted speech into text or generated voices.

When technologies can better understand us—our behavior and our intentions—they will more effectively adapt to us.

Or consider technologies that read body movement, like eye and hand tracking. In 2023, Apple’s Vision Pro introduced visionOS, which lets users navigate and click with just their gaze and a simple gesture, bypassing the need for a handheld controller.

Innovations like these are rewriting the rules and pushing the limits that have guided human-machine interaction for decades. So often today, we bend over backwards, adapting and changing what we do to make technologies work. But the “human interface” will turn that on its head; when technologies can better understand us—our behavior and our intentions—they will more effectively adapt to us.

To succeed, enterprises will also need to address growing issues around trust and technology misuse. Companies and individuals alike may balk at the idea of letting technology read and understand us in these new and more intimate ways. Biometric privacy standards will need to be updated. And new neuroethics safeguards will need to be defined, including how to appropriately handle brain and other biometric data that can be used to infer people’s intentions and cognitive states. Until formal regulations catch up, it’s on enterprises’ shoulders to earn people’s trust.

of consumers agree they are often frustrated that technology fails to understand them and their intentions accurately.

The technology: A more human-centric view of people

Attempting to understand people—as individuals, target groups or populations—is a centuries’ old business challenge. And in recent decades, using digital technology to do this has been the ultimate differentiator. Digital platforms and devices have let businesses track and quantify people’s behaviors with enormously valuable impact. Now, the “human interface” is changing the game again, making it possible to understand people in deeper, more human-centric ways.

Recent technologies used to understand people have been based on tracking and observing patterns that lack specificity. People may read or watch familiar content, but they may actually want something new. We’re very good at recognizing what people do, but we don’t always understand why they do it.

How the “human interface” measures intent

The “human interface” isn’t any one single technology. Rather, it encompasses a suite of technologies that are deepening how innovators see and make sense of people.

Some are using wearable devices to track biosignals that can help predict what people want or understand their cognitive state. Others are building more detailed ways to understand people’s intent in relation to their environments.

Another approach to human intent is through AI. Consider human-robot collaborations. People’s state of mind, like if they’re feeling ambitious or tired, can impact how they approach a task. But while humans tend to be good at understanding these states of mind, robots haven’t been. But efforts are underway to teach robots to identify these states.

Lastly, perhaps one of the most exciting “human interface” technologies is neurotech: neuro-sensing and BCI. Many new neurotech companies have appeared in the last decade, and the field holds clear potential to read and identify human intent.

Neurotech highlights the pace of “human interface” advances

Many may think neural-sensing and BCI are years away from widespread commercial use, but recent advances tell a different story.

Skeptics tend to assert that neurotech will stay limited to the healthcare industry. But new use cases are being identified by the day. Two key advances are driving this. The first is decoding brain signals. Advances in AI pattern detection, as well as greater availability of brain data, are making a big difference.

The second area to watch is neuro-hardware – specifically, the quality of external devices. Historically, EEG (electroencephalogram) and fMRI (functional magnetic resonance imaging) have been two of the most widely used external brain sensing techniques. However, until recently, capturing either type of brain signal required a lab setting. But that is starting to change.

The implications: Getting started—the right way

As more enterprises start to build “human interface” strategies, they should begin by scoping out the different business areas and challenges that can be transformed.

First, consider how “human interface” technologies are raising the bar when it comes to anticipating people’s actions. Some of the most promising use cases are in areas where people and machines operate in shared spaces. For instance, enterprises could create safer and more productive manufacturing systems if robots could anticipate what people were about to do.

Another area that can be transformed is direct human-machine collaboration: how we use and control technology. As an example, think about how neurotech is letting us tap into our minds and connect with technology in new, potentially more natural ways.

Lastly, the “human interface” could drive the invention of new products and services. Brain-sensing, for instance, could help people “get” themselves better. L'Oréal is working with EMOTIV to help people better understand their fragrance preferences.

Still others are thinking about the “human interface” as a safety measure. Meili Technologies is a startup working to improve vehicle safety. It uses deep learning, visual inputs, and in-cabin sensors to detect if a driver has been incapacitated by a heart attack, seizure, stroke, or other emergency.

Business competition is changing—and trust is more important than ever

Businesses need to start assessing the risks posed by these technologies, and what new policies and safeguards need to be put in place. Rather than wait for regulations to ramp up, responsible enterprises need to begin now, looking to existing biometric laws and to the medical industry for guidance.

If tin foil hats don’t prevent mind reading, what will? More than any other trend this year, security will make or break enterprise and consumer adoption of the “human interface."

Acceptance of more perceptive and connected tools hinges on humans’ ability to be the primary gatekeepers of what information gets shared, at a minimum. This practice needs to be integrated into the design of the next generation of human-computer interface tools, letting people either opt into sharing data or telemetry relevant to the task at hand, or opt out of sharing extraneous or sensitive information.

The human interface is a new approach to addressing one of the oldest business challenges: understanding people as humans . That’s a big responsibility and an even bigger opportunity. People will have questions, and concerns about privacy will be the first and most important hurdle enterprises face. But the chance to understand people in this deeper, more human-centric way, is worth it.

Positive engineering: Our technology crossroads

The world is arriving at what might be technology’s biggest inflection point in history, and enterprises—and the decisions their leaders make—are at the heart of shaping how we move forward.

As we experience more growth and innovation, it won’t all be for the better. There will be more (and new) opportunities for fraud, misinformation and breaches of security. If we engineer tools with human capabilities but without human intelligence—or even human conscience—we can create in a way that deteriorates both the bottom line and the greater good.

In the era of human tech, every product and every service that enterprises bring to market holds the potential to transform lives, empower communities, and ignite change, for better or for worse. And, invariably, enterprises will face the delicate balancing act of needing to act fast versus needing to act carefully, as well as the expectation that competitors or other countries may not share the same concerns or impose the same guardrails.

As we strive to make technology human by design, we need to think of security as an enabler, an essential way to build trust between people and technology, rather than as a limitation or requirement. And we need to build technology without overshadowing or upending what it means to be human. It’s a concept we call “positive engineering.” Over the last few years, ethical questions have entered the technology domain from a number of different directions. Inclusivity, accessibility, sustainability, job security, protection of creative intellectual property, and so much more. Each of them roots back to one single question: how do we balance what we can achieve with technology with what we want as people?

This is a transformative moment for technology and people alike, and the world is ready for you to help shape it.

Paul Daugherty

Chief Technology & Innovation Officer

Adam Burden

Global Innovation Lead

Michael Biltz

Managing Director – Accenture Technology Vision

Superstars, rising stars, and the rest: Pandemic trends and shifts in the geography of tech

• Data Appendix

Mark Muro and Mark Muro Senior Fellow - Brookings Metro @markmuro1 Yang You Yang You Senior Research Assistant - Brookings Metro @YangYoungYou

March 8, 2022

• 32 min read

Table of contents

• I. Summary »
• II. Introduction »
• III. Background »
• IV. Approach »
• V. Findings »
• VI. Discussion »

Technology industries hold out the potential for decentralized economic vitality. However, for decades, tech has remained highly concentrated in a short list of coastal “superstar” cities—places such as San Francisco, Seattle, and New York.

More recently, though, the rise of remote work during the COVID-19 pandemic has spawned new hopes for the spread of tech jobs into the U.S. heartland. Given that possibility, this report probes the latest trends in the geography of tech over the past decade and through the pandemic. Specifically, the analysis examines detailed employment data as well as location-specific job postings to assess local and national hiring trends. Data on firm starts is also examined. Among the findings are:

• Growth in key tech industries has been rapid and resilient in the last decade , including through the pandemic. Software publishing and other information services have led the way.
• The tech sector has until recently been concentrating, not decentralizing. Prior to the pandemic, tech was adding jobs across much of America, but it wasn’t really “spreading out” in terms of more cities increasing their shares of the sector’s jobs. Instead, coastal “superstars” like the Bay Area and Seattle predominated.
• With that said, the pandemic years seem to be distributing somewhat more tech activity into a wider set of places . This shift does not represent a massive reorientation of tech work into the heartland during the pandemic. However, the data in this report shows that employment growth slowed in some of the biggest tech “superstars” and increased in other midsized and smaller markets, including smaller quality-of-life meccas and college towns.

II. Introduction

For decades, technology visionaries have dreamed that an explosion of decentralized work would bring about “the death of distance” —journalist Frances Cairncross’ term for the space-collapsing effect of the internet, including the dispersion of tech activity into new places, such as the U.S. heartland.

More recently, rising concerns about the nation’s economic divides have sharpened the hope that the spread of tech jobs into “flyover country” would allow struggling Main Street communities to participate more fully in the economy.

However, relatively little of that diffusion has happened in recent decades, even during the social media boom of the 2010s. Tech employment grew in many regions, but the nation’s “superstar” hubs in the San Francisco Bay Area and elsewhere grew even faster, concentrating their dominance. Instead of the “rise of the rest,” a term coined by AOL co-founder and investor Steve Case to refer to the growth of startup ecosystems away from the coastal tech hubs, the geography of the tech sector solidified into an uneven “winner-take-most”  dynamic.

Now, though, the COVID-19 pandemic and the rise of remote work have brought an array of intriguing new signals.

A 2021 survey by the San Francisco venture fund Initialized found that 42% of its firms’ founders said that if they were starting a business today, their preferred “place” to launch it would be through remote or distributed work. More recently, research by PitchBook and the Washington, D.C.-based investment firm Revolution reported that the share of early stage venture capital dollars going to non-Bay Area startups was on pace to exceed 70% in 2021—up from 60% in 2014. Meanwhile, major tech companies such as Palantir , Hewlett Packard Enterprise , Oracle , and Tesla have moved their headquarters from California to Denver, Houston, or Austin, Texas. During the pandemic, Google and Apple announced major satellite and engineering offices in North Carolina. And Intel recently announced the siting of two semiconductor plants in the Columbus, Ohio metro area, prompting excitement about the rise of a “Silicon Heartland.”

So, is the long-awaited “rise of the rest” actually happening? To investigate that question, this report provides a new look at recent and emerging geographic trends to assess the extent to which the tech sector has been spreading out or concentrating.

Specifically, the analysis employs detailed employment data (rather than survey information) as well as thousands of location-specific job postings to assess local and national hiring trends both before and during the pandemic. Data on firm starts is also examined. Focusing on this information yields several findings about the growth and geography of tech in recent years.  Among the findings are:

• Growth in key tech industries has been rapid and resilient in the last decade, including amid the pandemic.
• The tech sector has until recently been concentrating, not decentralizing. Prior to the pandemic, tech was adding jobs across much of America, but it wasn’t really “spreading out” in terms of more cities increasing their shares of the sector’s jobs.
• With that said, the pandemic years may be distributing more tech activity into a wider set of places. This shift does not depict a massive reorientation of tech work into the heartland during the pandemic—in fact, the biggest established hubs as a group slightly increased their share of the sector’s total nationwide employment. And yet, the data in this report shows that employment growth slowed in some of the biggest tech “superstars” and increased in numerous other midsized and smaller markets, including smaller quality-of-life meccas and college towns.

Whether these trends forecast a durable shift or a temporary disruption, the new figures support at least for now the possibility of a greater diffusion of tech activity in the coming years.

III. Background

A few notes of context are needed to situate the current moment in tech geography. After all, major swings in the nature of the U.S. economy have shaped and reshaped the nation’s economic geography in recent decades. Such swings suggest alternative paths for the post-pandemic future.

Postwar convergence, followed by divergence

For much of the 20th century, market forces tended to reduce job, wage, investment, and business formation disparities between more- and less-developed regions. Consequently, disparities between places tended to dissipate as the economy grew. Even seriously lagging places often “caught up” as business ideas diffused and cost differentials motivated people and firms to relocate to lower-cost regions; witness the rise of the South as regional pay and employment gaps narrowed in the post-World War II economy. Market forces were bringing about “convergence” among communities.

Yet in the 1980s and 1990s, the convergence trend started to break down, especially as digital technologies and innovation began to dominate. Since then, intense new demands for talent—all hitched to gigantic platforms and global electronic networks—have increased the power of “agglomeration” economies , unleashing self-reinforcing dynamics that have increasingly rewarded workers and companies for clustering together in dense, tech-heavy urban areas, especially big, coastal cities.

Amid these “winner-take-most” conditions, the convergence of cities gave way to their divergence in the 2000s. Soon, the leading 10% of U.S. metropolitan areas—which included tech-driven cities such as San Francisco, Boston, and New York—begun to pull away from other regions on measures of pay and employment, with a surge in the last decade.

By the middle of the last decade, a handful of dynamic coastal metro areas—most notably the Bay Area, Seattle, and Los Angeles—had emerged as dominant hubs of both tech and the rest of the economy. By contrast, scores of heartland cities, small towns, and rural areas were going sideways or falling behind on basic indicators of innovation, output, and income.

Regions’ possible futures amid pandemic disruptions

So now what’s happening? Given fast tech growth during the pandemic and the national experiment with remote work, it is important to examine the latest trends in tech geography to assess possible futures as the COVID-19 crisis eases.

New research by Stanford University economist Nicholas Bloom suggests the potential for both a “winner-take-more” trajectory (major gains for only a few places) and a “rise of the rest” scenario (more broadly dispersed opportunity across many metro areas). On the one hand, Bloom’s study of the rollout of 20 new technologies during the 2000s shows that the earliest stages of tech emergence often concentrate the bulk of job growth close to the site of the original innovation. On the other hand, Bloom reports that in later development stages, a greater portion of employment associated with new technologies diffuses more widely, as earlier-stage innovation gives way to more routinized business activity.

Given that, the ongoing development of the U.S. tech sector holds out the potential for multiple scenarios for local tech ecosystems, firm siting, and development leaders. In view of these alternative scenarios, a data-driven look at recent and ongoing trends in tech geography is in order, as workers, firms, builders, investors, and development professionals begin to map their next moves.

IV. Approach

To assess these issues, this report tracks the growth and change of a defined technology sector as it proceeds across multiple geographies and time periods.

Defining the technology sector

This report defines the technology sector as a six-industry subset of the nation’s “advanced industries” —a Brookings grouping of the nation’s highest-value innovation industries:

• Computer and peripheral equipment manufacturing (including companies such as Dell, Apple, and Western Digital)
• Semiconductor and other electronic component manufacturing (e.g., Intel, Nvidia)
• Software publishers (e.g., Microsoft, Salesforce)
• Data processing, hosting, and related services (e.g., Amazon Web Services)
• Other information services (e.g., Google, Meta, Netflix)
• Computer systems design and related services (e.g., IBM, Accenture, and Tata Consultancy Services)

Given this report’s focus on tech’s spatial patterns, our analysis reports major industry trends as they play out across the nation’s main geographical units: the nation as a whole and the nation’s 100 largest metropolitan statistical areas (MSAs), which account for 81% of U.S. tech sector employment as defined here. MSAs (or “metro areas”) are central to the analysis because they are the nation’s core economic units.

In addition, special attention is placed on eight mostly large, long-established, and growing tech hubs—sometimes deemed tech’s “superstar” metro areas:

• San Jose, Calif.
• San Francisco
• Washington, D.C.
• Los Angeles
• Austin, Texas (although smaller than the other established hubs, Austin is included given its longtime importance and fast growth)

Tracking metro areas’ growth and change

To assess the pace and shape of tech trends, our analysis tracks tech-sector employment growth and change across the largest 100 metro areas during several time periods. Broad context is provided by reporting on tech growth during the 2010s decade in full, while the core analysis reports growth and change during the years 2015 to 2020—reflecting pre-Covid trends as well as the latest available data for the first year of the pandemic. Data are segmented to allow comparison of trends in the pre-pandemic years (2015-2019) with trends in the first year of the pandemic (2020).

For these analyses the report employs high-quality data from the labor market research firm Emsi Burning Glass (EmsiBG), derived from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW). This annual data allows for the highest-quality, most reliable analysis of on-the-ground employment trends, but is only available with coverage up to 2020.

For all of these indicators, special attention is paid to shifts in metro areas’ local shares of the national tech sector. Such shifts are important measures of both the location of tech and the relative local competitiveness of particular markets in comparison to other markets.

V. Findings

Analysis of employment growth, hiring growth, and location trends in the technology sector generates several conclusions:

• The U.S. tech sector has continued to rapidly grow

Throughout the last decade, the U.S. tech sector has been growing rapidly, including during the COVID-19 pandemic.

Taken together, the sector—consisting of four digital services and two slower-growing tech manufacturing industries—grew by 47% in the 2010s, as it added more than 1.2 million jobs. That brought the sector’s total employment to 3.9 million positions in 2019. Given that expansion, the sector grew at a compound annual growth rate (CAGR) of 4.4% in the 2010s—a rate nearly triple the growth of the economy as a whole.

Not even COVID-19 could stymie the sector’s growth. Although the sector’s expansion slowed during the initial pandemic-related lockdowns, it has managed net positive growth through most of the crisis. Propelled by an explosion of remote work, e-commerce, and digitalization, growth turned only shallowly negative during seven months of 2020 before powering forward after fall of that year.

Among the four fast-growing digital services in the sector, three of them (“Software Publishing,” “Data Processing,” and “Other Information Services”) shed jobs in the five months between spring and early summer 2020. But by last summer, these industries saw employment 8% to 11% above their pre-pandemic highs. Only the slow-growing “Computer and Peripheral” and “Semiconductor Manufacturing” industries saw employment growth languish throughout 2020. All of the other industries studied far exceeded their national pre-pandemic employment levels from nearly two years ago.

In sum, most U.S. regions and states and more than half of metro areas have benefitted from tech sector growth throughout the last decade. Between 2010 and 2019, all four major census regions; 48 out of the 50 states as well as Washington, D.C.; and 289 out of the nation’s 384 metro areas have seen positive employment growth in the sector. Among the 100 largest metro areas, 83 have seen tech sector growth. That growth and the rise of consequential tech ecosystems in numerous new areas have licensed optimism about the spread of tech into new places, including the U.S. heartland.

• Tech sector growth prior to the pandemic remained highly concentrated

Despite the tech sector’s growth in the last decade, employment in the sector—while positive in many markets—wasn’t really spreading out. In fact, looking across the landscape, tech employment was growing more concentrated into a short list of places.

Focusing on the nation’s largest metro areas, a historically dominant cadre of “superstar” cities and a newer set of “rising star” metro areas were each continuing to extend their ascendency in the years immediately before the pandemic

At the forefront, only eight mostly coastal “superstar” metro areas—beginning with San Francisco, San Jose, and Austin , and including Boston, Seattle, Los Angeles, New York, and Washington, D.C. —accounted for nearly half  of the nation’s technology sector job creation between 2015 and 2019.

Large and mostly fast-growing, these well-established hubs dominated the nation’s tech growth through the early 2010s and gained dominance in the pre-pandemic years of 2015 to 2019. For example, the two Bay Area metro areas—San Francisco and San Jose—together generated almost 20% of the nation’s entire new tech employment during the pre-pandemic period, increasing their share of the sector’s total nationwide employment by 1.2% (see Figure 4).  Likewise, Seattle added more than 40,000 new tech jobs in the period (roughly 7% of the nation’s total), increasing its share of the sector’s total nationwide employment by 0.5%.

Altogether, the eight established hubs encompassed roughly 1.5 million tech jobs as of 2019 (38.2% of the nation’s tech employment), up from 1.2 million and 36.8% in 2015 (even though the East Coast hubs of New York, Washington, D.C., and Boston grew slow enough to slightly lose industry share). Altogether, the eight tech hubs’ share of the sector’s total nationwide employment increased by 1.4% between 2015 and 2019, even as advocates hoped for greater dispersion.

At the same time, a handful of midsized but less-established centers grew briskly in the years before the pandemic, meriting attention as “rising stars.” Mostly situated in the nation’s interior, these nine dynamic metro areas— Atlanta ; Dallas ; Denver ; Miami ; Orlando, Fla. ; San Diego ; Kansas City, Mo. ; St. Louis ; and Salt Lake City —also increased their share of the sector’s total nationwide employment by adding jobs at a rapid 3% CAGR (or more). These newer centers—which together generated 87,000 new tech jobs between 2015 and 2019—grew their share of the nation’s tech economy by an aggregate 0.5% during those years (see Figure 4). By growing rapidly and increasing their share of the national tech sector, these metro areas were delivering on the promise of tech spreading out to create sizable new ecosystems in the “rest” of America.

However, for the most part tech, was not really spreading out during the 2010s. Beyond the superstars and rising stars, most other large metro areas saw only modest (or negative) tech sector growth and employment share increases in the pre-pandemic years. Figure 4 visualizes this with its long “tail” of metro areas extending to the right of the two dozen or so most competitive metro areas. Altogether, 73 of the nation’s 100 largest metro areas (including the three historical East Coast superstars of Boston , New York , and Washington, D.C. ) experienced either negligible, flat, or negative growth in their share of the nation’s technology sector in the pre-pandemic years. Among those metro areas, 24 lost tech jobs in absolute terms during that period. About half of these slow-growing cities lie in the Northeast and Midwest.

Overall, the years 2015 to 2019 saw most of the nation’s 100 largest metro areas add tech jobs, yet only 27 of them added enough to demonstrate significant competitiveness by notably increasing their share of the sector’s total nationwide employment. In short, the pre-pandemic years 2015 to 2019 accentuated the emergence in the last decade of a national tech geography dominated by relatively few mostly coastal winners, complemented by an up-and-coming cohort of “rising star” markets in the nation’s interior. Beyond these two tiers lay scores of urban areas in the nation’s interior that were mostly going sideways or slipping in terms of true competitiveness gains, as reflected by their flat or decreased shares of the nation’s overall tech employment. The tech “rich” were getting richer.

• The pandemic’s first year disrupted tech sector concentration

The tech sector’s “superstar” geography may be entrenched, but it’s not necessarily immutable. The first year of the pandemic showed that. Employment data covering 2020 confirms the extent of early pandemic disruption and the possibility of new growth patterns.

To be sure, the first year of the pandemic imposed no wholesale apocalypse on the nation’s superstar geography. Despite everything, the superstars’ aggregate growth rate remained positive through 2020, to the point that these established hubs further increased their aggregate share of the sector’s total nationwide employment by 0.3%. New York , Seattle , San Francisco , and Austin dominated on this metric, increasing their shares slightly. New York added jobs significantly faster in 2020 than in the previous four years, with its annual growth rate surging from 3.5% to 4.9%.

Rising stars Atlanta , Dallas , Denver , Miami , Orlando , San Diego , Kansas City , St. Louis , and Salt Lake City also powered through the first year of the pandemic to turn in positive growth and add a combined 14,000 tech jobs while slightly increasing their aggregate share of the nation’s tech sector. Dallas, Atlanta, Denver, and St. Louis all added tech jobs at annual growth rates in excess of 3%. And St. Louis saw its tech growth rate increase from 3.9% over the 2015-19 period to 4.8% in 2020.

At the same time, 29 large metro areas failed to register tech employment gains, and 62 saw hiring slow in 2020—a sign that not everything has changed with America’s winner-take-most technology geography.

With that said, the first year of the pandemic saw unmistakable shifts in the nation’s superstar-dominated tech geography:

• Tech sector employment growth slowed in the biggest, most dominant tech centers. Notwithstanding New York’s 2020 growth surge, all the other tech superstars saw their tech sector employment growth rates slow—sometimes precipitously—in the first year of the pandemic. Overall, these metro areas saw their 4.9% pre-pandemic (2015 to 2019) annual growth rate slow to 2.9% in 2020. Employment growth in San Jose slowed from 5.3% pre-pandemic to just 1.9% in 2020. In Los Angeles , growth slowed from 5.6% to 0.2%. And in Boston , growth turned negative. Given this, Boston and Los Angeles gave up sector share amid the year’s market gyrations. These shifts signaled potential weakening of the dominant hold of the superstar cohort on U.S. tech growth. Similar patterns played out among the rising star metro areas: Growth among these leading metro areas slowed from 5% a year to 2.9%, as all of the rising stars except St. Louis saw slowing growth (although in none of these vibrant locations did growth turn negative). Overall, then, almost all of the nation’s leading tech centers—including both the superstars and rising stars—saw their growth slow during the first year of the pandemic (though only a few of them also decreased their share of the sector’s total nationwide employment).

• Nearly half of the nation’s 83 other large metro areas saw their tech sector growth rates increase in 2020 compared to 2015-2019. In contrast to the major tech hubs, a significant number of cities in the rest of America saw notable upticks as remote work increased and tech growth spread out slightly in the first year of the pandemic. Altogether, 36 of these 83 metro areas outside the superstar or rising star echelon saw tech employment change accelerate in 2020 compared to the pre-pandemic years. Larger growers included northern business cities such as Philadelphia , Minneapolis , and Cincinnati ; sizable warm weather cities such as Charlotte, N.C. , San Antonio , Nashville, Tenn. , Birmingham, Ala. , New Orleans, Greensboro, N.C. , Jackson, Miss. , and Stockton, Calif. ; and a number of substantial university cities such as Chapel Hill, C. and Madison, W is . Also seeing accelerated 2020 tech growth were numerous lifestyle, Sun Belt, or vacation centers such as Virginia Beach, Va. , Ogden, Utah , Albuquerque, N.M. , Tucson, Ariz. , and El Paso, Texas . In sum, nearly half of the nation’s secondary large metro areas added tech jobs at a faster rate than they did in 2015-2019, when only one superstar and one rising star metro area did.
• A number of smaller quality-of-life meccas and college towns also seemed to add tech jobs sharply during the initial year of the crisis . Among the former group, high-amenity and vacation towns such as Santa Barbara, Calif. ; Barnstable, Mass. ; Gulfport-Biloxi, Miss. ; Pensacola, Fla. ; and Salisbury, Md. all saw their tech employment surge by 6% or more. These locations offered proximity to larger technology centers in addition to an attractive quality of life for footloose firms or workers. Likewise, attractive and convenient college towns such as Boulder, Colo. ; Lincoln, Neb. ; Tallahassee, Fla. ; Charlottesville, Va. ; and Ithaca, N.Y. all grew their tech jobs by more than 3% during the first year of the pandemic. Smaller-town job surges like these likely reflected the rise of “Zoom towns”: communities bolstered (at least for now) by the remote tech work of new residents whose work relies on digital tools.

While not definitive, these signals from high-quality 2020 employment data suggest at least the temporary emergence during the pandemic of a new kind of two-tier reality that incorporates persistent superstar and rising star dominance paired with a degree of tech diffusion into lower-cost or high-amenity locations.

• More recent data also points to continued pandemic-related decentralization

Higher-frequency, more recent information on local economic activity confirms the impression of modest tech sector decentralization during the pandemic. This data on job postings and firm starts extends the story beyond the 2020 employment data used in this report, and provides additional signs of potentially greater decentralization of tech activity.

Job postings data from EmsiBG suggests discernable shifts of economic activity among cities. While distinct from actual hires and employment, the ebbs and flows of job vacancy advertisements allow visibility into economic activity throughout the pandemic and depict a distinct slippage of the superstar metro areas’ share of U.S. tech activity.

Specifically, the superstar metro areas’ share of unique tech sector job postings—which had begun to decline in the pre-pandemic period—has slipped further in the last two years as postings declined from roughly 40% in September 2016 to about 31% in December 2021. To be sure, three of the nation’s superstars— Los Angeles, Seattle, and Austin —saw their national job postings shares surge as tech job ads there increased by more than 150% during the period. Ads in Austin , in particular, surged massively during the pandemic. However, the share of postings in the five other superstars— San Francisco , San Jose , Boston, New York , and Washington, D.C. —slumped, with hiring activity as measured by job postings sagging by noticeable margins.

For their part, job postings in the rising star cities have increased as a share of U.S. tech postings—from 14.5% in September 2016 to 16% at the end of 2021—hinting at new activity in non-superstar metro areas. Rising star cities with particularly vibrant growth in hiring ads during the pandemic include Denver and Miami . What’s more, other metro area tech ecosystems beyond the superstars and rising stars—including increasingly dynamic centers such as Phoenix and Houston —have seen increases in their shares of the nation’s tech sector job openings. Such shifts—while only one indicator, albeit a leading one—may well forecast potential adjustments in the geography of hiring and perhaps of the tech sector engaging with remote work and shifting location trends.

Data on new tech firm starts—available from Crunchbase—corresponds with the job postings trend. After several years of steady increases of tech startup share growth, the eight superstar metro areas’ share of new tech firm starts declined by 2% between 2020 and 2021. Concurrently, the share notched by the rising stars rose 0.4%. Contributing to these shifts were notable startup declines in San Francisco and San Jose , which saw their shares of the nation’s tech startups slip 0.8% and 0.7%, respectively. At the same time, rising star metro area gains on the part of San Diego and Miami pointed to increased vibrancy in those places, as startup share gains ticked up from 1.7% and 3.3%, respectively, to 1.9% and 3.7%.

Also notable was significant growth in Philadelphia ’s and Tampa ’s shares of the nation’s tech startups, which rose by 1.7% and 0.2%, respectively.

In sum, higher-frequency data extending the analysis beyond 2020 and into 2021 using job postings and startup information reinforces the impression that the pandemic disruption has somewhat—though not massively—reallocated tech activity across cities.

VI. Discussion

The analysis presented here provides a fresh look at tech sector geography at a moment of possible inflection.

Some of the data suggests tech could be on the brink of spreading out, prompted by the COVID-19 pandemic and remote work. Specifically, the continued growth of the rising star metro areas—as well as accelerated job growth in dozens of other metro areas during the pandemic—suggests the possibility of a genuine adjustment of the nation’s highly concentrated tech geography in the coming years. Similar vibrancy outside the most entrenched superstar hubs on measures of hiring activity and new firm starts in tech reinforces this impression.

However, what is equally striking is the persistence of the sector’s superstar geography. Since 2010, the geography of tech has remained highly skewed, with activity and growth concentrated into a short list of large, mostly fast-growing hubs on the West Coast and the Boston-Washington, D.C. corridor. In this regard, what is remarkable is not just that 38.4% of all U.S. tech jobs clustered in just eight of the nation’s metro areas in 2020. Even more noteworthy is the fact that that those metro areas increased their share of the nation’s tech sector employment from 35.2% to 38.2% between 2010 and 2019, and then slightly more amidst the pandemic’s disruptions in 2020.

In short, as recently as 2020, the tech industry remained much more a “winner-take-most” affair than one in which the “rest” of the nation’s tech ecosystems were truly rising, as defined by increasing their shares of the sector’s total nationwide employment.

The question now is whether tech’s slightly more dispersed growth forecasts a shift to greater diffusion, or if it is instead a temporary disruption.

Coming trends that might shift the equation

Several trends discussed here speak to the issue of whether ongoing developments—such as the spread of remote work or the maturation of tech product cycles—are truly beginning to decentralize U.S. tech activity. The answers are ambiguous.

Remote work is garnering the most attention. Such discussions speculate that the pandemic and its aftermath are decentralizing the U.S. tech sector by sending key firm units and the industry’s hottest talent hustling toward the exits of the big, crowded, expensive superstar hubs. And certainly, there are plenty of anecdotes and media stories suggesting that such moves may somewhat shift the nation’s tech geography in the coming years, especially toward smaller tech ecosystems and high-amenity towns.

However, neither the scale of the moves seen to date nor the most frequent format of remote work seem to forecast a wholesale decentralization of tech. First, the numbers don’t really add up, given the still modest flows of people moving out of high-cost metro areas and into “flyover country” (apart from sizable flows out of the Bay Area and New York). Beyond that, recent analyses forecast that, for most knowledge workers, work patterns will be “hybrid” for the foreseeable future, with workers commuting to offices two or three days a week. This level of commuting could limit full exits from established hubs to new locations, though it might well support tech worker shifts to nearby high-amenity satellite towns. With that said, wider-spread acceptance of remote work in the tech sector could, with time, allow greater dispersion of workers and tech activity.

Within-sector technology cycles also merit attention as possible sources of decentralization.  Nicholas Bloom’s research on the diffusion of disruptive technologies, for example, builds on economic literature showing that as new technologies mature, a portion of their employment gradually spreads out geographically. Such findings bode well for the spread of more tech employment into new places as portions of the sector mature.

And yet, Bloom’s research (and that of others) underscores that disruptive technologies tend not only to emerge in just a few urban areas—such as the superstar metro areas named here— but also to be commercialized there. Such “pioneer” regions, report Bloom and others, then seem to maintain a persistent advantage in early-stage development and ancillary growth.  This, in turn, confers long-lasting local benefits on the early hubs. Given that, the current emergence of new technologies and projects in the sector—ranging from artificial intelligence and quantum computing to AR/VR, Web3, and the metaverse—may well forecast more years of concentration in the established hubs. On this front, too, further diffusion of tech employment into new places appears possible—but so does even more concentration.

A ctions that could promote decentralization

What would it take for the U.S. to steer tech into more places and bring greater opportunity to new people and regions? There are several answers.

Some observers will say nothing needs doing. These voices will say the nation’s extreme degree of geographical imbalance is fine, as it reflects the optimal, market-ordained geography for maximizing innovation in a sector heavily shaped by clusters and agglomeration. Alternatively, such observers may say nothing needs doing given the natural diffusion of maturing technology mapped by Bloom and his colleagues. The current spread of remote work has added to this view.

But such confidence in business-as-usual tech trends remains tentative at best, whether among industry veterans, inland entrepreneurs, or heartland economic developers.

Housing and lifestyle crises in the big coastal hubs continue to constitute sizable drags on industry efficiency. At the same time, too many other communities feel that they remain excluded from digital prosperity, as they struggle with underutilization, “brain drain,” and only modest tech growth. What’s more, the self-reinforcing nature of tech sector development underscores the likely rigidity of the current industry structure. As the University of California, Berkeley economist Enrico Moretti has explained , the geography of technology growth is a vexing issue because “initial advantages matter, and the future depends heavily on the past.”

Which is why the pandemic moment is seeing a surge of local and national ferment focused on disrupting—and better balancing—the nation’s deterministic, superstar-dominated tech geography.

There’s no doubt, at the local level, that the remote work experiment during the pandemic has shown that cloud-based tools for workers, firms, and entrepreneurs can open up hopeful prospects for tech activity anywhere. In that vein, urban theorist Richard Florida and economist Adam Ozimek are right that local communities , especially smaller or more remote ones, have an opportunity to “develop their economies based on remote workers so as to try to compete with the big-city business centers and West Coast high-tech meccas that have long dominated the employment landscape.”

So it’s not surprising that numerous communities are taking direct action to attract newcomers with special perks and benefits—some aimed specifically at high-tech workers. Most notable are the cash incentives offered by programs such as Tulsa Remote and Remote Tucson to attract remote workers with cash, perks, or relocation benefits. Savannah, Ga. offered to reimburse relocating technology workers for up to $2,000 of their moving expenses. For its part, the Northwest Arkansas Council offers relocating tech workers $10,000 in cash or bitcoin and a bike.

Yet it remains doubtful that such incentives—offered in limited numbers to the relatively few truly footloose tech workers—will by themselves do much to reverse the winner-take-most nature of America’s economic geography. Such strategies may help some amenity-rich smaller towns generate buzz, but that will not be the case for most communities.

A likely better local strategy for promoting connection will be to focus on the basic block-and-tackling of building out homegrown tech ecosystems that are compelling to firms, entrepreneurs, and workers. This includes the hard work of:

• Building authentic, differentiated tech clusters
• Developing a skilled, abundant, and diverse digital workforce
• Providing excellent broadband connectivity
• Cultivating a vibrant tech community with plentiful networking opportunities and acceleration programs
• Crafting an excellent quality of place, complete with top-notch schools; parks and greenspace; bike lanes; and coworking spaces

Also important for communities is thinking about how to manage the growth that will follow the arrival of hundreds of relocating tech workers who hail from areas that previously struggled with growth-related quality-of-life issues.

In sum, the best way for most cities to promote their own participation in the nation’s tech sector will be to build up the best tech ecosystems and quality of life they can—now and going forward. In that sense, Florida and Ozimek are right that the remote work opportunity could change the focus of smaller cities and towns from luring companies with special deals to luring talent with services and amenities.

Still, given the massive scale of the nation’s tech divides, not even the best of strategies will by themselves be likely to boost local ecosystems enough to democratize the sector’s geography. For that reason, more and more tech leaders, economists, and policymakers are increasingly focused on deliberate efforts to catalyze growth in a limited number of promising new locations in order to disrupt the status quo.

In many parts of the country, renewed state investments in public higher education (after a period of disinvestment) will be necessary in building up new tech hubs. In other regions, the way forward will likely involve complementing existing higher education strengths with coordinated state-level economic development strategies.

Yet not even statewide strategies will likely be sufficient. Federal intervention is also now on the table in a serious way. Specifically, the last few years have seen extensive talk and action in Congress focused on efforts to “seed digital jobs all over the country, even while [ensuring] places like Silicon Valley continue to attract talent and prosper,” as Rep. Ro Khanna (D-Calif.) recently wrote .

Already, 60 finalist regions have been announced in the Build Back Better Regional Challenge, a $1 billion U.S. Economic Development Administration competition that will award 20 to 30 regional coalitions between $25 million and $100 million each to implement projects to drive tech and related cluster development. In addition, pending bipartisan legislation would create a set of large-scale technology hubs to catalyze innovation sector takeoff in a handful of promising inland regions. The Senate’s U.S. Innovation and Competition Act (USICA) and its House companion bill—soon likely to be harmonized in a congressional conference committee—would also boost growth in new regions through new and better place-based and place-conscious investments in technology education as well as the nation’s historically Black colleges and universities (HBCUs) and minority-serving institutions (MSIs). Other initiatives include investments from the National Science Foundation’s artificial intelligence program to catalyze activity in emerging technologies in regions beyond the usual ones. Such programs could deliver a major new place-based innovation surge of the type that once created Silicon Valley and Boston’s tech ecosystem.

In sum, the pandemic years have raised the promise of tech decentralization through remote work and new siting decisions. However, the continued dominance of tech’s long-standing hubs ensures that the “rise of the rest” won’t happen easily, or by itself. The nation, states, and regions themselves will need to help it along.

Atkinson, Robert, and Mark Muro. 2019. “The case for growth centers. How to Spread Tech Innovation Across America.” Brookings Institution.

Bloom, Nicholas, and others. 2020. “The geography of new technologies.” Working paper. Institute for New Economic Thinking.

Case, Steve. 2016. The Third Wave: An Entrepreneur’s Vision of the Future.” New York: Simon & Schuster.

Florida, Richard, Andres Rodriguez-Pose, and Michael Storper. 2021. “Cities in a post-COVID world.” Urban Studies. 1-23.

Florida, Richard, and Adam Ozimek. 2021. “How remote work Is reshaping America’s urban geography.” Wall Street Journal. March 5.

Gruber, Jonathan, and Simon Johnson. 2019. Jumpstarting America: How breakthrough science can revive economic growth and the American Dream.

Mims, Chris. 2021. “How working from home can change where innovation happens.” The Wall Street Journal. October 21, 2021

Muro, Mark. 2021. “The geography of AI: What cities will drive the artificial intelligence revolution.” September.

——. 2017. “Tech Is (still) concentrating in the Bay Area: An update on America’s “winner-take-most” economic phenomenon. The Avenue. December 17.

——. 2017. “Tech is divergent.” TechCrunch . March 7.

Mark Muro and Robert Atkinson. 2020. “Countering America’s regional divides is going to take more than hope.” American Enterprise Institute.

O’Mara, Margaret. 2019. The code: Silicon Valley and the remaking of America. Penguin.

Arjun, Ramani, and Nicholas Bloom. 2021. “The donut effect of COVID-19 on cities.” Working paper. National Bureau of Economic Research.

Revolution and Pitchbook. 2021. “Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage start-up funding across the U.S.”

Acknowledgments 

Brookings Metro would like to thank the following for their generous support of this analysis: Dell Technologies, Microsoft, Hillman Family Foundations, Antoine van Agtmael, and Derek Kaufman. The team is also grateful to the Metro Council, a network of business, civic, and philanthropic leaders that provides financial and intellectual support for the program.

The report’s authors would like to thank Alan Berube, Richard Florida, and Margaret O’Mara for providing valuable comments on early versions of the analysis. Jenny Chiang, Emily Laderman, Miguel Liscano, and Carly Tatum provided other forms of support. The authors would also like to thank the following Brookings colleagues for invaluable support in producing the report and contributing to outreach efforts: Dalia Beshir, Michael Gaynor, Annelies Goger, David Lanham, Rob Maxim, and Erin Raftery.

Molly Kinder

April 12, 2024

Blair Levin

February 13, 2024

John C. Austin, Mark Muro

February 7, 2024

• United States
• United Kingdom
• Czech Republic
• Ivory Coast
• Netherlands
• New Zealand
• Palestinian Authority
• Philippines
• Saudi Arabia
• South Africa
• South Korea
• Switzerland
• Trinidad & Tobago
• United Arab Emirates
• All Industries
• Energy Services
• Oil and Gas Drilling
• Oil and Gas Services
• Oil and Gas
• Oil and Gas Exploration and Production
• Oil and Gas Refining and Marketing
• Coal and Fuels
• Oil and Gas Storage and Transportation
• Real Estate
• Diversified Real Estate
• Real Estate Operating Companies
• Real Estate Development
• Real Estate Services
• Diversified REITs
• Industrial REITs
• Office REITs
• Residential REITs
• Retail REITs
• Specialized REITs
• Hotel and Resort REITs
• Healthcare REITs
• Self-Storage REITs
• Single-Family Residential REITs
• Health Care REITs
• Commodity Chemicals
• Fertilizers and Agricultural Chemicals
• Specialty Chemicals
• Industrial Gases
• Basic Materials
• Construction Materials
• Metal and Glass Containers
• Paper Packaging
• Metals and Mining
• Diversified Metals and Mining
• Precious Metals and Minerals
• Paper and Forestry Products
• Paper Products
• Industrials
• Aerospace & Defense
• Aerospace and Defense
• Building Products
• Construction
• Construction and Engineering
• Electrical Components
• Heavy Electrical Equipment
• Industrial Conglomerates
• Construction Machinery and Vehicles
• Industrial Machinery
• Agricultural Machinery
• Trade Distributors
• Trade Companies and Distributors
• Commercial Services
• Commercial Printing
• Diversified Support Services
• Environmental and Facilities Services
• Office Services and Supplies
• Security and Alarm Services
• Professional Services
• HR Services
• Research and Consulting Services
• Air Freight and Logistics
• Marine and Shipping
• Transportation
• Cargo Ground Transportation
• Infrastructure
• Consumer Discretionary
• Auto Components
• Auto Parts and Equipment
• Automobile Manufacturers
• Motorcycle Manufacturers
• Consumer Durables
• Consumer Electronics
• Home Furnishings
• Homebuilding
• Household Appliances
• Leisure Products
• Apparel, Accessories and Luxury Goods
• Hospitality
• Casinos and Gaming
• Hotels, Resorts and Cruise Lines
• Leisure Facilities
• Restaurants
• Consumer Services
• Education Services
• Specialized Consumer Services
• Retail Distributors
• Distributors
• Online Retail and Ecommerce
• Specialty Stores
• Apparel Retail
• Computer and Electronics Retail
• Home Improvement Retail
• Home Furnishing Retail
• Automotive Retail
• General Merchandise and Department Stores
• General Merchandise Stores
• Broadline Retail
• Consumer Staples
• Food and Staples Retail
• Drug Retail
• Food Distributors
• Food Retail
• Big Box Super Stores
• Distillers and Wine Makers
• Soft Drinks
• Agricultural Products
• Packaged Foods and Meats
• Household Products
• Personal Products
• Medical Equipment
• Medical Supplies
• Healthcare Services
• Healthcare Distributors
• Healthcare Facilities
• Managed Healthcare
• Life Sciences
• Clinical Research and Equipment
• Diversified Banks
• Regional Banks
• Mortgage Finance
• Thrifts and Mortgage Finance
• Mortgage REITs
• Diversified Financial
• Other Diversified Financial Services
• Multi-Sector Holdings
• Specialized Finance
• Transaction and Payment Processing Services
• Consumer Finance
• Capital Markets
• Financial Exchanges and Data
• Asset Management
• Investment Banking and Brokerage
• Insurance Brokers
• Life and Health Insurance
• General Insurance
• Property and Casualty Insurance
• Reinsurance
• Internet Services and Infrastructure
• IT Consulting
• Data Processing Services
• Application Software
• Systems Software
• Communications
• Communications Equipment
• Tech Hardware
• Tech Hardware Storage and Peripherals
• Electronic Equipment and Components
• Electronic Equipment and Instruments
• Electronic Manufacturing Services
• Technology Distributors
• Electronic Components
• Semiconductors
• Semiconductor Equipment
• Entertainment
• Movies and Entertainment
• Interactive Home Entertainment
• Interactive Media and Services
• Advertising
• Broadcasting
• Cable and Satellite
• Telecom Services and Carriers
• Alternative Carriers
• Integrated Telecom Services
• Wireless Telecom
• Wireless Telecom Services
• Electric Utilities
• Gas Utilities
• Other Utilities
• Multi-Utilities
• Water Utilities
• Renewable Energy
• Independent Power Producers and Energy Traders

U.S. Tech Sector Analysis

Over the last 7 days, the Tech industry has remained flat, although notably NVIDIA gained 4.8%. As for the the longer term, the industry is up 38% over the past 12 months. Earnings are forecast to grow by 17% annually.

Sector Valuation and Performance

Has the U.S. Tech Sector valuation changed over the past few years?

• Price to Earnings
• Price to Sales
• Median Price to Earnings
• Investors are relatively neutral on the American Information Technology industry at the moment, indicating that they anticipate long term growth rates to remain steady.
• The industry is trading close to its 3-year average PE ratio of 38.9x.
• The 3-year average PS ratio of 5.8x is lower than the industry's current PS ratio of 6.8x.
• The earnings for companies in the Information Technology industry have grown 4.5% per year over the last three years.
• Revenues for these companies have grown 2.1% per year.
• This means that more sales are being generated by these companies overall, and subsequently their profits are increasing too.

Industry Trends

Which industries have driven the changes within the U.S. Tech sector?

• Investors are most optimistic about the Semiconductors industry which is trading above its 3-year average PE ratio of 33.4x.
• Analysts are expecting annual earnings growth of 24.2%, which is higher than its past year's earnings decline of 8.5% per year.
• Investors are most pessimistic about the Communications industry, which is trading close to its 3-year average of 23.4x.
• Analysts are most optimistic on the Semiconductors industry, expecting annual earnings growth of 24% over the next 5 years.
• This is better than its past earnings decline of 8.5% per year.
• In contrast, the Tech Hardware industry is expected to see its earnings grow by 6.2% per year over the next few years.

Top Stock Gainers and Losers

Which companies have driven the market over the last 7 days?

Latest News

Shareholders may be wary of increasing intel corporation's (nasdaq:intc) ceo compensation package.

NXP Semiconductors

Here's What Analysts Are Forecasting For NXP Semiconductors N.V. (NASDAQ:NXPI) After Its First-Quarter Results

International Business Machines

IBM Declares Quarterly Cash Dividend, Payable on June 10, 2024

Arm Holdings

OpenCV.ai Announces the Release of OpenCV 4.9.0 Through Collaboration with ARM Holdings

A look at the fair value of apple inc. (nasdaq:aapl).

Texas Instruments

First quarter dividend of US$1.30 announced

Advanced Micro Devices

Is Advanced Micro Devices (NASDAQ:AMD) Using Too Much Debt?

Atlassian Corporation Announces Step Down of Scott Farquhar as Co-CEO, Effective August 31, 2024

Third quarter 2024 earnings: eps and revenues exceed analyst expectations, nvidia corporation (nasdaqgs:nvda) agreed to acquire deci.ai ltd., servicenow, inc. beat analyst estimates: see what the consensus is forecasting for this year.

Salesforce Unveils Zero Copy Partner Network, an Ecosystem Committed to Secure, Bidirectional Zero Copy Integration with Salesforce Data Cloud

Cisco Systems

Cisco: Market Underestimates Its AI Potential And Will Regret It

Super Micro Computer

Super Micro Computer Stock Plunges - What To Expect From Its Q3 Earnings?

Accenture plc's (nyse:acn) popularity with investors is clear.

US$1,300.27

Broadcom: A Great Corporation At Too High A Price

Industry research with unrivaled coverage.

The industry analysis and forecasts you need to make strategic decisions, backed by data..

Every sector of the economy, at your fingertips

No more scrambling for credible information. Fill knowledge gaps instantly with the largest collection of industry research reports.

Manufacturing

Construction, finance & insurance, real estate, healthcare & social assistance services, administration & business support services, information, retail trade, transportation & warehousing, professional, scientific & technical services, agriculture, forestry, fishing & hunting, accommodation & food services, educational services, industry analysis with an eye on the future.

Learn what’s behind today’s industry trends and where your market is headed next so you can future-proof your business decisions.

Mitigate risk with Industry research

Assess the industry from all sides to avoid blind spots and make smarter strategic decisions.

• check_circle_outline Leverage industry reports and risk ratings to mitigate the threats you can control and plan for the ones you can’t.
• check_circle_outline Compare industry financial ratios and benchmarks to help quantify the risk of doing business.
• check_circle_outline Identify opportunities and threats present in any industry to bolster your risk management frameworks.

Find your competitive edge

Discover the forces working for or against you in any industry to help you rise above the competition.

• check_circle_outline Understand which companies compete in the industry and the barriers to entry new businesses face.
• check_circle_outline Uncover geographic nuances and opportunities using business concentration and global trade data.
• check_circle_outline Ready your talking points with accessible key takeaways and call prep questions.

Understand market dynamics

Turn days of research into hours or minutes using actionable industry insights that paint a holistic picture of the market. 

• check_circle_outline Discover the driving forces behind supply, demand, market size, risks and revenue trends.
• check_circle_outline Understand the growth trajectory of any industry with five-year data forecasts.
• check_circle_outline Present industry statistics, pain points and key success factors to help you gain credibility with your audience.

Need a closer look? Download a sample report?

Global coverage written by local analysts.

Streamline your research process with industry reports covering everything from established sectors to emerging markets across four continents.

Trusted by 7,000+ companies around the world

Independent, accurate and written by experienced analysts. Our industry analysis, company database and economic insights support businesses of all sizes, across all markets.

“IBISWorld delivers the crisp business knowledge we need to drive our business. Whether it be serving up our major clients, winning new business or educating people on industry issues, IBISWorld brings real value.”

“IBISWorld has revolutionised business information - which has proved commercially invaluable to exporters, investors and public policy professionals in Australia and overseas.”

“You could spend hours researching for the information that IBISWorld has at your fingertips. IBISWorld gives you far more than most resources do.”

Want industry statistics and news delivered to your inbox monthly?

• Telecommunications and Computing /
• Computing and Technology /

Information Technology Global Market Report 2024

• February 2024
• Region: Global
• The Business Research Company
• ID: 5781249
• Description

Table of Contents

Executive summary.

• Companies Mentioned

Methodology

Related topics, related reports.

• Purchase Options
• Ask a Question
• Recently Viewed Products
• IT Services
• Computer Hardware
• Software Products
• Large Enterprise
• Small and Medium Enterprise
• Financial Services
• Retail & Wholesale
• Manufacturing
• Other End Users

Reasons to Purchase

• Gain a truly global perspective with the most comprehensive report available on this market covering 50+ geographies.
• Understand how the market has been affected by the coronavirus and how it is responding as the impact of the virus abates.
• Assess the Russia-Ukraine war’s impact on agriculture, energy and mineral commodity supply and its direct and indirect impact on the market.
• Measure the impact of high global inflation on market growth.
• Create regional and country strategies on the basis of local data and analysis.
• Identify growth segments for investment.
• Outperform competitors using forecast data and the drivers and trends shaping the market.
• Understand customers based on the latest market shares.
• Benchmark performance against key competitors.
• Suitable for supporting your internal and external presentations with reliable high quality data and analysis.
• Report will be updated with the latest data and delivered to you with an Excel data sheet for easy data extraction and analysis.
• All data from the report will also be delivered in an excel dashboard format.
• The market characteristics section of the report defines and explains the market.
• The market size section gives the market size ($b) covering both the historic growth of the market, and forecasting its development.
• The forecasts are made after considering the major factors currently impacting the market. These include:
• The impact of sanctions, supply chain disruptions, and altered demand for goods and services due to the Russian Ukraine war, impacting various macro-economic factors and parameters in the Eastern European region and its subsequent effect on global markets.
• The impact of higher inflation in many countries and the resulting spike in interest rates.
• The continued but declining impact of COVID-19 on supply chains and consumption patterns.
• Market segmentations break down the market into sub markets.
• The regional and country breakdowns section gives an analysis of the market in each geography and the size of the market by geography and compares their historic and forecast growth. It covers the growth trajectory of COVID-19 for all regions, key developed countries and major emerging markets.
• The competitive landscape chapter gives a description of the competitive nature of the market, market shares, and a description of the leading companies. Key financial deals which have shaped the market in recent years are identified.
• The trends and strategies section analyses the shape of the market as it emerges from the crisis and suggests how companies can grow as the market recovers.

Report Scope

Companies mentioned (partial list).

A selection of companies mentioned in this report includes, but is not limited to:

• Microsoft Corporation
• Verizon Communications Inc.
• China Mobile Limited
• Huawei Technologies Co. Ltd.
• Deutsche Telekom AG
• Dell Technologies Inc.
• Samsung Electronics Co. Ltd.
• Comcast Corporation
• International Business Machines Corp.
• Oracle Corporation
• Tata Consultancy Services Ltd.
• Salesforce Inc.
• Infosys Limited
• Wipro Limited
• Tech Mahindra Limited
• Echo Global Logistics Inc.
• Larsen & Toubro Infotech Limited
• Mphasis Limited
• Mindtree Limited
• MarketAxess Holdings Inc.
• PagerDuty Inc.
• HCL Technologies Limited
• 3i Infotech Limited
• Inspirisys Solutions Limited
• Atom Technologies Limited
• Alphabet Inc.
• Amazon.com Inc.

Table Information

Computers Global Market Report 2024

•  Report

United States ICT Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

• United States

Negotiating and Drafting IT (Information Technology) Contracts Training Course (London, United Kingdom - October 8-9, 2024)

•  Training
• October 2024

IT BFSI Global Market Report 2024

Mobile Virtualization Global Market Report 2024

• December 2023

ASK A QUESTION

We request your telephone number so we can contact you in the event we have difficulty reaching you via email. We aim to respond to all questions on the same business day.

Request a Quote

YOUR ADDRESS

YOUR DETAILS

PRODUCT FORMAT

DOWNLOAD SAMPLE

Please fill in the information below to download the requested sample.

• May 1, 2024 | Harnessing Sunbeams for Space Travel: NASA’s Solar Sail Mission Successfully Phones Home
• May 1, 2024 | Unlocking Lifetime Flu Protection: Duke’s Innovative Vaccine Strategy
• May 1, 2024 | Scientists Shed New Light on the Ancient “Forgotten” City of Anqa
• May 1, 2024 | FathomVerse: Harnessing AI and Gaming to Guide Ocean Exploration
• May 1, 2024 | Secrets Beneath the Sweat: Scientists Decode the Molecular Impact of Exercise

Technology News

Read the latest technology news on SciTechDaily, your comprehensive source for the latest breakthroughs, trends, and innovations shaping the world of technology. We bring you up-to-date insights on a wide array of topics, from cutting-edge advancements in artificial intelligence and robotics to the latest in green technologies, telecommunications, and more.

Our expertly curated content showcases the pioneering minds, revolutionary ideas, and transformative solutions that are driving the future of technology and its impact on our daily lives. Stay informed about the rapid evolution of the tech landscape, and join us as we explore the endless possibilities of the digital age.

Discover recent technology news articles on topics such as Nanotechnology ,  Artificial Intelligence , Biotechnology ,  Graphene , Green Tech , Battery Tech , Computer Tech , Engineering , and Fuel-cell Tech featuring research out of MIT , Cal Tech , Yale , Georgia Tech , Karlsruhe Tech , Vienna Tech , and Michigan Technological University . Discover the future of technology with SciTechDaily.

Technology April 30, 2024

Revolutionizing Memory Tech: The Rise of Low-Power Multiferroic Nanodots

Tokyo Institute of Technology researchers have developed BFCO nanodots for efficient and non-destructive memory technology, promising advancements in low-power magnetic memory devices. Traditional memory devices…

Scientists Have Developed a Solar Cell You Can Bend and Soak in Water

Beyond Graphene: A New World of 2D Materials Is Opening Up

Mystery of Embedded Engine Noise Unraveled – New Research Paves the Way for Silent Skies

Revolutionizing Connectivity: Researchers Develop Game-Changing 3D Processors

AI Falls Short: Large Language Models Struggle With Medical Coding, Study Shows

Scientists Uncover Surprising Efficiency of “Messy” Supercapacitors

Scientists Develop Battery Capable of Rapid Charging in Just a Few Seconds

Tiny Robotic Nerve “Cuffs” Could Transform How We Treat Neurological Conditions

Technology April 25, 2024

Compact Quantum Light Processing: Time-Bending Optical Computing Breakthrough

A leap forward in optical quantum computing. An international collaboration of researchers, led by Philip Walther at University of Vienna, have achieved a significant breakthrough…

Unlocking New Levels of Accuracy With Advanced Timing Chips

Compact chips enhance precision timing for communication, navigation, and various applications. The National Institute of Standards and Technology (NIST) and its collaborators have delivered a…

How Tiny Lidar Tech is Redefining High-Resolution 3D Mapping

Compact, low-power system opens doors for photon-efficient drone and satellite-based environmental monitoring and mapping. Researchers have developed a compact and lightweight single-photon airborne lidar system…

Space Age Security: How Satellites Could Extend Quantum Encryption Globally

Quantum cryptography enables secure communication over large distances. How can we guarantee that data sent over the internet is only accessible to its intended recipient?…

Technology April 24, 2024

Evolution vs. Engineering: Why Can’t Robots Outrun Animals?

Despite superior individual components, robots lag behind animals in overall performance, suggesting a future focus on better system integration and control in robotics. Robotics engineers…

Technology April 23, 2024

A Cheaper and More Sustainable Lithium Battery: How LiDFOB Could Change Everything

Scientists have developed an ultralow-concentration electrolyte for lithium-ion batteries. Lithium salts enhance the power of batteries but also increase their cost. A new electrolyte with…

AI Efficiency Breakthrough: How Sound Waves Are Revolutionizing Optical Neural Networks

Researchers have developed a way to use sound waves in optical neural networks, enhancing their ability to process data with high speed and energy efficiency….

How a New 3D Printer Automatically Masters Diverse Sustainable Materials

The advance could help make 3D printing more sustainable, enabling printing with renewable or recyclable materials that are difficult to characterize. While 3D printing has…

Technology April 22, 2024

Super Radar: Pioneering Research Overcomes Historic Trade-Offs Between Distance and Detail

Breakthrough radar technology improves distance resolution, impacting multiple industries and enabling advanced applications like detailed surface characterization. New interference radar functions employed by a team…

• The Experience
• The Programs
• Faculty & Research

The Library will be closed Dec. 21, 2023, through Jan. 3, 2024. Online resources remain available.

Enterprise Technology Industry

Introduction, information technology industry & market reports, business-to-business discovery, where to look for industry information, common topics (blockchain, cybersecurity, cloud computing).

• Companies, Investments, & Funders
• Industry Publications & Related Sources

While these resources are generally the most relevant, there may be other resources available. If you are looking for something in particular or cannot find a lot of information about a niche segment, please Ask Us .

These databases contain market & industry reports. They provide overviews of the industry as well as the intended market or end consumer. 

Additional Resources

• Market Research Reports @ Stanford
• Market Size & Market Share Data

Learn about enterprise information technologies and the business-to-business (B2B) landscape. Use DB Hoovers' CRUSH reports to learn about which applications companies are currently using, how the technologies are applied, and technology business drivers. 

In addition to industry and market reports, there are many other ways to analyze an industry, gain insights, and find relevant statistics and data.

Statistics Databases

These databases contain industry statistical data in tables or charts. They're a good place to start as they collect information from many sources.

Associations & Regulators

Industry associations and regulators (both in governments and independent agencies) often have great information. Look for sections on their websites like "Resources", "Publications", or "Data," but note some resources may be restricted to members.

Examples of Information Technology industry associations and regulators are:

• Business Software Alliance (BSA) The largest international IT industry group, with policy, legal and educational programs in 80 countries.
• Computing Technology Industry Association (CompTIA) "Voice and advocate for the $5 trillion global information technology ecosystem; and the estimated 75 million industry and tech professionals who design, implement, manage, and safeguard the technology that powers the world’s economy."
• Information Technology Industry Council (ITIC) The advocate and thought leader for the information and communications technology industry.
• Software & Information Industry Association (SIAA) The principal trade association for the software and digital content industries.
• Find Industry Associations
• Cybersecurity
• Cloud Computing

These resources contain reports or statistics about blockchain technology.  Related keywords include: cryptocurrency, decentralized finance, and distributed ledgers.

• Deloitte's 2021 Global Blockchain Survey "Deloitte’s 2021 Global Blockchain Survey affirms that banks should embrace their inevitable digital future. In a seismic shift, financial leaders increasingly see digital assets as the future."
• EMIS Intelligence This link opens in a new window If you can't connect and see "Inquire about additional products", use an incognito/private browser. -->Global and emerging market information and market reports for countries or regions worldwide. For : Current Stanford faculty, staff, and students. Remote access temporarily unavailable. For updates, please check System Status -->
• IEEE International Conference on Blockchain (Blockchain) Proceedings from the annual IEEE International Conference on Blockchain.

These resources contain reports or statistics for cybersecurity and data privacy.

• Cybersecurity & Infrastructure Security Agency (CISA) Publications Library Reports, recommendations, and fact sheets about cybersecurity practices.
• The International Association of Privacy Professionals (IAAP) Resource Center Reports, infographics, and white papers about data privacy (collection also features publications from government researchers and other trade associations).
• WSJ Pro Cybersecurity Cybersecurity news, analysis and insights from WSJ's global team of reporters and editors. Help : WSJ.com access and accounts (accounts must be renewed each year).

These resources contain reports for cloud computing technologies, also known as: software as a service (SaaS) and platform as a service (PaaS).

• Next: Companies, Investments, & Funders >>
• Last Updated: May 1, 2024 10:35 AM
• URL: https://libguides.stanford.edu/library/it

• News for Xero

Analysts Are Bullish on Top Technology Stocks: Xero Limited (XROLF), Megaport Ltd. (MGPPF)

There’s a lot to be optimistic about in the Technology sector as 2 analysts just weighed in on Xero Limited ( XROLF – Research Report ) and Megaport Ltd. ( MGPPF – Research Report ) with bullish sentiments.

Xero Limited (XROLF)

In a report released today, Siraj Ahmed from Citi maintained a Buy rating on Xero Limited, with a price target of A$159.00 . The company’s shares closed last Friday at $78.00.

According to TipRanks.com , Ahmed is a 5-star analyst with an average return of 12.7% and a 60.4% success rate. Ahmed covers the Technology sector, focusing on stocks such as Nextdc Limited, Megaport Ltd., and Serko Ltd.

Currently, the analyst consensus on Xero Limited is a Moderate Buy with an average price target of $87.54, representing a 12.2% upside. In a report issued on April 18, UBS also maintained a Buy rating on the stock with a A$141.90 price target.

See the top stocks recommended by analysts >>

Megaport Ltd. (MGPPF)

In a report released today, Darren Leung from Macquarie maintained a Buy rating on Megaport Ltd., with a price target of A$18.30 . The company’s shares closed last Tuesday at $10.20, close to its 52-week high of $10.55.

Leung has an average return of 34.4% when recommending Megaport Ltd..

According to TipRanks.com , Leung is ranked #3250 out of 8800 analysts.

The word on The Street in general, suggests a Strong Buy analyst consensus rating for Megaport Ltd. with a $9.68 average price target.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

Read More on XROLF:

• Xero Limited Reports Over 12K Securities Cessation
• Xero Limited Expands Shares Quotation on ASX
• Xero Limited added to APAC Conviction List at Goldman Sachs

Xero News MORE

Related stocks.

Create an account

Create a free IEA account to download our reports or subcribe to a paid service.

Trends in electric cars

• Executive summary

Electric car sales

Electric car availability and affordability.

• Electric two- and three-wheelers
• Electric light commercial vehicles
• Electric truck and bus sales
• Electric heavy-duty vehicle model availability
• Charging for electric light-duty vehicles
• Charging for electric heavy-duty vehicles
• Battery supply and demand
• Battery prices
• Electric vehicle company strategy and market competition
• Electric vehicle and battery start-ups
• Vehicle outlook by mode
• Vehicle outlook by region
• The industry outlook
• Light-duty vehicle charging
• Heavy-duty vehicle charging
• Battery demand
• Electricity demand
• Oil displacement
• Well-to-wheel greenhouse gas emissions
• Lifecycle impacts of electric cars

Cite report

IEA (2024), Global EV Outlook 2024 , IEA, Paris https://www.iea.org/reports/global-ev-outlook-2024, Licence: CC BY 4.0

Share this report

• Share on Twitter Twitter
• Share on Facebook Facebook
• Share on LinkedIn LinkedIn
• Share on Email Email
• Share on Print Print

Report options

Nearly one in five cars sold in 2023 was electric.

Electric car sales neared 14 million in 2023, 95% of which were in China, Europe and the United States

Almost 14 million new electric cars 1 were registered globally in 2023, bringing their total number on the roads to 40 million, closely tracking the sales forecast from the 2023 edition of the Global EV Outlook (GEVO-2023). Electric car sales in 2023 were 3.5 million higher than in 2022, a 35% year-on-year increase. This is more than six times higher than in 2018, just 5 years earlier. In 2023, there were over 250 000 new registrations per week, which is more than the annual total in 2013, ten years earlier. Electric cars accounted for around 18% of all cars sold in 2023, up from 14% in 2022 and only 2% 5 years earlier, in 2018. These trends indicate that growth remains robust as electric car markets mature. Battery electric cars accounted for 70% of the electric car stock in 2023.

Global electric car stock, 2013-2023

While sales of electric cars are increasing globally, they remain significantly concentrated in just a few major markets. In 2023, just under 60% of new electric car registrations were in the People’s Republic of China (hereafter ‘China’), just under 25% in Europe, 2 and 10% in the United States – corresponding to nearly 95% of global electric car sales combined. In these countries, electric cars account for a large share of local car markets: more than one in three new car registrations in China was electric in 2023, over one in five in Europe, and one in ten in the United States. However, sales remain limited elsewhere, even in countries with developed car markets such as Japan and India. As a result of sales concentration, the global electric car stock is also increasingly concentrated. Nevertheless, China, Europe and the United States also represent around two-thirds of total car sales and stocks, meaning that the EV transition in these markets has major repercussions in terms of global trends.

In China, the number of new electric car registrations reached 8.1 million in 2023, increasing by 35% relative to 2022. Increasing electric car sales were the main reason for growth in the overall car market, which contracted by 8% for conventional (internal combustion engine) cars but grew by 5% in total, indicating that electric car sales are continuing to perform as the market matures. The year 2023 was the first in which China’s New Energy Vehicle (NEV) 3 industry ran without support from national subsidies for EV purchases, which have facilitated expansion of the market for more than a decade. Tax exemption for EV purchases and non-financial support remain in place, after an extension , as the automotive industry is seen as one of the key drivers of economic growth. Some province-led support and investment also remains in place and plays an important role in China’s EV landscape. As the market matures, the industry is entering a phase marked by increased price competition and consolidation. In addition, China exported over 4 million cars in 2023, making it the largest auto exporter in the world, among which 1.2 million were EVs. This is markedly more than the previous year – car exports were almost 65% higher than in 2022, and electric car exports were 80% higher. The main export markets for these vehicles were Europe and countries in the Asia Pacific region, such as Thailand and Australia.

In the United States, new electric car registrations totalled 1.4 million in 2023, increasing by more than 40% compared to 2022. While relative annual growth in 2023 was slower than in the preceding two years, demand for electric cars and absolute growth remained strong. The revised qualifications for the Clean Vehicle Tax Credit, alongside electric car price cuts, meant that some popular EV models became eligible for credit in 2023. Sales of the Tesla Model Y, for example, increased 50% compared to 2022 after it became eligible for the full USD 7 500 tax credit. Overall, the new criteria established by the Inflation Reduction Act (IRA) appear to have supported sales in 2023, despite earlier concerns that tighter domestic content requirements for EV and battery manufacturing could create immediate bottlenecks or delays, such as for the Ford F-150 Lightning . As of 2024, new guidance for the tax credits means the number of eligible models has fallen to less than 30 from about 45, 4 including several trim levels of the Tesla Model 3 becoming ineligible. However, in 2023 and 2024, leasing business models enable electric cars to qualify for the tax credits even if they do not fully meet the requirements, as leased cars can qualify for a less strict commercial vehicle tax credit and these tax credit savings can be passed to lease-holders. Such strategies have also contributed to sustained electric car roll-out.

In Europe, new electric car registrations reached nearly 3.2 million in 2023, increasing by almost 20% relative to 2022. In the European Union, sales amounted to 2.4 million, with similar growth rates. As in China, the high rates of electric car sales seen in Europe suggest that growth remains robust as markets mature, and several European countries reached important milestones in 2023. Germany, for example, became the third country after China and the United States to record half a million new battery electric car registrations in a single year, with 18% of car sales being battery electric (and another 6% plug-in hybrid).

However, the phase-out of several purchase subsidies in Germany slowed overall EV sales growth. At the start of 2023, PHEV subsidies were phased out, resulting in lower PHEV sales compared to 2022, and in December 2023, all EV subsidies ended after a ruling on the Climate and Transformation Fund. In Germany, the sales share for electric cars fell from 30% in 2022 to 25% in 2023. This had an impact on the overall electric car sales share in the region. In the rest of Europe, however, electric car sales and their sales share increased. Around 25% of all cars sold in France and the United Kingdom were electric, 30% in the Netherlands, and 60% in Sweden. In Norway, sales shares increased slightly despite the overall market contracting, and its sales share remains the highest in Europe, at almost 95%.

Electric car registrations and sales share in China, United States and Europe, 2018-2023

Sales in emerging markets are increasing, albeit from a low base, led by southeast asia and brazil.

Electric car sales continued to increase in emerging market and developing economies (EMDEs) outside China in 2023, but they remained low overall. In many cases, personal cars are not the most common means of passenger transport, especially compared with shared vans and minibuses, or two- and three-wheelers (2/3Ws), which are more prevalent and more often electrified, given their relative accessibility and affordability. The electrification of 2/3Ws and public or shared mobility will be key to achieve emissions reductions in such cases (see later sections in this report). While switching from internal combustion engine (ICE) to electric cars is important, the effect on overall emissions differs depending on the mode of transport that is displaced. Replacing 2/3Ws, public and shared mobility or more active forms of transport with personal cars may not be desirable in all cases.

In India, electric car registrations were up 70% year-on-year to 80 000, compared to a growth rate of under 10% for total car sales. Around 2% of all cars sold were electric. Purchase incentives under the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme, supply-side incentives under the Production Linked Incentive (PLI) scheme, tax benefits and the Go Electric campaign have all contributed to fostering demand in recent years. A number of new models also became popular in 2023, such as Mahindra’s XUV400, MG’s Comet, Citroën’s e-C3, BYD’s Yuan Plus, and Hyundai’s Ioniq 5, driving up growth compared to 2022. However, if the forthcoming FAME III scheme includes a subsidy reduction, as has been speculated in line with lower subsidy levels in the 2024 budget, future growth could be affected. Local carmakers have thus far maintained a strong foothold in the market, supported by advantageous import tariffs , and account for 80% of electric car sales in cumulative terms since 2010, led by Tata (70%) and Mahindra (10%).

In Thailand, electric car registrations more than quadrupled year-on-year to nearly 90 000, reaching a notable 10% sales share – comparable to the share in the United States. This is all the more impressive given that overall car sales in the country decreased from 2022 to 2023. New subsidies, including for domestic battery manufacturing, and lower import and excise taxes, combined with the growing presence of Chinese carmakers , have contributed to rapidly increasing sales. Chinese companies account for over half the sales to date, and they could become even more prominent given that BYD plans to start operating EV production facilities in Thailand in 2024, with an annual production capacity of 150 000 vehicles for an investment of just under USD 500 million . Thailand aims to become a major EV manufacturing hub for domestic and export markets, and is aiming to attract USD 28 billion in foreign investment within 4 years, backed by specific incentives to foster investment.

In Viet Nam, after an exceptional 2022 for the overall car market, car sales contracted by 25% in 2023, but electric car sales still recorded unprecedented growth: from under 100 in 2021, to 7 000 in 2022, and over 30 000 in 2023, reaching a 15% sales share. Domestic front-runner VinFast, established in 2017, accounted for nearly all domestic sales. VinFast also started selling electric sports utility vehicles (SUVs) in North America in 2023, as well as developing manufacturing facilities in order to unlock domestic content-linked subsidies under the US IRA. VinFast is investing around USD 2 billion and targets an annual production of 150 000 vehicles in the United States by 2025. The company went public in 2023, far exceeding expectations with a debut market valuation of around USD 85 billion, well beyond General Motors (GM) (USD 46 billion), Ford (USD 48 billion) or BMW (USD 68 billion), before it settled back down around USD 20 billion by the end of the year. VinFast also looks to enter regional markets, such as India and the Philippines .

In Malaysia, electric car registrations more than tripled to 10 000, supported by tax breaks and import duty exemptions, as well as an acceleration in charging infrastructure roll-out. In 2023, Mercedes-Benz marketed the first domestically assembled EV, and both BYD and Tesla also entered the market.

In Latin America, electric car sales reached almost 90 000 in 2023, with markets in Brazil, Colombia, Costa Rica and Mexico leading the region. In Brazil, electric car registrations nearly tripled year-on-year to more than 50 000, a market share of 3%. Growth in Brazil was underpinned by the entry of Chinese carmakers, such as BYD with its Song and Dolphin models, Great Wall with its H6, and Chery with its Tiggo 8, which immediately ranked among the best-selling models in 2023. Road transport electrification in Brazil could bring significant climate benefits given the largely low-emissions power mix, as well as reducing local air pollution. However, EV adoption has been slow thus far, given the national prioritisation of ethanol-based fuels since the late 1970s as a strategy to maintain energy security in the face of oil shocks. Today, biofuels are important alternative fuels available at competitive cost and aligned with the existing refuelling infrastructure. Brazil remains the world’s largest producer of sugar cane, and its agribusiness represents about one-fourth of GDP. At the end of 2023, Brazil launched the Green Mobility and Innovation Programme , which provides tax incentives for companies to develop and manufacture low-emissions road transport technology, aggregating to more than BRA 19 billion (Brazilian reals) (USD 3.8 billion) over the 2024-2028 period. Several major carmakers already in Brazil are developing hybrid ethanol-electric models as a result. China’s BYD and Great Wall are also planning to start domestic manufacturing, counting on local battery metal deposits, and plan to sell both fully electric and hybrid ethanol-electric models. BYD is investing over USD 600 million in its electric car plant in Brazil – its first outside Asia – for an annual capacity of 150 000 vehicles. BYD also partnered with Raízen to develop charging infrastructure in eight Brazilian cities starting in 2024. GM, on the other hand, plans to stop producing ICE (including ethanol) models and go fully electric, notably to produce for export markets. In 2024, Hyundai announced investments of USD 1.1 billion to 2032 to start local manufacturing of electric, hybrid and hydrogen cars.

In Mexico, electric car registrations were up 80% year-on-year to 15 000, a market share just above 1%. Given its proximity to the United States, Mexico’s automotive market is already well integrated with North American partners, and benefits from advantageous trade agreements, large existing manufacturing capacity, and eligibility for subsidies under the IRA. As a result, local EV supply chains are developing quickly, with expectations that this will spill over into domestic markets. Tesla, Ford, Stellantis, BMW, GM, Volkswagen (VW) and Audi have all either started manufacturing or announced plans to manufacture EVs in Mexico. Chinese carmakers such as BYD, Chery and SAIC are also considering expanding to Mexico. Elsewhere in the region, Colombia and Costa Rica are seeing increasing electric car sales, with around 6 000 and 5 000 in 2023, respectively, but sales remain limited in other Central and South American countries.

Throughout Africa, Eurasia and the Middle East, electric cars are still rare, accounting for less than 1% of total car sales. However, as Chinese carmakers look for opportunities abroad, new models – including those produced domestically – could boost EV sales. For example, in Uzbekistan , BYD set up a joint venture with UzAuto Motors in 2023 to produce 50 000 electric cars annually, and Chery International established a partnership with ADM Jizzakh. This partnership has already led to a steep increase in electric car sales in Uzbekistan, reaching around 10 000 in 2023. In the Middle East, Jordan boasts the highest electric car sales share, at more than 45%, supported by much lower import duties relative to ICE cars, followed by the United Arab Emirates, with 13%.

Strong electric car sales in the first quarter of 2024 surpass the annual total from just four years ago

Electric car sales remained strong in the first quarter of 2024, surpassing those of the same period in 2023 by around 25% to reach more than 3 million. This growth rate was similar to the increase observed for the same period in 2023 compared to 2022. The majority of the additional sales came from China, which sold about half a million more electric cars than over the same period in 2023. In relative terms, the most substantial growth was observed outside of the major EV markets, where sales increased by over 50%, suggesting that the transition to electromobility is picking up in an increasing number of countries worldwide.

Quarterly electric car sales by region, 2021-2024

From January to March of this year, nearly 1.9 million electric cars were sold in China, marking an almost 35% increase compared to sales in the first quarter of 2023. In March, NEV sales in China surpassed a share of 40% in overall car sales for the first time, according to retail sales reported by the China Passenger Car Association. As witnessed in 2023, sales of plug-in hybrid electric cars are growing faster than sales of pure battery electric cars. Plug-in hybrid electric car sales in the first quarter increased by around 75% year-on-year in China, compared to just 15% for battery electric car sales, though the former started from a lower base.

In Europe, the first quarter of 2024 saw year-on-year growth of over 5%, slightly above the growth in overall car sales and thereby stabilising the EV sales share at a similar level as last year. Electric car sales growth was particularly high in Belgium, where around 60 000 electric cars were sold, almost 35% more than the year before. However, Belgium represents less than 5% of total European car sales. In the major European markets – France, Germany, Italy and the United Kingdom (together representing about 60% of European car sales) – growth in electric car sales was lower. In France, overall EV sales in the first quarter grew by about 15%, with BEV sales growth being higher than for PHEVs. While this is less than half the rate as over the same period last year, total sales were nonetheless higher and led to a slight increase in the share of EVs in total car sales. The United Kingdom saw similar year-on-year growth (over 15%) in EV sales as France, about the same rate as over the same period last year. In Germany, where battery electric car subsidies ended in 2023, sales of electric cars fell by almost 5% in the first quarter of 2024, mainly as a result of a 20% year-on-year decrease in March. The share of EVs in total car sales was therefore slightly lower than last year. As in China, PHEV sales in both Germany and the United Kingdom were stronger than BEV sales. In Italy, sales of electric cars in the first three months of 2024 were more than 20% lower than over the same period in 2023, with the majority of the decrease taking place in the PHEV segment. However, this trend could be reversed based on the introduction of a new incentive scheme , and if Chinese automaker Chery succeeds in appealing to Italian consumers when it enters the market later this year.

In the United States, first-quarter sales reached around 350 000, almost 15% higher than over the same period the year before. As in other major markets, the sales growth of PHEVs was even higher, at 50%. While the BEV sales share in the United States appears to have fallen somewhat over the past few months, the sales share of PHEVs has grown.

In smaller EV markets, sales growth in the first months of 2024 was much higher, albeit from a low base. In January and February, electric car sales almost quadrupled in Brazil and increased more than sevenfold in Viet Nam. In India, sales increased more than 50% in the first quarter of 2024. These figures suggest that EVs are gaining momentum across diverse markets worldwide.

Since 2021, first-quarter electric car sales have typically accounted for 15-20% of the total global annual sales. Based on this observed trend, coupled with policy momentum and the seasonality that EV sales typically experience, we estimate that electric car sales could reach around 17 million in 2024. This indicates robust growth for a maturing market, with 2024 sales to surpass those of 2023 by more than 20% and EVs to reach a share in total car sales of more than one-fifth.

Electric car sales, 2012-2024

The majority of the additional 3 million electric car sales projected for 2024 relative to 2023 are from China. Despite the phase-out of NEV purchase subsidies last year, sales in China have remained robust, indicating that the market is maturing. With strong competition and relatively low-cost electric cars, sales are to grow by almost 25% in 2024 compared to last year, reaching around 10 million. If confirmed, this figure will come close to the total global electric car sales in 2022. As a result, electric car sales could represent around 45% of total car sales in China over 2024.

In 2024, electric car sales in the United States are projected to rise by 20% compared to the previous year, translating to almost half a million more sales, relative to 2023. Despite reporting of a rocky end to 2023 for electric cars in the United States, sales shares are projected to remain robust in 2024. Over the entire year, around one in nine cars sold are expected to be electric.

Based on recent trends, and considering that tightening CO 2 targets are due to come in only in 2025, the growth in electric car sales in Europe is expected to be the lowest of the three largest markets. Sales are projected to reach around 3.5 million units in 2024, reflecting modest growth of less than 10% compared to the previous year. In the context of a generally weak outlook for passenger car sales, electric cars would still represent about one in four cars sold in Europe.

Outside of the major EV markets, electric car sales are anticipated to reach the milestone of over 1 million units in 2024, marking a significant increase of over 40% compared to 2023. Recent trends showing the success of both homegrown and Chinese electric carmakers in Southeast Asia underscore that the region is set to make a strong contribution to the sales of emerging EV markets (see the section on Trends in the electric vehicle industry). Despite some uncertainty surrounding whether India’s forthcoming FAME III scheme will include subsidies for electric cars, we expect sales in India to remain robust, and to experience around 50% growth compared to 2023. Across all regions outside the three major EV markets, electric car sales are expected to represent around 5% of total car sales in 2024, which – considering the high growth rates seen in recent years – could indicate that a tipping point towards global mass adoption is getting closer.

There are of course downside risks to the 2024 outlook for electric car sales. Factors such as high interest rates and economic uncertainty could potentially reduce the growth of global electric car sales in 2024. Other challenges may come from the IRA restrictions on US electric car tax incentives, and the tightening of technical requirements for EVs to qualify for the purchase tax exemption in China. However, there are also upside potentials to consider. New markets may open up more rapidly than anticipated, as automakers expand their EV operations and new entrants compete for market share. This could lead to accelerated growth in electric car sales globally, surpassing the initial estimations.

More electric models are becoming available, but the trend is towards larger ones

The number of available electric car models nears 600, two-thirds of which are large vehicles and SUVs

In 2023, the number of available models for electric cars increased 15% year-on-year to nearly 590, as carmakers scaled up electrification plans, seeking to appeal to a growing consumer base. Meanwhile, the number of fully ICE models (i.e. excluding hybrids) declined for the fourth consecutive year, at an average of 2%. Based on recent original equipment manufacturer (OEM) announcements, the number of new electric car models could reach 1 000 by 2028. If all announced new electric models actually reach the market, and if the number of available ICE car models continues to decline by 2% annually, there could be as many electric as ICE car models before 2030.

As reported in GEVO-2023, the share of small and medium electric car models is decreasing among available electric models: in 2023, two-thirds of the battery-electric models on the market were SUVs, 5 pick-up trucks or large cars. Just 25% of battery electric car sales in the United States were for small and medium models, compared to 40% in Europe and 50% in China. Electric cars are following the same trend as conventional cars, and getting bigger on average. In 2023, SUVs, pick-up trucks and large models accounted for 65% of total ICE car sales worldwide, and more than 80% in the United States, 60% in China and 50% in Europe.

Several factors underpin the increase in the share of large models. Since the 2010s, conventional SUVs in the United States have benefited from less stringent tailpipe emissions rules than smaller models, creating an incentive for carmakers to market more vehicles in that segment. Similarly, in the European Union, CO 2 targets for passenger cars have included a compromise on weight, allowing CO 2 leeway for heavier vehicles in some cases. Larger vehicles also mean larger margins for carmakers. Given that incumbent carmakers are not yet making a profit on their EV offer in many cases, focusing on larger models enables them to increase their margins. Under the US IRA, electric SUVs can qualify for tax credits as long as they are priced under USD 80 000, whereas the limit stands at USD 55 000 for a sedan, creating an incentive to market SUVs if a greater margin can be gathered. On the demand side, there is now strong willingness to pay for SUVs or large models. Consumers are typically interested in longer-range and larger cars for their primary vehicles, even though small models are more suited to urban use. Higher marketing spend on SUVs compared to smaller models can also have an impact on consumer choices.

The progressive shift towards ICE SUVs has been dramatically limiting fuel savings. Over the 2010-2022 period, without the shift to SUVs, energy use per kilometre could have fallen at an average annual rate 30% higher than the actual rate. Switching to electric in the SUV and larger car segments can therefore achieve immediate and significant CO 2 emissions reductions, and electrification also brings considerable benefits in terms of reducing air pollution and non-tailpipe emissions, especially in urban settings. In 2023, if all ICE and HEV sales of SUVs had instead been BEV, around 770 Mt CO 2 could have been avoided globally over the cars’ lifetimes (see section 10 on lifecycle analysis). This is equivalent to the total road emissions of China in 2023.

Breakdown of battery electric car sales in selected countries and regions by segment, 2018-2023

Nevertheless, from a policy perspective, it is critical to mitigate the negative spillovers associated with an increase in larger electric cars in the fleet.

Larger electric car models have a significant impact on battery supply chains and critical mineral demand. In 2023, the sales-weighted average battery electric SUV in Europe had a battery almost twice as large as the one in the average small electric car, with a proportionate impact on critical mineral needs. Of course, the range of small cars is typically shorter than SUVs and large cars (see later section on ranges). However, when comparing electric SUVs and medium-sized electric cars, which in 2023 offered a similar range, the SUV battery was still 25% larger. This means that if all electric SUVs sold in 2023 had instead been medium-sized cars, around 60 GWh of battery equivalent could have been avoided globally, with limited impact on range. Accounting for the different chemistries used in China, Europe, and the United States, this would be equivalent to almost 6 000 tonnes of lithium, 30 000 tonnes of nickel, almost 7 000 tonnes of cobalt, and over 8 000 tonnes of manganese.

Larger batteries also require more power, or longer charging times. This can put pressure on electricity grids and charging infrastructure by increasing occupancy, which could create issues during peak utilisation, such as at highway charging points at high traffic times.

In addition, larger vehicles also require greater quantities of materials such as iron and steel, aluminium and plastics, with a higher environmental and carbon footprint for materials production, processing and assembly. Because they are heavier, larger models also have higher electricity consumption. The additional energy consumption resulting from the increased mass is mitigated by regenerative braking to some extent, but in 2022, the sales-weighted average electricity consumption of electric SUVs was 20% higher than that of other electric cars. 6

Major carmakers have announced launches of smaller and more affordable electric car models over the past few years. However, when all launch announcements are considered, far fewer smaller models are expected than SUVs, large models and pick-up trucks. Only 25% of the 400+ launches expected over the 2024-2028 period are small and medium models, which represents a smaller share of available models than in 2023. Even in China, where small and medium models have been popular, new launches are typically for larger cars.

Number of available car models in 2023 and expected new ones by powertrain, country or region and segment, 2024-2028

Several governments have responded by introducing policies to create incentives for smaller and lighter passenger cars. In Norway, for example, all cars are subject to a purchase tax based on weight, CO 2 and nitrogen oxides (NO x ) emissions, though electric cars were exempt from the weight-based tax prior to 2023. Any imported cars weighing more than 500 kg must also pay an entry fee for each additional kg. In France, a progressive weight-based tax applies to ICE and PHEV cars weighing above 1 600 kg, with a significant impact on price: weight tax for a Land Rover Defender 130 (2 550 kg) adds up to more than EUR 21 500, versus zero for a Renault Clio (1 100 kg). Battery electric cars have been exempted to date. In February 2024, a referendum held in Paris resulted in a tripling of city parking fees for visiting SUVs, applicable to ICE, hybrid and plug-in hybrid cars above 1 600 kg and battery electric ones above 2 000 kg, in an effort to limit the use of large and/or polluting vehicles. Other examples exist in Estonia, Finland, Switzerland and the Netherlands. A number of policy options may be used, such as caps and fleet averages for vehicle footprint, weight, and/or battery size; access to finance for smaller vehicles; and sustained support for public charging, enabling wider use of shorter-range cars.

Average range is increasing, but only moderately

Concerns about range compared to ICE vehicles, and about the availability of charging infrastructure for long-distance journeys, also contribute to increasing appetite for larger models with longer range.

With increasing battery size and improvements in battery technology and vehicle design, the sales-weighted average range of battery electric cars grew by nearly 75% between 2015 and 2023, although trends vary by segment. The average range of small cars in 2023 – around 150 km – is not much higher than it was in 2015, indicating that this range is already well suited for urban use (with the exception of taxis, which have much higher daily usage). Large, higher-end models already offered higher ranges than average in 2015, and their range has stagnated through 2023, averaging around 360-380 km. Meanwhile, significant improvements have been made for medium-sized cars and SUVs, the range of which now stands around 380 km, whereas it averaged around 150 km for medium cars and 270 km for SUVs in 2015. This is encouraging for consumers looking to purchase an electric car for longer journeys rather than urban use.

Since 2020, growth in the average range of vehicles has been slower than over the 2015-2020 period. This could result from a number of factors, including fluctuating battery prices, carmakers’ attempts to limit additional costs as competition intensifies, and technical constraints (e.g. energy density, battery size). It could also reflect that beyond a certain range at which most driving needs are met, consumers’ willingness to pay for a marginal increase in battery size and range is limited. Looking forward, however, the average range could start increasing again as novel battery technologies mature and prices fall.

More affordable electric cars are needed to reach a mass-market tipping point

An equitable and inclusive transition to electric mobility, both within countries and at the global level, hinges on the successful launch of affordable EVs (including but not limited to electric cars). In this section, we use historic sales and price data for electric and ICE models around the world to examine the total cost of owning an electric car, price trends over time, and the remaining electric premium, by country and vehicle size. 7 Specific models are used for illustration.

Total cost of ownership

Car purchase decisions typically involve consideration of retail price and available subsidies as well as lifetime operating costs, such as fuel costs, insurance, maintenance and depreciation, which together make up the total cost of ownership (TCO). Reaching TCO parity between electric and ICE cars creates important financial incentives to make the switch. This section examines the different components of the TCO, by region and car size.

In 2023, upfront retail prices for electric cars were generally higher than for their ICE equivalents, which increased their TCO in relative terms. On the upside, higher fuel efficiency and lower maintenance costs enable fuel cost savings for electric cars, lowering their TCO. This is especially true in periods when fuel prices are high, in places where electricity prices are not too closely correlated to fossil fuel prices. Depreciation is also a major factor in determining TCO: As a car ages, it loses value, and depreciation for electric cars tends to be faster than for ICE equivalents, further increasing their TCO. Accelerated depreciation could, however, prove beneficial for the development of second-hand markets.

However, the trend towards faster depreciation for electric vehicles might be reversed for multiple reasons. Firstly, consumers are gaining more confidence in electric battery lifetimes, thereby increasing the resale value of EVs. Secondly, strong demand and the positive brand image of some BEV models can mean they hold their value longer, as shown by Tesla models depreciating more slowly than the average petrol car in the United States. Finally, increasing fuel prices in some regions, the roll-out of low-emissions zones that restrict access for the most polluting vehicles, and taxes and parking fees specifically targeted at ICE vehicles could mean they experience faster depreciation rates than EVs in the future. In light of these two possible opposing depreciation trends, the same fixed annual depreciation rate for both BEVs and ICE vehicles has been applied in the following cost of ownership analysis.

Subsidies help lower the TCO of electric cars relative to ICE equivalents in multiple ways. A purchase subsidy lowers the original retail price, thereby lowering capital depreciation over time, and a lower retail price implies lower financing costs through cumulative interest. Subsidies can significantly reduce the number of years required to reach TCO parity between electric and ICE equivalents. As of 2022, we estimate that TCO parity could be reached in most cases in under 7 years in the three major EV markets, with significant variations across different car sizes. In comparison, for models purchased at 2018 prices, TCO parity was much harder to achieve.

In Germany, for example, we estimate that the sales-weighted average price of a medium-sized battery electric car in 2022 was 10-20% more expensive than its ICE equivalent, but 10-20% cheaper in cumulative costs of ownership after 5 years, thanks to fuel and maintenance costs savings. In the case of an electric SUV, we estimate that the average annual operating cost savings would amount to USD 1 800 when compared to the equivalent conventional SUV over a period of 10 years. In the United States, despite lower fuel prices with respect to electricity, the higher average annual mileage results in savings that are close to Germany at USD 1 600 per year. In China, lower annual distance driven reduces fuel cost savings potential, but the very low price of electricity enables savings of about USD 1 000 per year.

In EMDEs, some electric cars can also be cheaper than ICE equivalents over their lifetime. This is true in India , for example, although it depends on the financing instrument. Access to finance is typically much more challenging in EMDEs due to higher interest rates and the more limited availability of cheap capital. Passenger cars have also a significantly lower market penetration in the first place, and many car purchases are made in second-hand markets. Later sections of this report look at markets for used electric cars, as well as the TCO for electric and conventional 2/3Ws in EMDEs, where they are far more widespread than cars as a means of road transport.

Upfront retail price parity

Achieving price parity between electric and ICE cars will be an important tipping point. Even when the TCO for electric cars is advantageous, the upfront retail price plays a decisive role, and mass-market consumers are typically more sensitive to price premiums than wealthier buyers. This holds true not only in emerging and developing economies, which have comparatively high costs of capital and comparatively low household and business incomes, but also in advanced economies. In the United States, for example, surveys suggest affordability was the top concern for consumers considering EV adoption in 2023. Other estimates show that even among SUV and pick-up truck consumers, only 50% would be willing to purchase one above USD 50 000.

In this section, we examine historic price trends for electric and ICE cars over the 2018-2022 period, by country and car size, and for best-selling models in 2023.

Electric cars are generally getting cheaper as battery prices drop, competition intensifies, and carmakers achieve economies of scale. In most cases, however, they remain on average more expensive than ICE equivalents. In some cases, after adjusting for inflation, their price stagnated or even moderately increased between 2018 and 2022.

Larger batteries for longer ranges increase car prices, and so too do the additional options, equipment, digital technology and luxury features that are often marketed on top of the base model. A disproportionate focus on larger, premium models is pushing up the average price, which – added to the lack of available models in second-hand markets (see below) – limits potential to reach mass-market consumers. Importantly, geopolitical tension, trade and supply chain disruptions, increasing battery prices in 2022 relative to 2021, and rising inflation, have also significantly affected the potential for further cost declines.

Competition can also play an important role in bringing down electric car prices. Intensifying competition leads carmakers to cut prices to the minimum profit margin they can sustain, and – if needed – to do so more quickly than battery and production costs decline. For example, between mid-2022 and early-2024, Tesla cut the price of its Model Y from between USD 65 000 and USD 70 000 to between USD 45 000 and USD 55 000 in the United States. Battery prices for such a model dropped by only USD 3 000 over the same period in the United States, suggesting that a profit margin may still be made at a lower price. Similarly, in China, the price of the Base Model Y dropped from CNY 320 000 (Yuan renminbi) (USD 47 000) to CNY 250 000 (USD 38 000), while the corresponding battery price fell by only USD 1 000. Conversely, in cases where electric models remain niche or aimed at wealthier, less price-sensitive early adopters, their price may not fall as quickly as battery prices, if carmakers can sustain greater margins.

Price gap between the sales-weighted average price of conventional and electric cars in selected countries, before subsidy, by size, in 2018 and 2022

In China, where the sales share of electric cars has been high for several years, the sales-weighted average price of electric cars (before purchase subsidy) is already lower than that of ICE cars. This is true not only when looking at total sales, but also at the small cars segment, and is close for SUVs. After accounting for the EV exemption from the 10% vehicle purchase tax, electric SUVs were already on par with conventional ones in 2022, on average.

Electric car prices have dropped significantly since 2018. We estimate that around 55% of the electric cars sold in China in 2022 were cheaper than their average ICE equivalent, up from under 10% in 2018. Given the further price declines between 2022 and 2023, we estimate that this share increased to around 65% in 2023. These encouraging trends suggest that price parity between electric and ICE cars could also be reached in other countries in certain segments by 2030, if the sales share of electric cars continues to grow, and if supporting infrastructure – such as for charging – is sustained.

As reported in detail in GEVO-2023 , China remains a global exception in terms of available inexpensive electric models. Local carmakers already market nearly 50 small, affordable electric car models, many of which are priced under CNY 100 000 (USD 15 000). This is in the same range as best-selling small ICE cars in 2023, which cost from CNY 70 000 to CNY 100 000. In 2022, the best-selling electric car was SAIC’s small Wuling Hongguang Mini EV, which accounted for 10% of all BEV sales. It was priced around CNY 40 000, weighing under 700 kg for a 170-km range. In 2023, however, it was overtaken by Tesla models, among other larger models, as new consumers seek longer ranges and higher-end options and digital equipment.

United States

In the United States, the sales-weighted average price of electric cars decreased over the 2018-2022 period, primarily driven by a considerable drop in the price of Tesla cars, which account for a significant share of sales. The sales-weighted average retail price of electric SUVs fell slightly more quickly than the average SUV battery costs over the same period. The average price of small and medium models also decreased, albeit to a smaller extent.

Across all segments, electric models remained more expensive than conventional equivalents in 2022. However, the gap has since begun to close, as market size increases and competition leads carmakers to cut prices. For example, in 2023-2024, Tesla’s Model 3 could be found in the USD 39 000 to USD 42 000 range, which is comparable to the average price for new ICE cars, and a new Model Y priced under USD 50 000 was launched. Rivian is expecting to launch its R2 SUV in 2026 at USD 45 000, which is much less than previous vehicles. Average price parity between electric and conventional SUVs could be reached by 2030, but it may only be reached later for small and medium cars, given their lower availability and popularity.

Smaller, cheaper electric models have further to go to reach price parity in the United States. We estimate that in 2022, only about 5% of the electric cars sold in the United States were cheaper than their average ICE equivalent. In 2023, the cheapest electric cars were priced around USD 30 000 (e.g. Chevrolet Bolt, Nissan Leaf, Mini Cooper SE). To compare, best-selling small ICE options cost under USD 20 000 (e.g. Kia Rio, Mitsubishi Mirage), and many best-selling medium ICE options between USD 20 000 and USD 25 000 (e.g. Honda Civic, Toyota Corolla, Kia Forte, Hyundai Avante, Nissan Sentra).

Around 25 new all-electric car models are expected in 2024, but only 5 of them are expected below USD 50 000, and none under the USD 30 000 mark. Considering all the electric models expected to be available in 2024, about 75% are priced above USD 50 000, and fewer than 10 under USD 40 000, even after taking into account the USD 7 500 tax credit under the IRA for eligible cars as of February 2024. This means that despite the tax credit, few electric car models directly compete with small mass-market ICE models.

In December 2023, GM stopped production of its best-selling electric car, the Bolt, announcing it would introduce a new version in 2025. The Nissan Leaf (40 kWh) therefore remains the cheapest available electric car in 2024, at just under USD 30 000, but is not yet eligible for IRA tax credits. Ford announced in 2024 that it would move away from large and expensive electric cars as a way to convince more consumers to switch to electric, at the same time as increasing output of ICE models to help finance a transition to electric mobility. In 2024, Tesla announced it would start producing a next-generation, compact and affordable electric car in June 2025, but the company had already announced in 2020 that it would deliver a USD 25 000 model within 3 years. Some micro urban electric cars are already available between USD 5 000 and USD 20 000 (e.g. Arcimoto FUV, Nimbus One), but they are rare. In theory, such models could cover many use cases, since 80% of car journeys in the United States are under 10 miles .

Pricing trends differ across European countries, and typically vary by segment.

In Norway, after taking into account the EV sales tax exemption, electric cars are already cheaper than ICE equivalents across all segments. In 2022, we estimate that the electric premium stood around -15%, and even -30% for medium-sized cars. Five years earlier, in 2018, the overall electric premium was less advantageous, at around -5%. The progressive reintroduction of sales taxes on electric cars may change these estimates for 2023 onwards.

Germany’s electric premium ranks among the lowest in the European Union. Although the sales-weighted average electric premium increased slightly between 2018 and 2022, it stood at 15% in 2022. It is particularly low for medium-sized cars (10-15%) and SUVs (20%), but remains higher than 50% for small models. In the case of medium cars, the sales-weighted average electric premium was as low as EUR 5 000 in 2022. We estimate that in 2022, over 40% of the medium electric cars sold in Germany were cheaper than their average ICE equivalent. Looking at total sales, over 25% of the electric cars sold in 2022 were cheaper than their average ICE equivalent. In 2023, the cheapest models among the best-selling medium electric cars were priced between EUR 22 000 and EUR 35 000 (e.g. MG MG4, Dacia Spring, Renault Megane), far cheaper than the three front-runners priced above EUR 45 000 (VW ID.3, Cupra Born, and Tesla Model 3). To compare, best-selling ICE cars in the medium segment were also priced between EUR 30 000 and EUR 45 000 (e.g. VW Golf, VW Passat Santana, Skoda Octavia Laura, Audi A3, Audi A4). At the end of 2023, Germany phased out its subsidy for electric car purchases, but competition and falling model prices could compensate for this.

In France, the sales-weighted average electric premium stagnated between 2018 and 2022. The average price of ICE cars also increased over the same period, though more moderately than that of electric models. Despite a drop in the price of electric SUVs, which stood at a 30% premium over ICE equivalents in 2022, the former do not account for a high enough share of total electric car sales to drive down the overall average. The electric premium for small and medium cars remains around 40-50%.

These trends mirror those of some of the best-selling models. For example, when adjusting prices for inflation, the small Renault Zoe was sold at the same price on average in 2022-2023 as in 2018-2019, or EUR 30 000 (USD 32 000). It could be found for sale at as low as EUR 25 000 in 2015-2016. The earlier models, in 2015, had a battery size of around 20 kWh, which increased to around 40 kWh in 2018‑2019 and 50 kWh in newer models in 2022-2023. Yet European battery prices fell more quickly than the battery size increased over the same period, indicating that battery size alone does not explain car price dynamics.

In 2023, the cheapest electric cars in France were priced between EUR 22 000 and EUR 30 000 (e.g. Dacia Spring, Renault Twingo E-Tech, Smart EQ Fortwo), while best-selling small ICE models were available between EUR 10 000 and EUR 20 000 (e.g. Renault Clio, Peugeot 208, Citroën C3, Dacia Sandero, Opel Corsa, Skoda Fabia). Since mid-2024, subsidies of up to EUR 4 000 can be granted for electric cars priced under EUR 47 000, with an additional subsidy of up to EUR 3 000 for lower-income households.

In the United Kingdom, the sales-weighted average electric premium shrank between 2018 and 2022, thanks to a drop in prices for electric SUVs, as in the United States. Nonetheless, electric SUVs still stood at a 45% premium over ICE equivalents in 2022, which is similar to the premium for small models but far higher than for medium cars (20%).

In 2023, the cheapest electric cars in the United Kingdom were priced from GBP 27 000 to GBP 30 000 (USD 33 000 to 37 000) (e.g. MG MG4, Fiat 500, Nissan Leaf, Renault Zoe), with the exception of the Smart EQ Fortwo, priced at GBP 21 000. To compare, best-selling small ICE options could be found from GBP 10 000 to 17 000 (e.g. Peugeot 208, Fiat 500, Dacia Sandero) and medium options below GBP 25 000 (e.g. Ford Puma). Since July 2022, there has been no subsidy for the purchase of electric passenger cars.

Elsewhere in Europe, electric cars remain typically much more expensive than ICE equivalents. In Poland , for example, just a few electric car models could be found at prices competitive with ICE cars in 2023, under the PLN 150 000 (Polish zloty) (EUR 35 000) mark. Over 70% of electric car sales in 2023 were for SUVs, or large or more luxurious models, compared to less than 60% for ICE cars.

In 2023, there were several announcements by European OEMs for smaller models priced under EUR 25 000 in the near-term (e.g. Renault R5, Citroën e-C3, Fiat e-Panda, VW ID.2all). There is also some appetite for urban microcars (i.e. L6-L7 category), learning from the success of China’s Wuling. Miniature models bring important benefits if they displace conventional models, helping reduce battery and critical mineral demand. Their prices are often below USD 5 000 (e.g. Microlino, Fiat Topolino, Citroën Ami, Silence S04, Birò B2211).

In Europe and the United States, electric car prices are expected to come down as a result of falling battery prices, more efficient manufacturing, and competition. Independent analyses suggest that price parity between some electric and ICE car models in certain segments could be reached over the 2025-2028 period, for example for small electric cars in Europe in 2025 or soon after. However, many market variables could delay price parity, such as volatile commodity prices, supply chain bottlenecks, and the ability of carmakers to yield sufficient margins from cheaper electric models. The typical rule in which economies of scale bring down costs is being complicated by numerous other market forces. These include a dynamic regulatory context, geopolitical competition, domestic content incentives, and a continually evolving technology landscape, with competing battery chemistries that each have their own economies of scale and regional specificities.

Japan is a rare example of an advanced economy where small models – both for electric and ICE vehicles – appeal to a large consumer base, motivated by densely populated cities with limited parking space, and policy support. In 2023, about 60% of total ICE sales were for small models, and over half of total electric sales. Two electric cars from the smallest “Kei” category, the Nissan Sakura and Mitsubishi eK-X, accounted for nearly 50% of national electric car sales alone, and both are priced between JPY 2.3 million (Japanese yen) and JPY 3 million (USD 18 000 to USD 23 000). However, this is still more expensive than best-selling small ICE cars (e.g. Honda N Box, Daihatsu Hijet, Daihatsu Tanto, Suzuki Spacia, Daihatsu Move), priced between USD 13 000 and USD 18 000. In 2024, Nissan announced that it would aim to reach cost parity (of production, not retail price) between electric and ICE cars by 2030.

Emerging market and developing economies

In EMDEs, the absence of small and cheaper electric car models is a significant hindrance to wider market uptake. Many of the available car models are SUVs or large models, targeting consumers of high-end goods, and far too expensive for mass-market consumers, who often do not own a personal car in the first place (see later sections on second-hand car markets and 2/3Ws).

In India, while Tata’s small Tiago/Tigor models, which are priced between USD 10 000 and USD 15 000, accounted for about 20% of total electric car sales in 2023, the average best-selling small ICE car is priced around USD 7 000. Large models and SUVs accounted for over 65% of total electric car sales. While BYD announced in 2023 the goal of accounting for 40% of India’s EV market by 2030, all of its models available in India cost more than INR 3 million (Indian rupees) (USD 37 000), including the Seal, launched in 2024 for INR 4.1 million (USD 50 000).

Similarly, SUVs and large models accounted for the majority share of electric car sales in Thailand (60%), Indonesia (55%), Malaysia (over 85%) and Viet Nam (over 95%). In Indonesia, for example, Hyundai’s Ionic 5 was the most popular electric car in 2023, priced at around USD 50 000. Looking at launch announcements, most new models expected over the 2024-2028 period in EMDEs are SUVs or large models. However, more than 50 small and medium models could also be introduced, and the recent or forthcoming entry of Chinese carmakers suggests that cheaper models could hit the market in the coming years.

In 2022-2023, Chinese carmakers accounted for 40-75% of the electric car sales in Indonesia, Thailand and Brazil, with sales jumping as cheaper Chinese models were introduced. In Thailand, for example, Hozon launched its Neta V model in 2022 priced at THB 550 000 (Thai baht) (USD 15 600), which became a best-seller in 2023 given its relative affordability compared with the cheapest ICE equivalents at around USD 9 000. Similarly, in Indonesia, the market entry of Wuling’s Air EV in 2022-2023 was met with great success. In Colombia, the best-selling electric car in 2023 was the Chinese mini-car, Zhidou 2DS, which could be found at around USD 15 000, a competitive option relative to the country’s cheapest ICE car, the Kia Picanto, at USD 13 000.

Electric car sales in selected countries, by origin of carmaker, 2021-2023

Second-hand markets for electric cars are on the rise.

As electric vehicle markets mature, the second-hand market will become more important

In the same way as for other technology products, second-hand markets for used electric cars are now emerging as newer generations of vehicles progressively become available and earlier adopters switch or upgrade. Second-hand markets are critical to foster mass-market adoption, especially if new electric cars remain expensive, and used ones become cheaper. Just as for ICE vehicles – for which buying second-hand is often the primary method of acquiring a car in both emerging and advanced economies – a similar pattern will emerge with electric vehicles. It is estimated that eight out of ten EU citizens buy their car second-hand, and this share is even higher – around 90% – among low- and middle-income groups. Similarly, in the United States, about seven out of ten vehicles sold are second-hand, and only 17% of lower-income households buy a new car.

As major electric car markets reach maturity, more and more used electric cars are becoming available for resale. Our estimates suggest that in 2023, the market size for used electric cars amounted to nearly 800 000 in China , 400 000 in the United States and more than 450 000 for France, Germany, Italy, Spain, the Netherlands and the United Kingdom combined. Second-hand sales have not been included in the numbers presented in the previous section of this report, which focused on sales of new electric cars, but they are already significant. On aggregate, global second-hand electric car sales were roughly equal to new electric car sales in the United States in 2023. In the United States, used electric car sales are set to increase by 40% in 2024 relative to 2023. Of course, these volumes are dwarfed by second-hand ICE markets: 30 million in the European countries listed above combined, nearly 20 million in China, and 36 million in the United States . However, these markets have had decades to mature, indicating greater longer-term potential for used electric car markets.

Used car markets already provide more affordable electric options in China, Europe and the United States

Second-hand car markets are increasingly becoming a source of more affordable electric cars that can compete with used ICE equivalents. In the United States, for example, more than half of second-hand electric cars are already priced below USD 30 000. Moreover, the average price is expected to quickly fall towards USD 25 000, the price at which used electric cars become eligible for the federal used car rebate of USD 4 000, making them directly competitive with best-selling new and used ICE options. The price of a second-hand Tesla in the United States dropped from over USD 50 000 in early 2023 to just above USD 33 000 in early 2024, making it competitive with a second-hand SUV and many new models as well (either electric or conventional). In Europe , second-hand battery electric cars can be found between EUR 15 000 and EUR 25 000 (USD 16 000‑27 000), and second-hand plug-in hybrids around EUR 30 000 (USD 32 000). Some European countries also offer subsidies for second-hand electric cars, such as the Netherlands (EUR 2 000), where the subsidy for new cars has been steadily declining since 2020, while that for used cars remains constant, and France (EUR 1 000). In China , used electric cars were priced around CNY 75 000 on average in 2023 (USD 11 000).

In recent years, the resale value 8 of electric cars has been increasing. In Europe, the resale value of battery electric cars sold after 12 months has steadily increased over the 2017-2022 period, surpassing that of all other powertrains and standing at more than 70% in mid-2022. The resale value of battery electric cars sold after 36 months stood below 40% in 2017, but has since been closing the gap with other powertrains, reaching around 55% in mid-2022. This is the result of many factors, including higher prices of new electric cars, improving technology allowing vehicles and batteries to retain greater value over time, and increasing demand for second-hand electric cars. Similar trends have been observed in China.

High or low resale values have important implications for the development of second-hand electric car markets and their contributions to the transition to road transport electrification. High resale values primarily benefit consumers of new cars (who retain more of the value of their initial purchase), and carmakers, because many consumers are attracted by the possibility of reselling their car after a few years, thereby fostering demand for newer models. High resale values also benefit leasing companies, which seek to minimise depreciation and resell after a few years.

Leasing companies have a significant impact on second-hand markets because they own large volumes of vehicles for a shorter period (under three years, compared to 3 to 5 years for a private household). Their impact on markets for new cars can also be considerable: leasing companies accounted for over 20% of new cars sold in Europe in 2022.

Overall, a resale value for electric cars on par with or higher than that of ICE equivalents contributes to supporting demand for new electric cars. In the near term, however, a combination of high prices for new electric cars and high resale values could hinder widespread adoption of used EVs among mass-market consumers seeking affordable cars. In such cases, policy support can help bridge the gap with second-hand ICE prices.

International trade for used electric cars to emerging markets is expected to increase

As the EV stock ages in advanced markets, it is likely that more and more used EVs will be traded internationally, assuming that global standards enable technology compatibility (e.g. for charging infrastructure). Imported used vehicles present an opportunity for consumers in EMDEs, who may not have access to new models because they are either too expensive or not marketed in their countries.

Data on used car trade flows are scattered and often contradictory, but the history of ICE cars can be a useful guide to what may happen for electric cars. Many EMDEs have been importing used ICE vehicles for decades. UNEP estimates that Africa imports 40% of all used vehicles exported worldwide, with African countries typically becoming the ultimate destination for used imports. Typical trade flows include Western European Union member states to Eastern European Union member states and to African countries that drive on the right-hand side; Japan to Asia and to African countries that drive on the left-hand side; and the United States to the Middle East and Central America.

Used electric car exports from large EV markets have been growing in recent years. For China, this can be explained by the recent roll-back of a policy forbidding exports of used vehicles of any kind. Since 2019 , as part of a pilot project, the government has granted 27 cities and provinces the right to export second-hand cars. In 2022, China exported almost 70 000 used vehicles, a significant increase on 2021, when fewer than 20 000 vehicles were exported. About 70% of these were NEVs, of which over 45% were exported to the Middle East. In 2023, the Ministry of Commerce released a draft policy on second-hand vehicle export that, once approved, will allow the export of second-hand vehicles from all regions of China. Used car exports from China are expected to increase significantly as a result.

In the European Union, the number of used electric cars traded internationally is also increasing . In both 2021 and 2022, the market size grew by 70% year-on-year, reaching almost 120 000 electric cars in 2022. More than half of all trade takes place between EU member states, followed by trade with neighbouring countries such as Norway, the United Kingdom and Türkiye (accounting for 20% combined). The remainder of used EVs are exported to countries such as Mexico, Tunisia and the United States. As of 2023, the largest exporters are Belgium, Germany, the Netherlands, and Spain.

Last year, just over 1% of all used cars leaving Japan were electric. However these exports are growing and increased by 30% in 2023 relative to 2022, reaching 20 000 cars. The major second-hand electric car markets for Japanese vehicles are traditionally Russia and New Zealand (over 60% combined). After Russia’s invasion of Ukraine in 2022, second-hand trade of conventional cars from Japan to Russia jumped sharply following a halt in operations of local OEMs in Russia, but this trade was quickly restricted by the Japanese government, thereby bringing down the price of second-hand cars in Japan. New Zealand has very few local vehicle assembly or manufacturing facilities, and for this reason many cars entering New Zealand are used imports. In 2023, nearly 20% of all electric cars that entered New Zealand were used imports, compared to 50% for the overall car market.

In emerging economies, local policies play an important role in promoting or limiting trade flows for used cars. In the case of ICE vehicles, for example, some countries (e.g. Bolivia, Côte d’Ivoire, Peru) limit the maximum age of used car imports to prevent the dumping of highly polluting cars. Other countries (e.g. Brazil, Colombia, Egypt, India, South Africa) have banned used car imports entirely to protect their domestic manufacturing industries.

Just as for ICE vehicles, policy measures can either help or hinder the import of used electric cars, such as by setting emission standards for imported used cars. Importing countries will also need to simultaneously support roll-out of charging infrastructure to avoid problems with access like those reported in Sri Lanka after an incentive scheme significantly increased imports of used EVs in 2018.

The median age of vehicle imports tends to increase as the GDP per capita of a country decreases. In some African countries, the median age of imports is over 15 years. Beyond this timeframe, electric cars may require specific servicing to extend their lifetime. To support the availability of second-hand markets for electric cars, it will be important to develop strategies, technical capacity, and business models to swap very old batteries from used vehicles. Today, many countries that import ICE vehicles, including EMDEs, already have servicing capacity in place to extend the lifetimes of used ICE vehicles, but not used EVs. On the other hand, there are typically fewer parts in electric powertrains than in ICE ones, and these parts can even be more durable. Battery recycling capacity will also be needed, given that the importing country is likely to be where the imported EV eventually reaches end-of-life. Including end-of-life considerations in policy making today can help mitigate the risk of longer-term environmental harm that could result from the accumulation of obsolete EVs and associated waste in EMDEs.

Policy choices in more mature markets also have an impact on possible trade flows. For example, the current policy framework in the European Union for the circularity of EV batteries may prevent EVs and EV batteries from leaving the European Union, which brings energy security advantages but might limit reuse. In this regard, advanced economies and EMDEs should strengthen co-operation to facilitate second-hand trade while ensuring adequate end-of-life strategies. For example, there could be incentives or allowances associated with extended vehicle lifetimes via use in second-hand markets internationally before recycling, as long as recycling in the destination market is guaranteed, or the EV battery is returned at end of life.

Throughout this report, unless otherwise specified, “electric cars” refers to both battery electric and plug-in hybrid cars, and “electric vehicles” (EVs) refers to battery electric (BEV) and plug-in hybrid (PHEV) vehicles, excluding fuel cell electric vehicles (FCEV). Unless otherwise specified, EVs include all modes of road transport.

Throughout this report, unless otherwise specified, regional groupings refer to those described in the Annex.

In the Chinese context, the term New Energy Vehicles (NEVs) includes BEVs, PHEVs and FCEVs.

Based on model trim eligibility from the US government website as of 31 March 2024.

SUVs may be defined differently across regions, but broadly refer to vehicles that incorporate features commonly found in off-road vehicles (e.g. four-wheel drive, higher ground clearance, larger cargo area). In this report, small and large SUVs both count as SUVs. Crossovers are counted as SUVs if they feature an SUV body type; otherwise they are categorised as medium-sized vehicles.

Measured under the Worldwide Harmonised Light Vehicles Test Procedure using vehicle model sales data from IHS Markit.

Price data points collected from various data providers and ad-hoc sources cover 65-95% of both electric and ICE car sales globally. By “price”, we refer to the advertised price that the customer pays for the acquisition of the vehicle only, including legally required acquisition taxes (e.g. including Value-Added Tax and registration taxes but excluding consumer tax credits). Prices reflect not only the materials, components and manufacturing costs, but also the costs related to sales and marketing, administration, R&D and the profit margin. In the case of a small electric car in Europe, for example, these mark-up costs can account for around 40% of the final pre-tax price. They account for an even greater share of the final pre-tax price when consumers purchase additional options, or opt for larger models, for which margins can be higher. The price for the same model may differ across countries or regions (e.g. in 2023, a VW ID.3 could be purchased in China at half its price in Europe). Throughout the whole section, prices are adjusted for inflation and expressed in constant 2022 USD.

This metric of depreciation used in second-hand technology markets represents the value of the vehicle when being resold in relation to the value when originally purchased. A resale value of 70% means that a product purchased new will lose 30% of its original value, on average, and sell at such a discount relative to the original price.

Reference 1

Reference 2, reference 3, reference 4, reference 5, reference 6, reference 7, reference 8, subscription successful.

Thank you for subscribing. You can unsubscribe at any time by clicking the link at the bottom of any IEA newsletter.

We couldn’t find any results matching your search.

Please try using other words for your search or explore other sections of the website for relevant information.

We’re sorry, we are currently experiencing some issues, please try again later.

Our team is working diligently to resolve the issue. Thank you for your patience and understanding.

News & Insights

Technology Sector Update for 04/30/2024: GOOG, NWSA, HUBB, FFIV, MSTR

April 30, 2024 — 03:56 pm EDT

Written by MT Newswires for MTNewswires  ->

Tech stocks fell late Tuesday afternoon with the Technology Select Sector SPDR Fund (XLK) shedding 1.7% and the SPDR S&P Semiconductor ETF (XSD) down 0.9%.

The Philadelphia Semiconductor index declined 1.5%.

In corporate news, Alphabet's ( GOOG ) Google agreed to pay $5 million to $6 million annually to News Corp. ( NWSA ), owner of the Wall Street Journal, for the development of new artificial intelligence-related content and products, The Information reported. Alphabet shares fell 1.5%, and News Corp. dropped 1.2%.

Hubbell ( HUBB ) reported Q1 adjusted earnings of $3.60 per diluted share, down from $3.61 a year earlier. The shares tumbled 8.8%.

F5 ( FFIV ) slumped 9.4%, a day after the company posted fiscal Q2 revenue that fell more than forecast, while fiscal Q3 guidance that trailed estimates by analysts.

MicroStrategy ( MSTR ) shares plunged 17%, a day after the company reported lower-than-expected Q1 results.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Stocks mentioned

More related articles.

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.

To add symbols:

• Type a symbol or company name. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return.
• Copy and paste multiple symbols separated by spaces.

These symbols will be available throughout the site during your session.

Your symbols have been updated

Edit watchlist.

• Type a symbol or company name. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return.

Opt in to Smart Portfolio

Smart Portfolio is supported by our partner TipRanks. By connecting my portfolio to TipRanks Smart Portfolio I agree to their Terms of Use .

Language selection

• Français fr

Chapter 4: Economic Growth for Every Generation

On this page:, 4.1 boosting research, innovation, and productivity, 4.2 attracting investment for a net-zero economy, 4.3 growing businesses to create more jobs.

• 4.4 A Strong Workforce for a Strong Economy

Impacts report

Find out more about the expected gender and diversity impacts for each measure in Chapter 4: Economic Growth for Every Generation

To ensure every Canadian succeeds in the 21 st century, we must grow our economy to be more innovative and productive. One where every Canadian can reach their full potential, where every entrepreneur has the tools they need to grow their business, and where hard work pays off. Building the economy of the future is about creating jobs: jobs in the knowledge economy, jobs in manufacturing, jobs in mining and forestry, jobs in the trades, jobs in clean energy, and jobs across the economy, in all regions of the country.

To do this, the government's economic plan is investing in the technologies, incentives, and supports critical to increasing productivity, fostering innovation, and attracting more private investment to Canada. This is how we'll build an economy that unlocks new pathways for every generation to earn their fair share.

The government is targeting investments to make sure Canada continues to lead in the economy of the future, and these are already generating stronger growth and meaningful new job opportunities for Canadians. New jobs—from construction to manufacturing to engineering—in clean technology, in clean energy, and in innovation, are just the start. All of this, helping to attract further investment to create more opportunities, will raise Canada's productivity and competitiveness. This will create more good jobs, and in turn, raise the living standards of all Canadians.

We are at a pivotal moment where we can choose to renew and redouble our investments in the economy of the future, to build an economy that is more productive and more competitive—or risk leaving an entire generation behind. We will not make that mistake. We owe it to our businesses, to our innovators, and most of all, to the upcoming generations of workers, to make sure that the Canadian economy is positioned to thrive in a changing world.

Canada has the best-educated workforce in the world. We are making investments to ensure every generation of workers has the skills the job market, and the global economy, are looking for—and this will help us attract private investment to grow the economy (Chart 4.1). Building on our talented workforce, we are delivering, on a priority basis, our $93 billion suite of major economic investment tax credits to drive growth, secure the future of Canadian businesses in Canada, and create good jobs for generations to come.

In the first three quarters of 2023, Canada had the highest level of foreign direct investment (FDI) on a per capita basis among G7 countries, and ranked third globally in total FDI, after the U.S. and Brazil (Chart 4.2).

The Canadian economy is adding new, high-paying jobs, in high-growth sectors, like clean tech, clean electricity, and scientific research and development (Chart 4.4). Budget 2024 will continue this momentum by making strategic investments that create opportunities for workers today—driving productivity and economic growth for generations to come.

Canada's skilled hands and brilliant minds are our greatest resource. Capitalizing on their ideas, innovations, and hard work is an essential way to keep our place at the forefront of the world's advanced economies. Our world-class innovators, entrepreneurs, scientists, and researchers are solving the most pressing challenges of today, and their discoveries help launch the businesses of tomorrow.

Canadian researchers, entrepreneurs, and companies are the driving force of this progress—from scientific discovery to bringing new solutions to market. They also train and hire younger Canadians who will become the next generation of innovators. New investments to boost research and innovation, including enhancing support for graduate students and post-doctoral fellows, will ensure Canada remains a world leader in science and new technologies, like artificial intelligence.

By making strategic investments today in innovation and research, and supporting the recruitment and development of talent in Canada, we can ensure Canada is a world leader in new technologies for the next generation. In turn, this will drive innovation, growth, and productivity across the economy.

Key Ongoing Actions

• Supporting scientific discovery, developing Canadian research talent, and attracting top researchers from around the planet to make Canada their home base for their important work with more than $16 billion committed since 2016.
• Supporting critical emerging sectors, through initiatives like the Pan-Canadian Artificial Intelligence Strategy, the National Quantum Strategy, the Pan-Canadian Genomics Strategy, and the Biomanufacturing and Life Sciences Strategy.
• Nearly $2 billion to fuel Canada's Global Innovation Clusters to grow these innovation ecosystems, promote commercialization, support intellectual property creation and retention, and scale Canadian businesses.
• Investing $3.5 billion in the Sustainable Canadian Agricultural Partnership to strengthen the innovation, competitiveness, and resiliency of the agriculture and agri-food sector.
• Flowing up to $333 million over the next decade to support dairy sector investments in research, product and market development, and processing capacity for solids non-fat, thus increasing its competitiveness and productivity.

Strengthening Canada's AI Advantage

Canada's artificial intelligence (AI) ecosystem is among the best in the world. Since 2017, the government has invested over $2 billion towards AI in Canada. Fuelled by those investments, Canada is globally recognized for strong AI talent, research, and its AI sector.

Today, Canada's AI sector is ranked first in the world for growth of women in AI, and first in the G7 for year-over-year growth of AI talent. Every year since 2019, Canada has published the most AI-related papers, per capita, in the G7. Our AI firms are filing patents at three times the average rate in the G7, and they are attracting nearly a third of all venture capital in Canada. In 2022-23, there were over 140,000 actively engaged AI professionals in Canada, an increase of 29 per cent compared to the previous year. These are just a few of Canada's competitive advantages in AI and we are aiming even higher.

To secure Canada's AI advantage, the government has already:

• Established the first national AI strategy in the world through the Pan-Canadian Artificial Intelligence Strategy;
• Supported access to advanced computing capacity, including through the recent signing of a letter of intent with NVIDIA and a Memorandum of Understanding with the U.K. government; and,
• Scaled-up Canadian AI firms through the Strategic Innovation Fund and Global Innovation Clusters program.

AI is a transformative economic opportunity for Canada and the government is committed to doing more to support our world-class research community, launch Canadian AI businesses, and help them scale-up to meet the demands of the global economy. The processing capacity required by AI is accelerating a global push for the latest technology, for the latest computing infrastructure.

Currently, most compute capacity is located in other countries. Challenges accessing compute power slows down AI research and innovation, and also exposes Canadian firms to a reliance on privately-owned computing, outside of Canada. This comes with dependencies and security risks. And, it is a barrier holding back our AI firms and researchers.

We need to break those barriers to stay competitive in the global AI race and ensure workers benefit from the higher wages of AI transformations; we must secure Canada's AI advantage. We also need to ensure workers who fear their jobs may be negatively impacted by AI have the tools and skills training needed in a changing economy.

To secure Canada's AI advantage Budget 2024 announces a monumental increase in targeted AI support of $2.4 billion, including:

• $2 billion over five years, starting in 2024-25, to launch a new AI Compute Access Fund and Canadian AI Sovereign Compute Strategy, to help Canadian researchers, start-ups, and scale-up businesses access the computational power they need to compete and help catalyze the development of Canadian-owned and located AI infrastructure. 
• $200 million over five years, starting in 2024-25, to boost AI start-ups to bring new technologies to market, and accelerate AI adoption in critical sectors, such as agriculture, clean technology, health care, and manufacturing. This support will be delivered through Canada's Regional Development Agencies.
• $100 million over five years, starting in 2024-25, for the National Research Council's AI Assist Program to help Canadian small- and medium-sized businesses and innovators build and deploy new AI solutions, potentially in coordination with major firms, to increase productivity across the country.
• $50 million over four years, starting in 2025-26, to support workers who may be impacted by AI, such as creative industries. This support will be delivered through the Sectoral Workforce Solutions Program, which will provide new skills training for workers in potentially disrupted sectors and communities.

The government will engage with industry partners and research institutes to swiftly implement AI investment initiatives, fostering collaboration and innovation across sectors for accelerated technological advancement.

Safe and Responsible Use of AI

AI has tremendous economic potential, but as with all technology, it presents important considerations to ensure its safe development and implementation. Canada is a global leader in responsible AI and is supporting an AI ecosystem that promotes responsible use of technology. From development through to implementation and beyond, the government is taking action to protect Canadians from the potentially harmful impacts of AI.

The government is committed to guiding AI innovation in a positive direction, and to encouraging the responsible adoption of AI technologies by Canadians and Canadian businesses. To bolster efforts to ensure the responsible use of AI:

• Budget 2024 proposes to provide $50 million over five years, starting in 2024-25, to create an AI Safety Institute of Canada to ensure the safe development and deployment of AI. The AI Safety Institute will help Canada better understand and protect against the risks of advanced and generative AI systems. The government will engage with stakeholders and international partners with competitive AI policies to inform the final design and stand-up of the AI Safety Institute.
• Budget 2024 also proposes to provide $5.1 million in 2025-26 to equip the AI and Data Commissioner Office with the necessary resources to begin enforcing the proposed Artificial Intelligence and Data Act .
• Budget 2024 proposes $3.5 million over two years, starting in 2024-25, to advance Canada's leadership role with the Global Partnership on Artificial Intelligence, securing Canada's leadership on the global stage when it comes to advancing the responsible development, governance, and use of AI technologies internationally.

Using AI to Keep Canadians Safe

AI has shown incredible potential to toughen up security systems, including screening protocols for air cargo. Since 2012, Transport Canada has been testing innovative approaches to ensure that air cargo coming into Canada is safe, protecting against terrorist attacks. This included launching a pilot project to screen 10 to 15 per cent of air cargo bound for Canada and developing an artificial intelligence system for air cargo screening.

• Budget 2024 proposes to provide $6.7 million over five years, starting in 2024-25, to Transport Canada to establish the Pre-Load Air Cargo Targeting Program to screen 100 per cent of air cargo bound for Canada. This program, powered by cutting-edge artificial intelligence, will increase security and efficiency, and align Canada's air security regime with those of its international partners.

Incentivizing More Innovation and Productivity

Businesses that invest in cutting-edge technologies are a key driver of Canada's economic growth. When businesses make investments in technology—from developing new patents to implementing new IT systems—it helps ensure Canadian workers put their skills and knowledge to use, improves workplaces, and maximizes our workers' potential and Canada's economic growth.

The government wants to encourage Canadian businesses to invest in the capital—both tangible and intangible—that will help them boost productivity and compete productively in the economy of tomorrow.

• To incentivize investment in innovation-enabling and productivity-enhancing assets, Budget 2024 proposes to allow businesses to immediately write off the full cost of investments in patents, data network infrastructure equipment, computers, and other data processing equipment. Eligible investments, as specified in the relevant capital cost allowance classes, must be acquired and put in use on or after Budget Day and before January 1, 2027. The cost of this measure is estimated at $725 million over five years, starting in 2024-25.

Boosting R&D and Intellectual Property Retention

Research and development (R&D) is a key driver of productivity and growth. Made-in-Canada innovations meaningfully increase our gross domestic product (GDP) per capita, create good-paying jobs, and secure Canada's position as a world-leading advanced economy.

To modernize and improve the Scientific Research and Experimental Development (SR&ED) tax incentives, the federal government launched consultations on January 31, 2024, to explore cost-neutral ways to enhance the program to better support innovative businesses and drive economic growth. In these consultations, which closed on April 15, 2024, the government asked Canadian researchers and innovators for ways to better deliver SR&ED support to small- and medium-sized Canadian businesses and enable the next generation of innovators to scale-up, create jobs, and grow the economy.

• Budget 2024 announces the government is launching a second phase of consultations on more specific policy parameters, to hear further views from businesses and industry on specific and technical reforms. This includes exploring how Canadian public companies could be made eligible for the enhanced credit. Further details on the consultation process will be released shortly on the Department of Finance Canada website.
• Budget 2024 proposes to provide $600 million over four years, starting in 2025-26, with $150 million per year ongoing for future enhancements to the SR&ED program. The second phase of consultations will inform how this funding could be targeted to boost research and innovation.

On January 31, 2024, the government also launched consultations on creating a patent box regime to encourage the development and retention of intellectual property in Canada. The patent box consultation closed on April 15, 2024. Submissions received through this process, which are still under review, will help inform future government decisions with respect to a patent box regime.

Enhancing Research Support

Since 2016, the federal government has committed more than $16 billion in research, including funding for the federal granting councils—the Natural Sciences and Engineering Research Council (NSERC), the Canadian Institutes of Health Research (CIHR), and the Social Sciences and Humanities Research Council (SSHRC).

This research support enables groundbreaking discoveries in areas such as climate change, health emergencies, artificial intelligence, and psychological health. This plays a critical role in solving the world's greatest challenges, those that will have impacts for generations.

Canada's granting councils already do excellent work within their areas of expertise, but more needs to be done to maximize their effect. The improvements we are making today, following extensive consultations including with the Advisory Panel on the Federal Research Support System, will strengthen and modernize Canada's federal research support.

• To increase core research grant funding and support Canadian researchers, Budget 2024 proposes to provide $1.8 billion over five years, starting in 2024-25, with $748.3 million per year ongoing to SSHRC, NSERC, and CIHR.
• To provide better coordination across the federally funded research ecosystem, Budget 2024 announces the government will create a new capstone research funding organization. The granting councils will continue to exist within this new organization, and continue supporting excellence in investigator-driven research, including linkages with the Health portfolio. This new organization and structure will also help to advance internationally collaborative, multi-disciplinary, and mission-driven research. The government is delivering on the Advisory Panel's observation that more coordination is needed to maximize the impact of federal research support across Canada's research ecosystem.
• To help guide research priorities moving forward, Budget 2024 also announces the government will create an advisory Council on Science and Innovation. This Council will be made up of leaders from the academic, industry, and not-for-profit sectors, and be responsible for a national science and innovation strategy to guide priority setting and increase the impact of these significant federal investments.
• Budget 2024 also proposes to provide a further $26.9 million over five years, starting in 2024-25, with $26.6 million in remaining amortization and $6.6 million ongoing, to the granting councils to establish an improved and harmonized grant management system.

The government will also work with other key players in the research funding system—the provinces, territories, and Canadian industry—to ensure stronger alignment, and greater co-funding to address important challenges, notably Canada's relatively low level of business R&D investment.

More details on these important modernization efforts will be announced in the 2024 Fall Economic Statement.

World-Leading Research Infrastructure

Modern, high-quality research facilities and infrastructure are essential for breakthroughs in Canadian research and science. These laboratories and research centres are where medical and other scientific breakthroughs are born, helping to solve real-world problems and create the economic opportunities of the future. World-leading research facilities will attract and train the next generation of scientific talent. That's why, since 2015, the federal government has made unprecedented investments in science and technology, at an average of $13.6 billion per year, compared to the average from 2009-10 to 2015-16 of just $10.8 billion per year. But we can't stop here.

To advance the next generation of cutting-edge research, Budget 2024 proposes major research and science infrastructure investments, including:

• $399.8 million over five years, starting in 2025-26, to support TRIUMF, Canada's sub-atomic physics research laboratory, located on the University of British Columbia's Vancouver campus. This investment will upgrade infrastructure at the world's largest cyclotron particle accelerator, positioning TRIUMF, and the partnering Canadian research universities, at the forefront of physics research and enabling new medical breakthroughs and treatments, from drug development to cancer therapy.
• $176 million over five years, starting in 2025‑26, to CANARIE, a national not-for-profit organization that manages Canada's ultra high-speed network to connect researchers, educators, and innovators, including through eduroam. With network speeds hundreds of times faster, and more secure, than conventional home and office networks, this investment will ensure this critical infrastructure can connect researchers across Canada's world-leading post-secondary institutions.
• $83.5 million over three years, starting in 2026-27 to extend support to Canadian Light Source in Saskatoon. Funding will continue the important work at the only facility of its kind in Canada. A synchrotron light source allows scientists and researchers to examine the microscopic nature of matter. This specialized infrastructure contributes to breakthroughs in areas ranging from climate-resistant crop development to green mining processes.
• $45.5 million over five years, starting in 2024-25, to support the Arthur B. McDonald Canadian Astroparticle Physics Research Institute, a network of universities and institutes that coordinate astroparticle physics expertise. Headquartered at Queen's University in Kingston, Ontario, the institute builds on the legacy of Dr. McDonald's 2015 Nobel Prize for his work on neutrino physics. These expert engineers, technicians, and scientists design, construct, and operate the experiments conducted in Canada's underground and underwater research infrastructure, where research into dark matter and other mysterious particles thrives. This supports innovation in areas like clean technology and medical imaging, and educates and inspires the next wave of Canadian talent.
• $30 million over three years, starting in 2024-25, to support the completion of the University of Saskatchewan's Centre for Pandemic Research at the Vaccine and Infectious Disease Organization in Saskatoon. This investment will enable the study of high-risk pathogens to support vaccine and therapeutic development, a key pillar in Canada's Biomanufacturing and Life Sciences Strategy. Of this amount, $3 million would be sourced from the existing resources of Prairies Economic Development Canada.

These new investments build on existing federal research support:

• The Strategic Science Fund, which announced the results of its first competition in December 2023, providing support to 24 third-party science and research organizations starting in 2024-25;
• Canada recently concluded negotiations to be an associate member of Horizon Europe, which would enable Canadians to access a broader range of research opportunities under the European program starting this year; and,
• The steady increase in federal funding for extramural and intramural science and technology by the government which was 44 per cent higher in 2023 relative to 2015.

Investing in Homegrown Research Talent

Canada's student and postgraduate researchers are tackling some of the world's biggest challenges. The solutions they come up with have the potential to make the world a better place and drive Canadian prosperity. They are the future Canadian academic and scientific excellence, who will create new innovative businesses, develop new ways to boost productivity, and create jobs as they scale-up companies—if they get the support they need.

To build a world-leading, innovative economy, and improve our productive capacity, the hard work of top talent must pay off; we must incentivize our top talent to stay here.

Federal support for master's, doctoral, and post-doctoral students and fellows has created new research opportunities for the next generation of scientific talent. Opportunities to conduct world-leading research are critical for growing our economy. In the knowledge economy, the global market for these ideas is highly competitive and we need to make sure talented people have the right incentives to do their groundbreaking research here in Canada.

• To foster the next generation of research talent, Budget 2024 proposes to provide $825 million over five years, starting in 2024-25, with $199.8 million per year ongoing, to increase the annual value of master's and doctoral student scholarships to $27,000 and $40,000, respectively, and post-doctoral fellowships to $70,000. This will also increase the number of research scholarships and fellowships provided, building to approximately 1,720 more graduate students or fellows benefiting each year. To make it easier for students and fellows to access support, the enhanced suite of scholarships and fellowship programs will be streamlined into one talent program.
• To support Indigenous researchers and their communities, Budget 2024 also proposes to provide $30 million over three years, starting in 2024-25, to support Indigenous participation in research, with $10 million each for First Nation, Métis, and Inuit partners.

Boosting Talent for Innovation

Advanced technology development is a highly competitive industry and there is a global race to attract talent and innovative businesses. Canada must compete to ensure our economy is at the forefront of global innovation.

To spur rapid growth in innovation across Canada's economy, the government is partnering with organizations whose mission it is to train the next generation of innovators. This will ensure innovative businesses have the talent they need to grow, create jobs at home, and drive Canada's economic growth.

• Budget 2024 announces the government's intention to work with Talent for Innovation Canada to develop a pilot initiative to build an exceptional research and development workforce in Canada. This industry-led pilot will focus on attracting, training, and deploying top talent across four key sectors: bio-manufacturing; clean technology; electric vehicle manufacturing; and microelectronics, including semiconductors.

Advancing Space Research and Exploration

Canada is a leader in cutting-edge innovation and technologies for space research and exploration. Our astronauts make great contributions to international space exploration missions. The government is investing in Canada's space research and exploration activities.

• Budget 2024 proposes to provide $8.6 million in 2024-25 to the Canadian Space Agency for the Lunar Exploration Accelerator Program to support Canada's world-class space industry and help accelerate the development of new technologies. This initiative empowers Canada to leverage space to solve everyday challenges, such as enhancing remote health care services and improving access to healthy food in remote communities, while also supporting Canada's human space flight program.
• Budget 2024 announces the establishment of a new whole-of-government approach to space exploration, technology development, and research. The new National Space Council will enable the level of collaboration required to secure Canada's future as a leader in the global space race, addressing cross-cutting issues that span commercial, civil, and defence domains. This will also enable the government to leverage Canada's space industrial base with its world-class capabilities, workforce, and track record of innovation and delivery.

Accelerating Clean Tech Intellectual Property Creation and Retention

Canadian clean technology companies are turning their ideas into the solutions that the world is looking for as it races towards net-zero. Encouraging these innovative companies to maintain operations in Canada and retain ownership of their intellectual property secures the future of their workforce in Canada, helping the clean economy to thrive in Canada.

As part of the government's National Intellectual Property Strategy, the not-for-profit organization Innovation Asset Collective launched the patent collective pilot program in 2020. This pilot program is helping innovative small- and medium-sized enterprises in the clean tech sector with the creation and retention of intellectual property.

• To ensure that small- and medium-sized clean tech businesses benefit from specialized intellectual property support to grow their businesses and leverage intellectual property, Budget 2024 proposes to provide $14.5 million over two years, starting in 2024-25, to Innovation, Science and Economic Development Canada for the Innovation Asset Collective.

Find out more about the expected gender and diversity impacts for each measure in section 4.1 Boosting Research, Innovation, and Productivity

In the 21 st century, a competitive economy is a clean economy. There is no greater proof than the $2.4 trillion worth of investment made around the world, last year, in net-zero economies. Canada is at the forefront of the global race to attract investment and seize the opportunities of the clean economy, with the government announcing a net-zero economic plan that will invest over $160 billion. This includes an unprecedented suite of major economic investment tax credits, which will help attract investment through $93 billion in incentives by 2034-35.

All told, the government's investments will crowd in more private investment, securing Canadian leadership in clean electricity and innovation, creating economic growth and more good-paying jobs across the country.

Investors at home and around the world are taking notice of Canada's plan. In defiance of global economic headwinds, last year public markets and private equity capital flows into Canada's net-zero economy grew—reaching $14 billion in 2023, according to RBC. Proof that Canada's investments are working—driving new businesses to take shape, creating good jobs, and making sure that we have clean air and clean water for our kids, grandkids, and for generations to come.

Earlier this year, BloombergNEF ranked Canada's attractiveness to build electric vehicle (EV) battery supply chains first in the world, surpassing China which has held the top spot since the ranking began. From resource workers mining the critical minerals for car batteries, to union workers on auto assembly lines, to the truckers that get cars to dealerships, Canada's advantage in the supply chain is creating high-skilled, good-paying jobs across the country, for workers of all ages.

This first place ranking of Canada's EV supply chains is underpinned by our abundant clean energy, high labour standards, and rigorous standards for consultation and engagement with Indigenous communities. That's what Canada's major economic investment tax credits are doing—seizing Canada's full potential, and doing it right.

By 2050, clean energy GDP could grow fivefold—up to $500 billion, while keeping Canada on track to reach net-zero by 2050. Proof, once again, that good climate policy is good economic policy.

Helping innovative Canadian firms scale-up is essential to increasing the pace of economic growth in Canada. Already, the Cleantech Group's 2023 list of the 100 most innovative global clean technology companies featured 12 Canadian companies, the second highest number of any country, behind only the U.S. The government is investing in clean technology companies to ensure their full capabilities are unlocked.

Budget 2024 announces the next steps in the government's plan to attract even more investment to Canada to create good-paying jobs and accelerate the development and deployment of clean energy and clean technology.

• Carbon Capture, Utilization, and Storage investment tax credit;
• Clean Technology investment tax credit;
• Clean Hydrogen investment tax credit;
• Clean Technology Manufacturing investment tax credit; and
• Clean Electricity investment tax credit.
• Since the federal government launched the Canada Growth Fund last year, $1.34 billion of capital has been committed to a world-leading geothermal energy technology company, the world's first of its kind carbon contract for difference; and to clean tech entrepreneurs and innovators through a leading Canadian-based climate fund.
• Working with industry, provinces, and Indigenous partners to build an end-to-end electric vehicle battery supply chain, including by securing major investments in 2023.
• Building major clean electricity and clean growth infrastructure projects with investments of at least $20 billion from the Canada Infrastructure Bank.
• $3.8 billion for Canada's Critical Minerals Strategy, to secure our position as the world's supplier of choice for critical minerals and the clean technologies they enable.
• $3 billion to recapitalize the Smart Renewables and Electrification Pathways Program, which builds more clean, affordable, and reliable power, and to support innovation in electricity grids and spur more investments in Canadian offshore wind.

A New EV Supply Chain Investment Tax Credit

The automotive industry is undergoing a major transformation. As more and more electric vehicles are being produced worldwide, it is essential that Canada's automotive industry has the support it needs to retool its assembly lines and build new factories to seize the opportunities of the global switch to electric vehicles. With our world-class natural resource base, talented workforce, and attractive investment climate, Canada will be an electric vehicle supply chain hub for all steps along the manufacturing process. This is an opportunity for Canada to secure its position today at the forefront of this growing global supply chain and secure high-quality jobs for Canadian workers for a generation to come.

Businesses that manufacture electric vehicles and their precursors would already be able to claim the 30 per cent Clean Technology Manufacturing investment tax credit on the cost of their investments in new machinery and equipment, as announced in Budget 2023. Providing additional support to these businesses so they choose Canada for more than one stage in the manufacturing process would secure more jobs for Canadians and help cement Canada's position as a leader in this sector.

• electric vehicle assembly;
• electric vehicle battery production; and,
• cathode active material production.

For a taxpayer's building costs in any of the specified segments to qualify for the tax credit, the taxpayer (or a member of a group of related taxpayers) must claim the Clean Technology Manufacturing investment tax credit in all three of the specified segments, or two of the three specified segments and hold at least a qualifying minority interest in an unrelated corporation that claims the Clean Technology Manufacturing tax credit in the third segment. The building costs of the unrelated corporation would also qualify for the new investment tax credit.

The EV Supply Chain investment tax credit would apply to property that is acquired and becomes available for use on or after January 1, 2024. The credit would be reduced to 5 per cent for 2033 and 2034, and would no longer be in effect after 2034.

The EV Supply Chain investment tax credit is expected to cost $80 million over five years, starting in 2024-25, and an additional $1.02 billion from 2029-30 to 2034-35.

The design and implementation details of the EV Supply Chain investment tax credit will be provided in the 2024 Fall Economic Statement . Its design would incorporate elements of the Clean Technology Manufacturing investment tax credit, where applicable.

Delivering Major Economic Investment Tax Credits

To seize the investment opportunities of the global clean economy, we are delivering our six major economic investment tax credits. These will provide businesses and other investors with the certainty they need to invest and build in Canada. And they are already attracting major, job-creating projects, ensuring we remain globally competitive.

From new clean electricity projects that will provide clean and affordable energy to Canadian homes and businesses, to carbon capture projects that will decarbonize heavy industry, our major economic investment tax credits are moving Canada forward on its track to achieve a net-zero economy by 2050.

In November 2023, the government introduced Bill C-59 to deliver the first two investment tax credits and provide businesses with the certainty they need to make investment decisions in Canada today. Bill C-59 also includes labour requirements to ensure workers are paid prevailing union wages and apprentices have opportunities to gain experience and succeed in the workforce. With the support and collaboration of Parliamentarians, the government anticipates Bill C-59 receiving Royal Assent before June 1, 2024.

• Carbon Capture, Utilization, and Storage investment tax credit: would be available as of January 1, 2022;
• Clean Technology investment tax credit: would be available as of March 28, 2023; and,
• Clean Hydrogen investment tax credit; and,

The government will soon introduce legislation to deliver the next two investment tax credits:

• Clean Hydrogen investment tax credit: available as of March 28, 2023; and,
• Clean Technology Manufacturing investment tax credit: available as of January 1, 2024.

As a priority, the government will work on introducing legislation for the remaining investment tax credits, including the new EV Supply Chain investment tax credit, as well as proposed expansions and enhancements:

• Clean Electricity investment tax credit: would be available as of the day of Budget 2024, for projects that did not begin construction before March 28, 2023;
• The expansion of the Clean Technology investment tax credit would be available as of November 21, 2023; and,
• The expansion of the Clean Electricity investment tax credit would be available from the day of Budget 2024, for projects that did not begin construction before March 28, 2023.
• Clean Technology Manufacturing investment tax credit enhancements to provide new clarity and improve access for critical minerals projects. Draft legislation will be released for consultation in summer 2024 and the government targets introducing legislation in fall 2024.
• The EV Supply Chain investment tax credit : would be available as of January 1, 2024.

Given that the major economic investment tax credits will be available, including retroactively, from their respective coming into force dates, businesses are already taking action to break ground on projects that will reduce emissions, create jobs, and grow the economy. Passing the major economic investment tax credits into law will secure a cleaner, more prosperous future for Canadians today, and tomorrow.

Implementing the Clean Electricity Investment Tax Credit

As the economy grows, Canada's electricity demand is expected to double by 2050 (Chart 4.7). To meet this increased demand with a clean, reliable, and affordable grid, our electricity capacity must increase by 1.7 to 2.2 times compared to current levels (Chart 4.8). Investing in clean electricity today will reduce Canadians' monthly energy costs by 12 per cent (Chart 4.9) and create approximately 250,000 good jobs by 2050 (Chart 4.10).

Canada already has one of the cleanest electricity grids in the world, with 84 per cent of electricity produced by non-emitting sources of generation. Quebec, British Columbia, Manitoba, Newfoundland and Labrador, and Yukon are already clean electricity leaders and generate nearly all of their electricity from non-emitting hydropower—and have more untapped clean electricity potential. Other regions of Canada will require major investments to ensure clean, reliable electricity grids, and the federal government is stepping up to support provinces and territories with these investments.

In Budget 2023, the government announced the new Clean Electricity investment tax credit to deliver broad-based support to implement clean electricity technologies and accelerate progress towards a Canada-wide net-zero electricity grid.

• Low-emitting electricity generation systems using energy from wind, solar, water, geothermal, waste biomass, nuclear, or natural gas with carbon capture and storage.
• Stationary electricity storage systems that do not use fossil fuels in operation, such as batteries and pumped hydroelectric storage.
• Transmission of electricity between provinces and territories.
• The Clean Electricity investment tax credit would be available to certain taxable and non-taxable corporations, including corporations owned by municipalities or Indigenous communities, and pension investment corporations.
• Provided that a provincial and territorial government satisfies additional conditions, outlined below, the tax credit would also be available to provincial and territorial Crown corporations investing in that province or territory.
• Robust labour requirements to pay prevailing union wages and create apprenticeship opportunities will need to be met to receive the full 15 per cent tax credit.

The Clean Electricity investment tax credit is expected to cost $7.2 billion over five years starting in 2024-25, and an additional $25 billion from 2029-30 to 2034-35.

The Clean Electricity investment tax credit would apply to property that is acquired and becomes available for use on or after the day of Budget 2024 for projects that did not begin construction before March 28, 2023. The credit would no longer be in effect after 2034. Similar rules would apply for provincial and territorial Crown corporations, with modifications outlined below.

Provincial and Territorial Crown Corporations

The federal government is proposing that, for provincial and territorial Crown corporations to access to the Clean Electricity investment tax credit within a jurisdiction, the government of that province or territory would need to:

• Work towards a net-zero electricity grid by 2035; and,
• Provincial and territorial Crown corporations passing through the value of the Clean Electricity investment tax credit to electricity ratepayers in their province or territory to reduce ratepayers' bills.
• Direct provincial and territorial Crown corporations claiming the credit to publicly report, on an annual basis, on how the tax credit has improved ratepayers' bills.

If a provincial or territorial government satisfies all the conditions by March 31, 2025, then provincial or territorial Crown corporations investing in that jurisdiction would be able to access the Clean Electricity investment tax credit for property that is acquired and becomes available for use on or after the day of Budget 2024 for projects that did not begin construction before March 28, 2023.

If a provincial or territorial government does not satisfy all the conditions by March 31, 2025, then provincial or territorial Crown corporations investing in that jurisdiction would not be able to access the Clean Electricity investment tax credit until all the conditions have been satisfied. In this case, the Clean Electricity investment tax credit would apply to property that is acquired and becomes available for use from the date when the conditions are deemed to have been satisfied for projects that did not begin construction before March 28, 2023.

The Department of Finance Canada will consult with provinces and territories on the details of these conditions before legislation is introduced this fall.

Additional design and implementation details for the tax credit can be found in the Budget Tax Measures Supplementary Information, under "Clean Electricity investment tax credit."

Delivering Clean Electricity with Indigenous, Northern, and Remote Communities

The government has announced significant measures to advance clean electricity projects nationwide. These initiatives include the Clean Electricity investment tax credit, the Smart Renewables and Electrification Pathways Program, and strategic financing through the Canada Infrastructure Bank. Understanding the energy goals and challenges in Indigenous, Northern, and remote communities—such as moving away from diesel—the government has offered unique assistance for projects in these areas, including for planning and feasibility stages. Recent federal investments to support projects with these communities include:

• Up to $535 million in Canada Infrastructure Bank financing and $50 million in funding from the Smart Renewables and Electrification Pathways Program for the 250-MW Oneida Energy storage project in Ontario, which is the largest battery storage project in the country.
• $173 million in Canada Infrastructure Bank financing and $50 million in funding from the Smart Renewables and Electrification Pathways Program for the Bekevar Wind Power project, an Indigenous-led wind power project in Saskatchewan.
• $14.4 million in funding to explore the feasibility of the Kivalliq Hydro Fibre Link, an innovative project that would connect northern Manitoba to southeastern Nunavut to provide electricity and internet access to five communities and one existing mine, helping to transition Northern communities off of diesel and connect them to the rest of Canada.
• $9 million in funding from the Smart Renewables and Electrification Pathways Program for the Salay Prayzaan Solar project, which is 100 per cent owned by the Métis Nation of Alberta.

Implementing the Major Economic Investment Tax Credits

The government's suite of major economic investment incentives is unprecedented in Canadian history, and the government is delivering these supports on a priority basis to attract investment, create good-paying jobs, and grow the economy, while continuing to make progress in the fight against climate change.

To deliver the major economic investment tax credits, without delay, the government is boosting resources to the Canada Revenue Agency, Natural Resources Canada, and the Department of Finance Canada, which each have a role to play in delivering these support measures. To this end:

• Budget 2024 proposes to provide the Canada Revenue Agency up to $90.9 million over 11 years, starting in 2024-25, to administer the new major economic investment tax credits.
• Budget 2024 proposes to provide Natural Resources Canada $7.4 million over five years, starting in 2024-25, to provide expert technical advice on engineering and scientific matters related to the major economic investment tax credits and to support the administration of certain investment tax credits with the Canada Revenue Agency.
• Budget 2024 proposes to provide the Department of Finance Canada $21.4 million over 11 years, starting in 2024-25, to complete the implementation, including legislation, of the major economic investment tax credits, ensure ongoing evaluation and response to emerging issues, and propose appropriate legislative amendments to the Income Tax Act and Income Tax Regulations .

The Canada Growth Fund

The Canada Growth Fund is a $15 billion arm's length public investment vehicle launched by the federal government to attract private capital and invest in Canadian projects and businesses, which is led by Canada's world-leading public sector pension professionals. The Canada Growth Fund investments in clean energy and clean technology are already building Canada's strong, clean economy and creating good-paying jobs across the country:

• On October 25, 2023, the Canada Growth Fund made its first investment—a $90 million investment in a groundbreaking geothermal energy company, Calgary's Eavor Technologies Inc., that is creating meaningful employment opportunities for Albertans and securing the Canadian future of a company at the leading-edge of the global economy. 
• The Canada Growth Fund's second investment was announced on December 20, 2023—a $200 million direct investment, plus complementary carbon contract offtake agreement, in a world-leading carbon capture and sequestration company, Calgary's Entropy Inc. to support the reduction of up to one million tonnes of carbon per year. This major investment will support 1,200 good jobs for Albertans and grow the company's Canadian-based activities.
• The Canada Growth Fund's third investment was announced on March 25, 2024—a $50 million commitment into the Idealist Climate Impact Fund, a clean tech investment fund led by the Montréal-based Idealist Capital. The clean tech fund will manage equity investments into innovative entrepreneurs and businesses that are creating good-paying jobs and accelerating the energy transition.

Carbon Contracts for Difference

A price on pollution is the foundation of Canada's plan to build a prosperous net-zero economy. It is a system that is fair and that promotes market-driven solutions. The government recognizes the substantial demand from industry and other stakeholders for carbon contracts for difference (CCFDs) as a tool to accelerate investment in decarbonization and clean growth technologies by providing certainty around carbon pricing.

The 2023 Fall Economic Statement announced that the Canada Growth Fund will be the principal federal entity to issue CCFDs, including allocating, on a priority basis, up to $7 billion to issue all forms of contracts for difference and offtake agreements. The Canada Growth Fund is fulfilling this important role as a federal issuer of CCFDs. Building on its initial success, the Canada Growth Fund is assessing the opportunity to expand its carbon contract offerings and is developing approaches that can best serve the different carbon credit markets across Canada:

• Budget 2024 announces that the Canada Growth Fund is developing an expanded range of CCFD offerings tailored to different markets and their unique risks and opportunities. The Canada Growth Fund will continue offering bespoke CCFDs and carbon offtake agreements, with a focus on provinces contributing significantly to greenhouse gas emissions reductions.
• Building on the insights gained from these transactions, Budget 2024 announces the Canada Growth Fund will explore ways to broaden its approach, for example, by developing off-the-shelf contracts for certain jurisdictions and ways to offer these contracts on a competitive basis for a set amount of emissions reductions.
• The Canada Growth Fund has around $6 billion remaining to continue issuing, on a priority basis, all forms of CCFDs and carbon offtake agreements. Budget 2024 announces the government will ensure that the Canada Growth Fund continues to have the resources it needs to fulfill its role as federal issuer of CCFDs. The government is also evaluating options to enhance the Canada Growth Fund's capacity to offer CCFDs, including by exploring the possibility of a government backstop of certain CCFD liabilities of the Canada Growth Fund.

CCFDs can help develop robust carbon credit markets, and the federal government has taken action to ensure their success. For example, in 2022, Environment and Climate Change Canada worked with Alberta to ensure that their TIER market was sufficiently stringent so that the projected demand for carbon credits exceeded projected supply, ensuring robust credit demand even as more major decarbonization projects get built and more credits are generated.

Credit markets are largely the responsibility of provinces, and there are opportunities to improve how these markets function. For example, commitments to maintain their industrial carbon pricing systems over the long-term, tighten the stringency of systems as necessary to avoid an oversupply of credits, publishing the price of carbon credits, and recommitting to maintain a price signal of $170 per tonne by 2030 could help improve carbon price expectations for investors. Increased credit price transparency would greatly improve market functioning and provide greater investment certainty, unlocking more decarbonization projects. It would also facilitate the Canada Growth Fund's efforts to develop off-the-shelf CCFDs and deliver more deals, much quicker across provincial carbon markets.

• Budget 2024 announces that Environment and Climate Change Canada will work with provinces and territories to improve the functioning of carbon credit markets, in order to help unlock additional decarbonization projects throughout Canada.

Getting Major Projects Done

Putting Canada on a path to net-zero requires significant and sustained private sector investment in clean electricity, critical minerals, and other major projects. For these investments to be made, Canada's regulatory system must be efficient and quicker—it shouldn't take over a decade to open a new mine and secure our critical minerals supply chains.

To that end, Budget 2023 announced an intention to develop a plan to improve the efficiency of the impact assessment and permitting processes for major projects. The Ministerial Working Group on Regulatory Efficiency for Clean Growth Projects was launched to coordinate this work, and drive positive, pro-growth culture change throughout government, to ensure major project approvals come quicker. New major projects create thousands of new, good-paying jobs for Canadians, and the government is focused on getting more done.

• Provide $9 million over three years, starting in 2024-25, to the Privy Council Office's Clean Growth Office to implement the recommendations of the Ministerial Working Group and reduce interdepartmental inefficiencies, including preventing fixation on well-studied and low-risk impacts, ensuring new permitting timelines are upheld throughout departments, and improving data sharing between departments to reduce redundant studies.
• Launch work to establish a new Federal Permitting Coordinator within the Privy Council Office's Clean Growth Office.
• Set a target of five years or less to complete federal impact assessment and permitting processes for federally designated projects, and a target of two years or less for permitting of non-federally designated projects;
• Issue a Cabinet Directive to drive culture change , achieve new targets, and set out clear federal roles and responsibilities within and across departments with the objective of getting clean growth projects built in a timely and predictable manner;
• Build a Federal Permitting Dashboard that reports on the status of large projects which require permits, to improve predictability for project proponents, and increase the federal government's transparency and accountability to Canadians; and,
• Set a three-year target for nuclear project reviews , by working with the Canadian Nuclear Safety Commission and Impact Assessment Agency of Canada, and consider how the process can be better streamlined and duplications reduced between the two agencies.
• Amend the Impact Assessment Act to respond to the October 2023 Supreme Court of Canada decision that ruled that elements of the Act are unconstitutional. The proposed amendments will ensure the Act is constitutionally sound, facilitating efficient project reviews while advancing Canada's clean growth and protecting the environment. An amended Act will provide certainty for businesses and investors through measures that include increasing flexibility in substitution of assessments to allow for collaboration and avoid interjurisdictional duplication, clarifying when joint federal-provincial review panels are possible, and allowing for earlier Agency screening decisions as to whether a full impact assessment is required after the Planning phase. The amended Act will remain consistent with the United Nations Declaration on the Rights of Indigenous Peoples Act ;
• Enhance coordination across orders of government using the tools available under the Impact Assessment Act and permitting coordination mechanisms, to reduce duplication and minimize the burden of regulatory processes on project proponents and Indigenous groups; and,
• Engage Northern Premiers, Indigenous communities, industry, and other partners to discuss transformative changes to their unique project review frameworks, to ensure the North is also prepared to assess and build clean growth projects.
• Advance Indigenous participation in major projects, through the Indigenous Loan Guarantee Program detailed in Chapter 6, which will provide more opportunities for Indigenous communities to benefit from the significant number of natural resource and energy projects proposed to take place in their territories;
• Work to establish a Crown Consultation Coordinator to ensure efficient and meaningful Crown consultation with Indigenous peoples on the issuance of federal regulatory permits to projects that do not undergo federal impact assessments. The government will consult First Nations, Inuit, Métis, and Modern Treaty and Self-Governing Indigenous partners on the design of the Crown Consultation Coordinator. The Impact Assessment Agency of Canada will continue to be the Crown consultation body for all federal decisions related to projects that undergo federal impact assessments; and,
• Improve Indigenous capacity for consultation by advancing the co-development and implementation of consultation protocol agreements and resource centres, led by Crown-Indigenous Relations and Northern Affairs Canada.

More details on the Ministerial Working Group's recommendations will be published in an Action Plan in spring 2024. Additionally, further analysis of opportunities for improving the efficiency of the impact assessment process will be undertaken as part of the five-year review of the Impact Assessment Act's designated project list, which will occur later this year, following coming into force of the amended Act. This review will be undertaken in consultation with the public, including with Indigenous partners.

Getting major projects built means more jobs, in more regions across Canada, and more opportunities for the next generation of workers.

Securing the Canadian Biofuels Industry

Biofuels and biogas are renewable energy sources sustainably made from plants or biowaste, such as canola crops and landfill emissions. Not only do they generate fewer greenhouse gas emissions compared to fossil fuels, they also represent a unique opportunity for the Canadian economy. The industry supports agriculture and forestry jobs and can help decarbonize key sectors like marine, aviation, rail, and heavy industry. Canada's Clean Fuel Regulations , in place since 2022, are helping drive the production and adoption of specific biofuels in Canada.

The government is proposing new measures to support biofuels production in Canada, with a focus on renewable diesel, sustainable aviation fuel, and renewable natural gas, aiming to capitalize on the increasing demand for these fuels and strengthen Canada's position in the market. Budget 2024 announces:

• The government's intention to disburse up to $500 million per year from Clean Fuel Regulations compliance payment revenues to support biofuels production in Canada, subject to sufficient compliance payments being made to the federal government. More details will be announced in the 2024 Fall Economic Statement .
• The government will also retool the Clean Fuels Fund to deliver funding faster, and extend the Fund for an additional four years, until 2029-30. With reprofiled funding proposed through this extension, a total of $776.3 million will be available to be deployed from 2024-25 to 2029-30 to support clean fuel projects. The program will shift to a continuous intake process, and streamlined negotiations and decision-making processes will expedite delivery. By the end of this year, Natural Resources Canada will launch another call for proposals under the extended Clean Fuels Fund.
• The Canada Infrastructure Bank will invest at least $500 million in biofuels production under its green infrastructure investment stream.

Advancing Nuclear Energy, Nuclear Research, and Environmental Remediation

Non-emitting, nuclear energy is one of the key tools in helping the world reach net-zero emissions by 2050. Canada stands out as one of the few countries to have developed and deployed its own nuclear technology, the CANDU. And the robust Canadian supply chains built around CANDU not only generate high-skilled jobs and foster research and development but also play a role in creating affordable and clean electricity. Canada's nuclear sector also produces medical isotopes essential for radiation therapy and diagnosing heart disease.

Canada is a Global Nuclear Energy Leader

Over the last few years, the government has announced significant investments and action to advance nuclear energy:

Large Reactors:

• Canada has committed up to $3 billion in export financing to Romania to support the construction of two new CANDU reactors, reducing Romania's reliance on Russian energy while boosting their own energy security and their neighbours', all while supporting Canadian jobs. Canadian supply chains will participate in the construction and maintenance of these reactors over their multi-decade operating life.
• The government announced $50 million in funding to support Bruce Power's large nuclear expansion.

Small Modular Reactors (SMRs):

• The Canada Infrastructure Bank announced a $970 million investment to support Ontario Power Generation in building the first grid-scale SMR among G7 nations at Darlington.
• The Strategic Innovation Fund has committed $94.7 million to accelerate the development of three different next generation SMR designs.
• The government announced $74 million in funding to support SaskPower's SMR development.
• The government announced $120.6 million to enable the deployment of SMRs through various activities such as building regulatory capacity.

Major Economic Investment Tax Credits:

• The Clean Electricity and Clean Technology Manufacturing investment tax credits announced in Budget 2023 would support investments in nuclear electricity generation, nuclear power supply chains, and nuclear fuel production, which are part of the solution for a clean economy transition.

 Sustainable Finance:

• The government updated its Green Bond Framework to make certain nuclear energy expenditures eligible.

Budget 2024 is announcing new measures to help get nuclear projects built in a timely, predictable, and responsible fashion.

Canadian Nuclear Laboratories conducts nuclear science research that helps advance clean energy and medical technologies, as well as environmental remediation and waste management of historic nuclear sites. This work is overseen by Atomic Energy of Canada Limited, a Crown corporation responsible for enabling nuclear science and technology and ensuring environmental protection at nuclear sites.

• Budget 2024 proposes to provide $3.1 billion over 11 years, starting in 2025-26, with $1.5 billion in remaining amortization, to Atomic Energy of Canada Limited to support Canadian Nuclear Laboratories' ongoing nuclear science research, environmental protection, and site remediation work.

Canada-U.S. Energy Transformation Task Force

On March 24, 2023, the Canada-U.S. Energy Transformation Task Force was launched by Prime Minister Trudeau and President Biden, as a one-year joint initiative to support our collective energy security and economic growth as we transition to a clean energy future. Canada is pleased to announce the renewal of the Energy Transformation Task Force for an additional year.

Since its creation, the Energy Transformation Task Force has driven significant progress towards more secure and resilient Canada-U.S. supply chains for critical minerals, nuclear fuels, and green steel and aluminum.

Canada is a global leader in the supply of responsibly sourced critical minerals. The government is investing $3.8 billion through the Canadian Critical Minerals Strategy to further develop Canadian value chains for critical minerals needed for our green and digital economy, including the new Critical Mineral Exploration Tax Credit. The Strategy will be further enabled by enhancements to the Clean Technology Manufacturing investment tax credit, and Canada's new Electric Vehicle Supply Chain investment tax credit.

Canada is building on our strong partnership with the U.S. on critical minerals, underpinned by the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration. Under the Energy Transformation Task Force, we have redoubled efforts to address issues of mutual concern such as bolstering supply security for critical minerals. Our government will continue to work in close collaboration with industry partners and our allies to support cross-border priority critical mineral projects that advance our shared interests.

Nuclear energy will play a key role in achieving net-zero greenhouse gas emissions. Canada is a Tier-1 nuclear nation with over 70 years of technological leadership, including our own national reactor technology, and a strong domestic supply chain that includes the world's largest deposit of high-grade natural uranium. Our government is taking action to support the growth of nuclear energy, including through the Clean Electricity investment tax credit, the Clean Technology Manufacturing investment tax credit, the Strategic Innovation Fund, the Canada Infrastructure Bank, and an updated Green Bond Framework that includes certain nuclear expenditures.

At COP28, the government and likeminded partners reaffirmed their commitment to triple nuclear energy capacity and promote public-private investment to strengthen supply chains and reduce reliance on non-allied countries for nuclear fuel needed for advanced and conventional nuclear energy. Through the Energy Transformation Task Force, Canada will continue to engage industry and international partners with a view to announcing concrete measures later this spring to bolster North American nuclear fuel supply chains.

Canadian steel and aluminum—among the greenest in the world—are important pillars of integrated North American manufacturing supply chains and key products to support the net-zero transition. We have invested significantly to further decarbonize our steel and aluminum sectors and to maintain their competitiveness in the green economy. As well, earlier this year, our government announced actions to increase the transparency of steel import data that will help provide more details on the origins of imported steel and align our practice with the U.S. We will continue to collaborate with the U.S. to promote common approaches for trade in low emissions green steel and aluminum goods.

Canada will continue to advance its work in partnership with the U.S., to reduce our shared exposure to production and supply chains controlled by non-likeminded countries, including by attracting investment in EV supply chains, solar, and more.

Clean Growth Hub

The Clean Growth Hub is the federal government's main source of information and advice on federal funding and other supports for clean technology projects in Canada. It directly supports up to 1,100 companies and organizations every year, ranging from emerging small businesses to Canada's world-leading clean tech companies.

Together, Innovation, Science and Economic Development Canada and Natural Resources Canada partner with 16 other departments and agencies to offer this one-stop shop to help businesses seeking to invest in Canada and create net-zero growth navigate the federal government's numerous clean economy programs and incentives—unlocking new investment and creating good jobs for Canadian workers.

• To continue supporting clean technology stakeholders to identify and access relevant support and advice, Budget 2024 proposes to provide $6.1 million over two years, starting in 2024-25, for the Clean Growth Hub.

Made-in-Canada Sustainable Investment Guidelines

The government recognizes the importance of promoting credible climate investment and combating greenwashing, to protect the integrity and fairness of the clean economy. This is critical for fostering investor confidence and mobilizing the private investment that Canada needs to help achieve a net-zero by 2050 economy.

As announced in the 2023 Fall Economic Statement, the Department of Finance Canada is working with Environment and Climate Change Canada and Natural Resources Canada to undertake next steps, in consultation with regulatory agencies, the financial sector, industry, and independent experts, to develop a taxonomy that is aligned with reaching net-zero by 2050. 

This work is being informed by the Sustainable Finance Action Council's Taxonomy Roadmap Report, which provided the government with recommendations on the design of a taxonomy to identify economic activities that the financial sector could label as "green" or "transition."  The government will provide an update on the development of a Canadian taxonomy later this year.

Find out more about the expected gender and diversity impacts for each measure in section 4.2 Attracting Investment for a Net-Zero Economy

Small- and medium-sized businesses are an integral engine of Canada's economy, and they employ about 64 per cent of Canadian workers. Entrepreneurs, local small business, start-ups, growing medium-sized businesses—everywhere in Canada, there are people with good ideas, ready to grow their businesses and create good jobs. The government is ensuring Canada's investment climate sets businesses up for success.

For economic growth to reach the pace that is needed, existing businesses need support to stay competitive and scale-up. The government is taking action to help businesses scale-up their technological innovations, and implement productivity-raising technology across the economy. By cutting red tape, new and existing businesses can grow faster. Boosting access to financing from financial Crown corporations and encouraging Canada's large public pension funds to put their investments to work here at home will unlock new growth opportunities for Canadian businesses.

Through Budget 2024, the government is making it easier for new businesses to start-up and for existing businesses to grow by cutting red tape, and providing the tools businesses need to scale-up. The government is also taking steps to have Canadian public institutions and Crown corporations put their capital to work here at home and seize opportunities to increase Canada's growth and productivity.

The federal government has set up a range of programs and initiatives to help small and medium businesses thrive, and foster economic growth, including:

• Supporting small- and medium-sized businesses to hire 55,000 first year apprentices in construction and manufacturing Red Seal Trades through a grant of $5,000 towards upfront costs, such as salaries and training.
• Maintaining the lowest marginal effective tax rate (METR) in the G7, and a 5.2 percentage point competitive advantage over the average U.S. METR, to ensure Canada is a competitive place to do business.
• Secured commitments with Visa and Mastercard to lower credit card interchange fees for small businesses while protecting reward programs for consumers. These reductions are expected to save eligible Canadian small businesses approximately $1 billion over five years.
• Budget 2022 cut taxes for Canada's growing small businesses by more gradually phasing out their access to the small business tax rate.
• Ongoing support for small- and medium-sized businesses through Canada's seven Regional Development Agencies, including over $3.7 billion since 2018 to help businesses scale-up and innovate through the Regional Economic Growth through Innovation program.
• Almost $7 billion since 2018 for the Women Entrepreneurship Strategy to help women-owned businesses access the financing, networks, and expertise they need to start-up, scale-up, and access new markets.
• Enhancements to the Canada Small Business Financing Program, increasing annual financing to small businesses by an estimated $560 million.
• Up to $265 million for the Black Entrepreneurship Program to help Black business owners and entrepreneurs succeed and grow their businesses.
• $150 million investment in the Indigenous Growth Fund, to help recruit other investors, and in turn provide a long-term source of capital to support continued success for Indigenous businesses.
• $49 billion in interest-free, partially forgivable loans of up to $60,000 to nearly 900,000 small businesses and not-for-profit organizations through the Canada Emergency Business Account (CEBA).

National Regulatory Alignment

Barriers to internal trade are preventing Canada from reaching its economic potential. These barriers, most commonly the 13 different sets of regulations for each province and territory, hold back businesses from trading across provincial and territorial borders, restrict workers from moving between provinces and territories, and can increase costs for businesses as they work to overcome regulatory hurdles.

By addressing barriers to internal trade, including harmonizing regulations between provinces and territories, we can create more opportunities for Canadian businesses to grow and make life more affordable for all Canadians through greater competition and consumer choice. According to the International Monetary Fund, Canada could increase its gross domestic product (GDP) per capita by as much as 4 per cent—or $2,900 per capita estimated in 2023 dollars through the reduction of internal trade barriers for interprovincial trade of goods.

In 2022, the federal government launched the Federal Action Plan to Strengthen Internal Trade , which is guiding work with the provinces and territories to cut red tape. This includes a rigorous assessment of remaining federal exceptions in the Canadian Free Trade Agreement (CFTA) and important investments in trade data and research.

Two significant milestones have now been reached, with further actions upcoming in 2024:

• The removal and streamlining of one third of all federal exceptions in the CFTA. This means the removal of 14 exceptions related to procurement that will provide Canadian businesses more opportunities to compete to deliver government goods and services. By the end of 2024, the federal government will publicly release the rationale for all remaining exceptions, and encourages provinces and territories to do the same.
• The launch of the new Canadian Internal Trade Data and Information Hub on April 3, 2024. The Hub is an open and accessible data platform that will provide governments, businesses, and workers with timely, free information to help them make choices about where to invest and where to work. The Hub will help shine a light on where labour mobility barriers are highest and where unnecessary red tape costs businesses time and money.

The federal government is committed to working with provinces and territories to ensure goods, services, and workers move seamlessly across the country by advancing the mutual recognition of regulatory standards and eliminating unnecessary red tape for full labour mobility in the construction, health, and child care sectors.

• Budget 2024 announces that the government will launch the first-ever Canadian Survey on Interprovincial Trade in June 2024, to engage thousands of Canadian businesses on the challenges they face when buying, selling, and investing across provincial and territorial borders. The survey's insights will help identify top interprovincial barriers so that they can be eliminated.

As detailed in Chapter 1, the federal government is also leveraging federal housing financing to encourage provinces and territories to align their building codes, including to support modular housing construction, to make it easier to build more homes, faster.

The federal government will announce further progress to align the regulatory environment across the country in due course.

The New Canada Carbon Rebate for Small Businesses

Canada's small- and medium-sized businesses keep main streets flourishing across the country, create jobs, and deliver the dream of entrepreneurship. It is essential that these businesses thrive so they can continue being the bedrock of our communities and our economy.

Pollution has a cost, one which will only rise this century as climate change causes intensifying natural disasters and more severe health effects, as detailed in Chapter 5. Canada's carbon pricing system includes a federal backstop for provinces and territories that don't put their own system in place. It's a system designed to be fair and affordable—for households, Indigenous communities, farmers, and businesses—while reducing the pollution that is causing climate change.

The government is delivering on its commitment to return proceeds from the price on pollution to small- and medium-sized businesses, by announcing an accelerated and automated return process to provide direct refunds to small- and medium-sized businesses in the provinces where the federal fuel charge applies—the new Canada Carbon Rebate for Small Businesses.

• Proceeds would be returned directly to eligible corporations through direct payments from the Canada Revenue Agency (CRA), separately from CRA tax refunds.
• To receive their proceed return for each fuel charge year, corporations would be required to have filed their tax return for 2023 by July 15, 2024.
• The proposal would return proceeds for future fuel charge years, including 2024-25, in a similar manner each year.

Environment and Climate Change Canada continues to consult with Indigenous governments on how best to directly return fuel charge proceeds to their communities, and will announce next steps soon. The share of fuel charge proceeds allocated to Indigenous governments will double to 2 per cent of direct proceeds beginning this year.

Unlocking New Opportunity Through Financial Crown Corporations

Canada's financial Crown corporations support economic growth by helping businesses get the financing they need to grow; helping farmers and agri-businesses invest in new equipment and technology and support their operations; and helping companies sell their products around the world.

Canadians expect the government to make the most of their tax dollars. That is why in the 2023 Fall Economic Statement the government announced it would be reviewing the operations of the Business Development Bank of Canada, Export Development Canada, and Farm Credit Canada. Based on this review:

• The amended Framework has also introduced a target solvency rating for financial Crown corporations in cases where the Office of the Superintendent of Financial Institutions has no legislative supervisory role. The amended Framework can be found in the: Capital and Dividend Policy Framework for Financial Crown Corporations .
• The Business Development Bank of Canada should increase financing for promising new and high-growth businesses and accelerate reorientation of its venture capital investments toward emerging and higher-risk sectors to help attract more private capital.
• Export Development Canada should leverage its full toolkit and authorities, including by updating internal risk management guidance to facilitate greater risk taking across its portfolio. Recognizing that success for Canadian exporters in highly competitive markets and sectors at times requires additional targeted support, Export Development Canada should also create a new stretch capital envelope to maximize potential for exporters in areas of strategic importance for Canada by taking on greater risk in deploying its capital. Having Export Development Canada take on more higher-risk, higher-impact transactions itself will reduce the need for direct support through the Canada Account. Further implementation details, including the scale and scope of the envelope, will be identified over the coming months.
• Farm Credit Canada should continue to pursue opportunities to support agri-food and agribusiness, including through venture capital investment, and further deployment of technologies to mitigate climate change. The government intends to amend the Farm Credit Canada Act to require regular legislative reviews that ensure Farm Credit Canada's activities are aligned with the sector's needs.

In focusing their mandate on driving economic growth and productivity, these Crown corporations are also expected to prioritize new financing, insurance, and advisory support to under-financed business owners, as well as increase their public reporting and engagement with Canadians. The performance incentives of senior leaders are expected to align with their organizations taking on increased risk appetite in support of economic growth objectives. For Export Development Canada, performance incentives should also encourage alignment of business activities with countries that have free trade agreements with Canada.

Investing in Canadian Start-Ups

Venture capital financing gives Canadian entrepreneurs the resources they need to start-up, scale-up, and become the next generation of Canadian anchor companies. Financing can help take new ideas from lab to market, while creating high-quality, middle-class jobs.

The Venture Capital Catalyst Initiative (VCCI) strengthens Canada's venture capital ecosystem by co-investing with the private market, discovering and nurturing the next generation of globally recognized Canadian companies, and generating returns for private and public investors alike. Since 2016, the government has invested $821 million through VCCI, delivering support to over 300 companies across Canada.

• Building on this momentum, Budget 2024 proposes to provide $200 million over two years, starting 2026-27, on a cash basis, to increase access to venture capital for equity-deserving entrepreneurs, and to invest in underserved communities and outside key metropolitan hubs. 

Encouraging Pension Funds to Invest in Canada

Keeping Canada's vibrant economy strong for future generations of Canadians requires significant capital investments in our businesses, industries, and communities. Attracting higher levels of investment into Canada from all sources, including foreign and domestic private and institutional investors will raise Canada's productivity and increase living standards for all Canadians.

Pension plans are a critical pillar in Canada's retirement income system that ensures Canadians can enjoy a secure and dignified retirement. Canadian pension funds hold over $3 trillion in assets, which are invested both at home and abroad to provide secure retirement income for plan members and retirees.

The government believes that encouraging pension funds to invest in Canada more would help grow the Canadian economy and provide the stable long-term returns needed to deliver strong pensions for Canadians. In the 2023 Fall Economic Statement , the government committed to improving transparency around pension funds' investments and to working collaboratively with Canadian pension funds to create an environment that encourages and identifies more domestic investment opportunities for pension funds and other responsible institutional investors.

Canadian pension funds rely on their strong governance practices and diversified portfolios to deliver Canadians' pensions, with assets including public and private equity, infrastructure, real estate, and bonds. Canada's own economy is full of investment opportunities in these asset classes that could provide valuable contributions to pension fund portfolios. Opening up more opportunities for investment by pension funds in these domestic assets would help one of Canada's largest pools of savings contribute to the growth of the Canadian economy.

Further engagement with industry experts and pension funds will guide the government's way forward on ways to make more domestic investments available that meet the needs of pension funds.

• digital infrastructure and AI investment;
• physical infrastructure;
• airport facilities;
• venture capital investments;
• building more homes, including on public lands; and,
• the removal of the 30 per cent rule for domestic investments.

To support investments in airport facilities, the Minister of Transport will release a policy statement this summer that highlights existing flexibilities under the governance model for Canada's National Airport System airports to attract capital, including from pension funds.

• Following up on the 2023 Fall Economic Statement , Budget 2024 also proposes to amend the Pension Benefits Standards Act, 1985 to enable and require the Office of the Superintendent of Financial Institutions to publicly release information related to the plan investments of large federally regulated pension plans.

The information to be disclosed would be set out in regulations and would include the distribution of plan investments by jurisdiction and, within each jurisdiction, by asset class.

The government will continue to engage with provinces and territories to discuss similar disclosures by Canada's largest pension plans in a simple and uniform format.

Boosting Regional Economic Growth

To build a brighter future for communities across the country, Canada's Regional Development Agencies help businesses and innovators grow to fuel economic growth and create good middle class jobs. Through the Regional Economic Growth through Innovation program, businesses can access funding to scale-up, implement new technologies, improve productivity, and find new markets, helping to develop prosperous and inclusive communities across the country.

• To create jobs and boost regional economic growth, Budget 2024 proposes to provide an additional $158.5 million over two years, starting in 2024-25, on a cash basis, to Canada's Regional Development Agencies for the Regional Economic Growth through Innovation program. A portion of this funding will be dedicated to housing innovation.

This support builds on the $200 million that Regional Development Agencies will deliver to businesses for AI adoption.

Cutting Red Tape to Boost Innovation

For innovative businesses to scale-up new ideas, they need certainty that they will be able to bring their product to market. But existing regulation can often be too outdated to fit the needs of new technologies.

To ensure regulation keeps pace with the speed of new innovations, rather than hold innovation back, the government is advancing work on regulatory "sandboxes" to create temporary rules to enable testing of products, services, or new regulatory approaches.

• Budget 2024 announces the government's intent to introduce amendments to the Red Tape Reduction Act to broaden the use of regulatory sandboxes across government. The changes will enable innovation by offering limited exemptions to existing legislation and regulations, streamlining the regulatory system, and reforming regulations to modern business realities.

Supporting the Canadian Chamber of Commerce's Business Data Lab

Since 2022, the Canadian Chamber of Commerce has collaborated with Statistics Canada to provide Canadian businesses with insights and information through the Business Data Lab. This initiative provides access to real-time information and analysis, that helps Canadian businesses stay informed, and make decisions that help them stay strong and support workers.

• To advance this work, Budget 2024 proposes to provide $7.2 million over three years, starting in 2024-25, to support the Canadian Chamber of Commerce's Business Data Lab.  

Find out more about the expected gender and diversity impacts for each measure in section 4.3 Growing Businesses to Create More Jobs

4.4 A Strong Workforce for a Strong Economy 

Building an economy that is fair for everyone means making sure that every generation can seize the opportunities of the government's investments to grow the economy and create jobs.

Investing in new jobs and skills support for younger Canadians will help them get that first good job or start their first business. Strengthening labour laws and safeguarding the rights of workers will help ensure more jobs are good jobs. Skills and education investments for the next generation of workers will lead to higher productivity and benefit businesses in Canada and looking to invest in Canada who can tap into a robust, highly skilled workforce.

The federal government's generational job-creating investments today lay the groundwork for a brighter tomorrow, where good job opportunities are available to everyone.

• Helping over one million Canadians each year upgrade their skills or find new jobs by investing nearly $3 billion annually in Canada's Labour Market Development Agreements and Workforce Development Agreements with provinces and territories.
• Supporting a trades workforce that is skilled, inclusive, certified, and productive through the Canadian Apprenticeship Strategy.
• Equipping close to 105,000 Canadian workers with the skills they need by increasing access to union-led training through the Union Training and Innovation Program since 2019-20, and supporting over 45,000 apprentices through interest-free Canada Apprentice Loans since 2018-19.
• Introducing labour requirements for prevailing union wages and apprenticeship opportunities in most major economic investment tax credits to ensure Canadian workers thrive in the growing clean economy.
• Ensuring workers have time to recover when they get sick, by providing ten days of paid sick leave for all federally regulated workers.
• Banning the use of replacement workers during a strike or lockout in federally regulated workplaces to protect workers' right to strike and support a fairer collective bargaining process during labour disputes.

Empowering Young Entrepreneurs 

Futurpreneur Canada is a national not-for-profit organization that provides young entrepreneurs with access to financing, mentorship, and other business supports to help them launch and grow their business. For over two decades, Futurpreneur Canada's programs and offerings, supported by $161.5 million in federal funding, have helped over 17,700 young entrepreneurs to launch more than 13,900 businesses across the country, supporting thousands of jobs since its inception.

• To empower young entrepreneurs, Budget 2024 proposes to provide $60 million over five years, starting in 2024-25, for Futurpreneur Canada. Futurpreneur Canada will match this federal investment with funding received from other orders of government and private sector partners.

By 2029, Futurpreneur Canada estimates this investment will enable an estimated 6,250 additional youth-owned businesses to launch and scale-up their businesses.

Futurpreneur Helps Young Entrepreneurs Scale-up Their Businesses

Sarah is a recent university graduate who wants to launch a sustainable clothing manufacturing company, but is unsure where to begin. She learns about Futurpreneur Canada. After visiting their website, she finds resources to help develop and test her business model, write a business plan and even attends a webinar to answer her questions. Now, Sarah feels confident and prepared to launch her business, but is having difficulty securing financing.

She decides to apply to Futurpreneur's Startup Program to take advantage of their financing and mentorship offering. Futurpreneur helps her finalize her business plan and cash flow, collects the necessary documentation, reviews her application and determines her business is a good fit, and provides her with financing and mentoring to help launch her business and start making sales.

Sarah is matched with an experienced business mentor who will provide her with guidance and reassurance over the next two years and receives financing of up to $20,000 from Futurpreneur and up to $40,000 from BDC to help start her business. She is also connected to various networking events with experts and other young entrepreneurs to build her business network and gain peer advice.

Investing in a Strong Workforce for a Strong Economy

Investments since Budget 2017 in skills training measures include:

Labour Market Transfer Agreements: Annual investment of nearly $3 billion enabling provinces and territories to deliver training and employment supports tailored to their unique labour market needs.

Union-based training: Over $200 million through Budget 2022 and Fall Economic Statement 2022 to expand the Union Training and Innovation Program to train more than 30,000 additional apprentices and journeypersons.

Employer-led training: Budget 2021 announced the Sectoral Workforce Solutions Program to help key sectors of the economy, including the construction sector, implement solutions to address their current and emerging workforce needs. Budget 2021 also announced $250 million for the Upskilling for Industry Initiative to support more than 15,000 workers. Budget 2024 proposes $50 million over four years to provide skills training for workers in sectors disrupted by AI, and $10 million over two years to train more early childhood educators, building up the talent needed for the expansion of affordable, high-quality child care.

Apprenticeship Service: Launched the Apprenticeship Service to help first year apprentices in construction and manufacturing Red Seal trades connect with opportunities at small and medium-sized employers. Budget 2024 proposes to provide $90 million over two years for the Apprenticeship Service to help create placements in the residential construction sector.

Skilled Trades Awareness and Readiness Program:   Budget 2018 announced the Skilled Trades Awareness and Readiness Program to help Canadians explore the trades and make informed career choices. Budget 2024 proposes $10 million over two years to continue to encourage Canadians to explore and prepare for careers in the skilled trades.

Sustainable Jobs Training Fund:   Recently launched the Sustainable Jobs Training Fund to help workers upgrade or gain new skills for jobs in the low-carbon economy.

Indigenous-led training: $99.4 million per year through the co-developed Indigenous Skills and Employment Training (ISET) Program to help Indigenous people improve their skills and find employment.

Financial support for adult learners: About $250 million per year for the Canada Training Credit, which covers up to 50 per cent of eligible training fees.

Affordability for Apprentices: Eliminated Elimination of interest on Canada Apprentice Loans, which provides up to $4,000 per period of technical training for tuition, tools, equipment, living expenses and forgone wages.

Apprenticeship Requirements for Clean Economy Investment Tax Credits: to access the highest tax credit rates, projects must dedicate at least 10 per cent of labour hours performed by covered workers to apprentices. This provides apprentices with the crucial hours they need to complete their training.

Establishing a Right to Disconnect

Everyone needs some downtime; it is essential for well-being and mental health. As the nature of work in many industries has become increasingly digital, workers are finding it increasingly difficult to disconnect from their devices and inboxes after hours and on weekends. This has particularly impacted Millennial and Gen Z workers, many of whom have worked their whole careers without firm separation between work and personal time. 

The government is taking action to restore work-life balance for the many workers in federally regulated industries, including but not limited to financial services, telecommunications, and transportation, by moving forward with a right disconnect from work, outside of their working hours.

• This is expected to benefit up to 500,000 employees in federally regulated sectors.

Further, on the topic of worker misclassification, Employment and Social Development Canada and the Canada Revenue Agency will enter into necessary data-sharing agreements to facilitate inspections and enforcement.

Modernizing the Employment Equity Act

Through the Employment Equity Act , the government promotes and improves equality and diversity in federally regulated workplaces. Since the introduction of the Employment Equity Act , continued progress has been made to address inequalities, but some workers are still facing barriers to employment and many federal workplaces fail to reflect the full diversity of Canada's population. That is why, in 2021, the government launched an arm's length Task Force to review the Act and advise on how to modernize the federal employment equity framework.

• Following the recommendations of the Task Force, Budget 2024 announces the government's intention to propose legislative amendments to modernize the Employment Equity Act , including by expanding designated equity groups.

Examining Critical Port Operations

Labour disputes and work stoppages at Canadian ports can lead to serious economic impacts by disrupting supply chains. To protect port workers and resolve the structural issues underlying port labour disputes, in 2023, the government launched the first phase of a formal review in collaboration with industrial relations experts.

• Budget 2024 proposes to provide $3.1 million over two years, starting in 2024-25, to enable the Labour Program at Employment and Social Development Canada to complete the second phase of its review, which will explore long-term solutions to minimize labour disputes, respect the collective bargaining process, and secure the stability of Canada's supply chains. This funding would be sourced from existing departmental resources.

Extending Temporary Support for Seasonal Workers

Many seasonal workers—including in fishing and tourism sectors in Atlantic Canada and Quebec—rely on Employment Insurance for the support they need between work seasons. To address gaps in Employment Insurance support between seasons, the government introduced temporary rules in 2018 to provide up to five additional weeks—for a maximum of 45 weeks—to eligible seasonal workers in 13 economic regions. This support is set to expire in October 2024.

• Budget 2024 proposes to extend this support for seasonal workers in targeted regions until October 2026. The cost of this measure is estimated at $263.5 million over four years, starting in 2024-25. 

Find out more about the expected gender and diversity impacts for each measure in section 4.4 A Strong Workforce for a Strong Economy

Page details

• Share full article

Advertisement

Supported by

Tesla’s Profit Fell 55%, Adding to Concerns About Its Strategy

The first-quarter results are likely to fuel worries that competitors will continue grabbing a bigger slice of a market dealing with slowing electric car sales.

By Jack Ewing

Tesla reported on Tuesday that it made significantly less money in the first three months of the year because of its tepid car sales, reinforcing concern among investors that the company led by Elon Musk is losing ground in the market for electric vehicles.

Profit fell 55 percent, to $1.1 billion, from the first quarter of 2023, the company said. And revenue fell 9 percent, to $21.3 billion.

A slump in earnings was seen as inevitable after Tesla said this month that sales in the first quarter fell 8.5 percent from a year earlier, and after the company announced plans to lay off more than 10 percent of its employees worldwide, or about 14,000 people.

The job cuts, including more than 2,000 workers at the company’s factory in Fremont, Calif., and nearly 2,700 at a factory in Austin, Texas, were interpreted as a sign that Tesla was struggling to bring costs in line with sinking revenue.

In the first quarter of 2023, Tesla made $2.5 billion and had one of the best profit margins in the industry, the company said a year ago. But it has been forced to cut prices, including in a new round last week, lowering the amount it makes on each car it sells. For a while, that strategy seemed to help bolster the company’s sales, but Tesla now appears to be struggling to attract buyers even with lower prices.

Tesla’s operating profit margin last quarter was 5.5 percent, half as much as a year earlier and in line with how much other automakers tended to earn.

Tesla investors are increasingly worried that its falling sales and profit are a symptom of larger problems , possibly pointing to the company’s inability to effectively respond to increased competition from established automakers and new carmakers from China .

Mr. Musk signaled recently that Tesla would focus on autonomous driving technology and a vehicle he called the Robotaxi, sowing doubt about the company’s plans to develop a new, lower-priced model that could make electric cars affordable to a broader range of customers and people in more countries.

Self-driving cars have long been an obsession for Mr. Musk. In 2019, he said Tesla would have one million autonomous taxis on the road the next year; the company still has no such cabs.

“Tesla lived on the coolness of its car, the idea that the company was about to launch autonomous vehicles and investor confidence in Mr. Musk’s ability to do nearly impossible things,” Erik Gordon, an assistant professor at the University of Michigan’s Ross School of Business, said in an email. “Now its cars are old, the fleet of Robotaxis promised five years ago hasn’t arrived, and confidence in Mr. Musk is battered by disappointments and behavior that mystifies investors.”

Tesla said on Tuesday that it remained on track to start producing a lower-priced vehicle next year. But in a change designed to reduce upfront investment, the car will use some new components and some borrowed from existing vehicles. That strategy will allow Tesla to make new models without building new factories, the company said.

“This update may result in achieving less cost reduction than previously expected,” the company said in a presentation to investors.

Tesla’s share price, which had fallen by about 40 percent this year, surged in extended trading Tuesday after its first-quarter report. Investors appeared to be pleased that the company was still planning a more affordable model.

Mr. Musk has defended Tesla’s price cuts, saying all carmakers adjust prices, but usually through dealer incentives and other measures that are not quite as visible to buyers. Tesla sells cars directly to customers online rather than through franchised dealers.

“Tesla prices must change frequently in order to match production with demand,” he said.

Tesla attributed the sales decline to conflict in the Red Sea, which has disrupted global supply chains; a fire that halted production at the company’s factory near Berlin; and the ramp-up of an upgraded version of the Model 3 sedan in Fremont. Tesla also blamed a decision by other carmakers to sell more hybrid vehicles, which include a gasoline engine and batteries and electric motors, for putting pressure on sales of fully electric vehicles.

The second quarter “will be a lot better,” Mr. Musk said on a conference call to discuss the company’s results.

He postponed a planned trip on Monday to India, where he was expected to meet Prime Minister Narendra Modi and announce plans for a factory, citing “very heavy Tesla obligations.”

While the postponement may disappoint investors who had hoped India could be a new source of growth, it could also provide reassurance that Mr. Musk was addressing Tesla’s problems more urgently. The company’s models are unlikely to sell in large numbers in India, where most car buyers prefer smaller and more affordable vehicles.

Tesla’s newest vehicle is the Cybertruck, a pickup that the company began producing last year. But the company has sold only around 4,000, according to information that emerged in a recall last week, suggesting it will not be a significant source of growth.

The self-driving taxi is seen as a long shot, partly because even the most advanced autonomous systems available today sometimes make glaring mistakes. In addition, federal and state regulators will have to sign off before Tesla can put such taxis on the road. Tesla does not yet have a license to test driverless vehicles in California, where it would be expected to develop Robotaxi software.

“Elon Musk has promised Robotaxis since 2016,” said Jan Becker, chief executive of Apex.AI, a company that provides software used by autonomous driving systems. “I don’t see enough evidence of Tesla releasing a Robotaxi, at least in the short term.”

Mr. Musk said Tuesday that the technology was improving rapidly because of advances in artificial intelligence. Answering questions from analysts, he expressed impatience with anybody who viewed Tesla as primarily a car company.

“We should have been thought of as an A.I. and robotics company,” he said. Anyone who doesn’t have faith in Tesla’s ability to perfect autonomous driving, he added, “should not be an investor in the company.”

Until recently, Tesla was among very few carmakers making money on electric cars, but established carmakers are catching up. General Motors, which also reported earnings on Tuesday, has ironed out production difficulties in battery-pack manufacturing and is ramping up output, Paul Jacobson, the company’s chief financial officer, said in a conference call with reporters.

G.M. remains dependent on its gasoline-vehicle business, which was primarily responsible for a 24 percent jump in profits for the first three months of the year, to $3 billion. But the company expects to be selling electric vehicles profitably later this year, Mr. Jacobson said.

Focus on Tesla’s earnings report Tuesday was unusually intense after a series of recent events that raised questions about the company’s direction and Mr. Musk’s leadership.

Last week, Tesla’s board of directors disappointed investors who had hoped it would do more to get Mr. Musk to focus on the car business and spend less time on X, where his polarizing comments and affinity for right-wing conspiracy theories have alienated many potential customers.

The board took steps to reinstate a $47 billion pay package for Mr. Musk that a Delaware court had voided. The board also said it would ask shareholders to approve moving Tesla’s corporate domicile to Texas, a change Mr. Musk called for on the day the Delaware court struck down his pay package in January on the grounds that it was excessive and that shareholders were not properly informed when they approved it in 2018.

Neal E. Boudette contributed reporting.

Jack Ewing writes about the auto industry with an emphasis on electric vehicles. More about Jack Ewing

The World of Elon Musk

The billionaire’s portfolio includes the world’s most valuable automaker, an innovative rocket company and plenty of drama..

Tesla: During a quick trip to Beijing by Elon Musk, Tesla concluded a series of arrangements with regulators and a Chinese A.I.company, potentially clearing the way  for the car-maker to offer its most advanced self-driving software on cars in China.

X: An Australian court extended an injunction ordering the social media platform X to remove videos depicting the recent stabbing of a bishop , setting the country’s judicial system up for a clash with Elon Musk, who has denounced the court’s order as censorship.

A $47 Billion Pay Deal: Despite   facing criticism that Tesla is overly beholden to Elon Musk , its board of directors said that the company would essentially give him everything he wanted, including the biggest pay package in corporate history.

SpaceX: President Biden wants companies that use American airspace for rocket launches to start paying taxes into a federal fund  that finances the work of air traffic controllers.

Business With China : Tesla and China built a symbiotic relationship that made Elon Musk ultrarich. Now, his reliance on the country may give Beijing leverage .  

The Musk Foundation: After making billions in tax-deductible donations to his charity, Musk has failed recently to donate the minimum required to justify a tax break  — and what he did give often supported his interests.

KPMG Personalization

• KPMG global tech report 2023: Healthcare sector insights

How healthcare is using technology to increase productivity and safeguard trust

• Share Share close
• 1000 Save this article to my library
• View Print friendly version of this article Opens in a new window
• Go to bottom of page
• Home ›
• Insights ›

New KPMG research finds that although technology leaders in healthcare face significant challenges, they are determined to keep organizational digital transformation on track. This article explores the research and compares healthcare technology functions and their decision-making with other industries. It also examines how healthcare organizations are using artificial intelligence, machine learning and cyber security to reduce staff workloads and build trust with consumers/patients.

Despite the headwinds of global economic uncertainty and significant industry challenges, around the world digital transformation leaders in healthcare are committed to their innovation priorities. By aligning investment in technology with their strategic ambitions, healthcare organizations are realizing value and upholding momentum.

Results from the KPMG  2021 Healthcare CEO Future Pulse  (PDF 1.11MB) survey of 200 healthcare leaders around the world shows what the sector has achieved so far. In the survey, 38 percent of healthcare CEOs said their organization used artificial intelligence (AI) to engage with and/or treat patients. And significant proportions reported using remote monitoring (47 percent), wearables (40 percent) and embedded biometric monitoring (35 percent). 1 These numbers are expected to rapidly increase in the coming years as adoption of emerging technologies accelerates.

As the sector works to harness the recent rapid evolution of technology, two priorities have emerged: supporting overstretched workforces so healthcare professionals have more time to give to patients, and cultivating experiences that will build consumer trust.

“Technology has been a key driver in the underlying growth of health expenditure around the world,” says Evan Rawstron, Global Co-Lead, KPMG Connected Enterprise for Health, KPMG International, and National Sector Lead for Health, Aging and Human Services at KPMG Australia. “Healthcare organizations have focused investment on technology in areas that improve consumer outcomes, experiences and trust for a long time, but employee and enterprise productivity are increasingly important priorities."

The  KPMG global tech report 2023 , which is based on a survey of 2,100 executives from 16 countries and nine industries, confirms that these two objectives are strong priorities for healthcare organizations.

In the research, 59 percent of healthcare respondents say that the need to fast-track employee productivity is a common trigger of digital transformation projects. And to maintain stakeholder trust, 59 percent say that consumer expectations of stronger data privacy and cyber security have the strongest influence on digital transformation plans in healthcare. That is 6 and 7 percentage points higher, respectively, than the average across all industries surveyed.

When they are used strategically, digital transformation initiatives can benefit employee productivity and consumer outcomes simultaneously. For instance, front-office improvements and streamlined systems of record will reduce the administrative burden on clinicians. In turn, this reduces wait times for appointments and treatments, which enhances the patient experience and communication. More efficient apps, meanwhile, give a clear view of patient data.

The research finds that AI and machine learning (ML) are seen as vital to overcoming healthcare’s productivity challenges. As the sector starts to use these emerging technologies to benefit employees and patients, it is using cyber resilience measures to safeguard stakeholder trust and information security. 

The battle against burnout dictates healthcare’s technology investments

Workforce shortages and funding pressures are pushing many institutions to decrease their costs and increase their productivity. The KPMG 2021 Healthcare CEO Future Pulse survey found, for instance, that the ability to meet demand and to support workforce wellness were among the most pressing workforce issues keeping leaders up at night. 2

Many are turning to technology for help. It can streamline processes, relieving healthcare professionals and allowing them to reallocate time to higher-value tasks. In the face of funding pressures, this boost in employee productivity and value generation is highly sought after by healthcare organizations.

Rather than reduce headcount to realize cost benefits, we need to leverage technologies to better meet spiraling demand with the same workforce.

Evan Rawstron Global Co-Lead, KPMG Connected Enterprise for Health, KPMG International, and National Sector Lead for Health, Aging and Human Services at KPMG Australia

The sector is racing to capture value from feature-rich, cloud-enabled platforms by investing in systems of record — particularly electronic medical records, enterprise resource planning systems and human-capital management. But in many cases these efforts are being resisted by an overstretched workforce.

Global research from the Partnership for Healthcare System Sustainability and Resilience has found that there is an urgent need to improve the working conditions of healthcare staff. Demanding workloads, poor job security and limited career prospects are leading to low motivation, burnout and attrition of healthcare staff. 3 This kind of environment dispels any employee enthusiasm for change initiatives such as system upgrades and new technologies. Unsurprisingly, the new research conducted by KPMG International finds that the healthcare sector is much more likely than others to say that employee resistance influences investment decisions regarding new technology.

The majority of healthcare respondents (75 percent) say that employee resistance influences technology investment decisions (17 percentage points more than the average across all industries surveyed). Aside from limited bandwidth to implement new systems and tech, Rawstron says that healthcare training processes need to empower healthcare professionals to be more efficient. “While many healthcare employees are overstretched,” he says, “I also don’t think we train or resource the workforce effectively to change the way they work to release the time that allows them to focus on higher-value activities.”

That training would also enhance the digital literacy of non-medical staff, suggests Rawstron, which would reduce the change-management burden. This is especially important because technology is improving at a much higher pace than healthcare organizations can adopt it, which creates a continuous need to get the basics in place.

AI and ML are vital to productivity

Of the industries in the new KPMG research, the healthcare sector is one of the most likely to say that AI and ML systems are going to be strategically important over the next three years: 62 percent of healthcare organizations consider AI and ML to be the most important technologies for achieving short-term ambitions — 5 percentage points above the average across all industries surveyed.

AI is here to stay. Healthcare’s main currency is time, and AI can give time back to healthcare professionals. Some in the industry are concerned that, instead of offering relief, productivity gains through technology could add new tasks to workloads, so a key focus of the digital transformation of healthcare is tackling employee burnout.

Many in the industry expect AI and ML to be an important way to unlock employee productivity. Increased employee productivity will be the top success metric healthcare organizations will use to measure the return on investment (ROI) of their AI and ML investments. While other industries are basing AL/ML investment decisions on imitating their leading competitors, in healthcare an evidence-based approach prevails. According to the research, healthcare organizations plan to prioritize AI/ML because of due diligence exercises that evaluate consumer feedback, proven ROI and guidance from third parties.

AI/ML investments are already paying off. Of the healthcare respondents surveyed by KPMG, 62 percent have seen improved performance because of AI and automation, and benefits include enhanced consumer engagement and employee satisfaction levels. “AI unlocks value in the way that care is delivered — whether that is through increased inclusivity, translating in real time or through improved tonal accuracy,” says Rawstron. “Tasks that used to take 10 minutes now take one or two. So when it is appropriately deployed it also creates big productivity improvements for a critically scarce workforce.” 

Much of this success can be attributed to data management. “Data maturity helps secure organizational support for investments needed to realize the value of emerging technologies at the scale required to offset the extraordinary workforce shortages,” Rawstron explains.

Post-pandemic, the sector has recognized that it needs to invest in data for emergency planning and response, as well as for population health interventions and new intelligent data platforms to unlock value from complex, fast-moving data streams (e.g., human, environmental and animal health data streams).

As a result, healthcare now ranks highly on data accessibility to support AI systems. Almost half (47 percent) of healthcare executives in the new research say that data accessibility with well-defined processes is fundamental to their business strategy. Only 37 percent of respondents across all industries surveyed are at this maturity stage. And 17 percent of the healthcare executives say they often generate returns from data-accessibility practices.

Cyber security is vital to safeguarding consumer trust

More than in any other sector, healthcare organizations are responsible for storing highly sensitive personal information. This explains why 59 percent of healthcare executives in the KPMG research (7 percentage points more than the average across all industries surveyed) say that consumer expectations of stronger data privacy and cyber security are the most significant direction-setting factors on digital transformation projects.

As healthcare organizations embrace technology as a positive influence on patient outcomes, they will have to put safeguards in place. The mounting cyber threat that can come from cloud, AI, remote working, transient workforces, alternate medical approaches and connected devices calls for a dedicated focus on cyber capabilities.

Generative AI, for example, may have captured the world’s imagination, but new opportunities bring unfamiliar risks. The technology has increased threat vectors and prompted healthcare provider organizations to review their cyber security strategies. Medical registrars, for instance, now commonly use Generative AI to write discharge summaries on their tablets outside of secure networks, exacerbating the risk of attack.

Security gaps also open up when agency staff step in to support an overstretched workforce. To mitigate this and preserve consumer trust, the KPMG research shows that the sector is leaning on cyber security to strengthen tech development plans and ensure patient welfare. Half of the healthcare executives (5 percentage points more than the executives overall) say their tech function will primarily focus on cyber threat detection and management as an innovation goal over the next two years.

Because AI allows organizations to tackle these risks head on, experts such as Rawstron predict a promising future for the technology in healthcare. “There are few technologies that have had the sort of impact that OpenAI has had in recent years,” he says. “It’s only just beginning — but it’ll be transformative.”

Key takeaways

• Around the world, fast-tracking employee productivity is a common trigger for digital transformation projects in healthcare organizations. Healthcare’s main currency is time, and AI and ML are seen as vital ways to offer relief to healthcare professionals and overcome the sector’s productivity challenges. Better digital literacy for healthcare workers and communities will help organizations to contend with employee resistance to change. It will also help them to manage the risk of health equity gaps being exacerbated by the diffusion of digital technologies.
• As the industry embraces technology with a focus on improving patient outcomes and experiences, it needs to focus on cyber capabilities in order to respond to mounting cyber threats that come from cloud, AI, remote working, transient workforces, alternate medical approaches and connected devices.
• Health and care systems around the world are relying on digital transformation to address the onslaught of issues they face. These complex challenges require robust and thoughtful approaches to realize desired value for patients, consumers, providers, staff and health system partners. Digital transformation in healthcare needs to be supported by strong alliances and collaborations across networks and systems: technology is no longer the only answer. Successful transformations require digital leadership, good governance, execution power and a strong focus on adoption.

How KPMG can help

KPMG member firms have deep expertise in business technology. Our award-winning 4,5,6,7   transformation, innovation, and profound industry expertise positions KPMG professionals to address market challenges and provide in-depth industry perspectives. We use technology in ways that increase competitive advantage for healthcare organizations such as leveraging the KPMG Connected Enterprise for Health framework , deploying digital health solutions  to address concrete issues and employing our strong network of alliances with some of the world’s leading technology, data and services companies. KPMG professionals have the ability to meet organizations where they are at in their transformation journey, whether that is helping them to successfully adopt appropriate solutions, increase innovation and/or embark on broader digital transformation. From increasing efficiency and streamlining care delivery, automating and augmenting workforces and helping to instill foundational systems for insights and processes, KPMG firms can help to address critical healthcare organization needs.

Get in touch to learn more about how KPMG can support transformation in your organization.

Related content

Discover how leaders are securing value by navigating uncertainty with confidence.

A blueprint for consumer-centric and digitally enabled healthcare transformation

A modern era of care that is agile, digitally enabled and consumer-centric

Igniting transformational change in care delivery

1 KPMG International. (2021), Healthcare CEO Future Pulse https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2021/07/healthcare-ceo-outlook-report.pdf  (PDF 1.11MB)

3 Partnership for Healthcare System Sustainability and Resilience (2023), Key findings from country reports: Building sustainable and resilient health systems

4 2023 and 2021 ServiceNow Worldwide Industry Solutions: Healthcare Partner of the Year award

5 2022 Appian Partner Award: Transformation award (outstanding results in global strategic program delivery)

6 2022 ServiceNow: Global Transformation Partner of the Year

7 2021 Workday: Partner Industry Innovation Award, Healthcare (Labor Distribution Enabled by Workday Prism Analytics solution)

Throughout this (film/document/webpage), “we”, “KPMG”, “us” and “our” refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.

• Arms and military expenditure
• Dual–use and arms trade control
• Emerging military and security technologies
• EU Non-Proliferation and Disarmament Consortium
• Weapons of mass destruction
• Middle East and North Africa
• Peace operations and conflict management
• Climate change and risk
• Environment of Peace
• Food, peace and security
• Governance and society
• Peacebuilding and resilience
• Publications
• Yearbook 2023
• Yearbook 2022
• Yearbook archive
• Yearbook summaries
• Yearbook translations
• Past News and Events
• Upcoming News and Events
• SIPRI Lecture
• Stockholm Forum on Peace and Development
• Stockholm Security Conference
• Press Releases
• SIPRI Experts
• SIPRI Films
• WritePeace Blog
• Expert Comments
• Backgrounders
• Governing Board
• Staff directory
• Support SIPRI

Intangible Transfers of Technology and Software: Challenges for the Missile Technology Control Regime

https://doi.org/10.55163/HLWP1722  

Controlling intangible transfers of technology (ITT) and software—including in the context of the Missile Technology Control Regime (MTCR)—is a known challenge, but the growth of the NewSpace industry and advances in emerging technologies make it a particularly timely topic. This report explores a series of cases of export control violations and cases where the risk of a possible violation was identified involving missile-related ITT or software. The report also develops a typology of violations and identifies associated compliance challenges.

This report explores some of the key challenges that emerge from the case studies, including the increasing reliance on ITT and software, which have become easier and more common, by companies in the aerospace and NewSpace sectors and their global supply chains.

The report concludes by offering recommendations for the MTCR to strengthen its efforts to address the proliferation risks posed by ITT and software.

1. Introduction

2. Controlling intangible transfers of missile-related technology and software through the MTCR

3. Case studies of ITT and software control violations and risks 

4. Key challenges posed by intangible transfers of missile-related technology and software

5. Strengthening the MTCR’s efforts to address proliferation risks posed by ITT and software

ABOUT THE AUTHOR(S)/EDITORS

wn1sdwk000IN4

Steel energy transition outlook 2024

Get this report

You can pay by card or invoice

Submit your details to receive further information about this report.

• Submit Category

For details on how your data is used and stored, see our  Privacy Notice .

- FAQs about online orders - Find out more about subscriptions

Report summary

Leading steelmakers in Europe first came together in 2016 to develop a technology for fossil-free iron and steelmaking. Fast forward to April 2024, and the world has seen 200+ low-carbon steel projects being announced across various shades of ‘green’ in the past few years. Key questions emerge: • How will the steel industry trim its carbon footprint? • With the Asia Pacific steel industry so young, can 2030 be the turning point as 60% of global blast furnace capacity hits a mid-life crisis? • Direct reduced iron (DRI) is emerging as the main protagonist. What is the hype on Electric Smelting Furnace? • H-DRI projects now rule our decarbonisation tracker, and some offtake agreements are in place. What will it cost to make hydrogen-based steel and who will foot the bill? • What will be the opportunities for energy transition for steel? • What is the status of policy support as green steel comes to life?

Table of contents

• No table of contents specified

Tables and charts

No table or charts specified

What's included

This report contains:

Steel Energy Transition Outlook 2024.pdf

PDF 2.36 MB

Global Steel Outlook Under AET Scenarios 2024.xlsx

XLSX 158.62 KB

Other reports you may be interested in

The energy transition outlook for lithium.

The outlook for the lithium market is strongly linked to energy transition and to electric vehicles in particular

The energy transition outlook for cobalt

Net Zero by 2050 will require magnet Co demand to more than double from today and battery-grade cobalt use to rise 15% higher than base case

Global bulk steel alloys strategic planning outlook - Q1 2024

The latest bulk steel alloys strategic planning outlook forecasts global supply, demand and prices for chromium, manganese and silicon.

Browse reports by Industry Sector

Power and renewables

Metals markets

Metals costs

Macroeconomics, risk and global trends

Upstream oil and gas

Oil and gas markets

Downstream oil refining