While technology innovation drives the global electrification of road transport, with battery prices plummeting and electric vehicle sales seeing double-digit growth, policy still plays a crucial part in steering the world towards carbon-neutral mobility.
“Policy-makers have an important role to play in driving the automotive market toward zero-emissions options, improving fuel efficiency, getting the power system ready for electric vehicles, and in reducing overall car dependency,” writes [pdf] BloombergNEF (BNEF) in its Electric Vehicle Outlook for 2023. “Eliminating emissions from road transport will require all hands on deck, including automakers, battery manufacturers, charging companies, grid operators, miners, large fleet operators, and consumers.”
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Bloomberg News pulls four main takeaways from the report:
• EV sales are up across the board, in every major market. In India and Southeast Asia, sales increased more than 200% in 2022. Those are also the only two markets where internal combustion engine (ICE) sales also increased year over year. EV sales rose 100% in Japan, nearly 100% in China, 90% in Australia, 50% in the United States, and 17% in Europe. This was “against the backdrop of an essentially flat global auto market,” where overall car sales grew by only 2%.
• EV sales have spiked, but last year EVs still accounted for only 1.7% of passenger vehicle kilometres driven. Meanwhile, the energy sector is way ahead, with 40% of global power generation already at zero-emissions thanks to decades of using hydropower, nuclear power, and renewables like wind and solar.
“That’s a sign that EVs have a lot of catching up to do,” writes Bloomberg. But it is possible, and with the power sector set to be more than 80% zero-carbon by 2050, “EVs will account for an increasing percentage of global driving while their energy input becomes cleaner every year.”
• “Long range is not where you might expect it,” Bloomberg notes. “The number of long-range EV trims (pre-packaged sets of features for a particular car model) has risen in every market, but one market dominates: China, which had only six long-range EV trims in 2018 and now has 141.”
Europe started with six long-range trims, as well, and now has 61. North America has gone from eight in 2018 to 56 today. As premium vehicles, these long-range EVs cost 30% more than their internal combustion counterparts. But “BNEF’s advanced transport team expects automakers to roll out a number of lower-range, and lower-priced, EVs in the future as their electric sales commitments become more pressing.”
• Hydrogen-powered fuel cell vehicles have been available for years, but their market remains small and regional. “Fuel cell vehicles play a role in some hard-to-electrify, long-haul trucking applications, but play no meaningful role in the passenger vehicle market,” the report states. “Synthetic fuels do not arrive at scale in time or at a price point needed to have a material impact on road transport.”
The report signals to policy-makers where they must focus their energies—and spend their money—to reach net-zero road transport emissions by 2050. “Heavy trucks in particular are far behind the net-zero trajectory and should be a priority focus,” the EVO states. “Grid investments, grid connections, and permitting processes also need to be streamlined to support the large number of charging points needed for the transition.”
Each link in the battery supply chain needs investment, as well, with at least US$188 billion required for battery cell and component plants by the end of the decade in BNEF’s, Economic Transition Scenario, which assumes no new policies are implemented over those years.
On the other hand, overall oil demand from road transport is very near its peak, which is expected in 2027. “Electric vehicles of all types are already displacing 1.5 million barrels per day of oil demand,” while “global electricity demand from all types of EVs increases five times” in Bloomberg’s ambitious Economic Transition Scenario.
Charging infrastructure could be a barrier to electrifying the last 10 to 20% of the market in many countries, says BNEF. But there are also important opportunities being presented, like the potential to electrify municipal fleets like buses.
Overall, the transition represents a huge economic opportunity; in the Economic Transition Scenario, the cumulative value of EV sales could hit US$8.8 trillion by 2030 and $57 trillion by 2050. That value jumps to over $88 trillion by 2050 in a Net-Zero Scenario consistent with a global zero-emissions-capable fleet by mid-century.
“EVs and batteries are now a central part of many countries’ industrial policy and competition to attract investment is likely to increase in the coming years,” the EVO states.
Another recent study evaluated current motivators for EV adoption and found that technology changes are a more significant factor than consumer preferences for EVs.
“Consumers haven’t changed. It’s technology that’s driving EV adoption,” study co-author and Carnegie Mellon University engineering professor Jeremy Michalek told Inside Climate News.
The findings suggest that as technological changes make EVs more appealing, by shrinking the price gap with internal combustion vehicles or extending EV driving ranges, EV sales will continue to rise. And while some factors could still hamper the transition—like inadequate charging infrastructure, or too few options for consumers—the findings suggest EV sales growth will continue as the vehicles keep getting better.
“We’re heading to a market in which EVs will be the leading options largely because they have better features,” writes Dan Gearino for Inside Climate. “In that market, we may stop thinking of them as EVs.”
“As others have said before me, they’ll just be cars.”
