Bloomberg June 25, 2021 11:00 PM “Where We Are on the Road to Electric Vehicles” by Elisabeth Behrmann
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Electric Vehicle (EV) investment of $230 billion, government incentives and pledges by companies like GM “to stop selling gas-burning cars by 2035" signals a commitment to EVs globally. Currently Q1 2021, 15% of new car sales in Europe are EV and 8% in China but the usual resistance to change will be an impediment to EV sales and to meeting climate change goals.
“What’s ahead for drivers?”
First as battery costs fall EV price parity to internal combustion vehicles is estimated for 2022 in American and Europe. Second, improvements in battery technology will reduce the range anxiety of earlier EV models. Third, “a global rollout of public fast-charging points should dissipate concerns about being stuck for hours.”
“Why are Europe and China ahead?”
In Europe a combination of potential fines to automakers not meeting CO2 emission goals, incentives to customers to buy EVs and to avoid extra fees like road taxes and congestion fees are driving a more rapid conversion. In China, automakers are keen to get nearly $2800 in subsidies for each EV and the government has already added nearly 1.7 million charging stations “compared to 72,000 at the end of 2019” in America. Projections show Europe, followed by China and then America with estimate 2040 EV share of total sales at ~37%, ~30% and ~23% respectively.
“What’s happening in the U.S.?
Biden rejoined “the Paris Agreement on climate change..reversed Trump’s efforts to weaken gas mileage” efficiency goals and has “proposed spending $174 billion to support EV production and purchases, plus charging stations.’
“What convinced carmakers?”
Simply put, fear of regulators and investors has automakers falling into line. Regulators “have grown more serious about meeting Paris Agreement pledges on carbon reductions. With Tesla’s success other start-ups are emerging threatening market share of the conventional automakers.
“Who’s joining the field?”
China’s Nio (NIO), not a newcomer but their market share “now is greater than that of Ford. Those jumping into EVs one way or the other are Fisker (FSR), Apple (APPL), Alphabet (GOOGL), Amazon (AMZN) by way of supporting Rivian, Baidu (BIDU) [China] and Huawei [China] with the latter two reportedly investing $7.7 B over five years and $1 B this year respectively.
“What are the hurdles to EV growth?”
Potential headwinds include building out charging stations, a potential for governments to roll-back hefty incentives, and a worry is the potential for “shortages of critical battery minerals.” Customer resistance to change lurks as well and is one rationale for the heavy advertising by the likes of Ford and GM to promote the EV versions of the F-150, Mustang Mach E and Chevrolet Silverado and Hummer” respectively.
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