Driving the EV (r)evolution forward
What makes and what brakes the mass adoption of electric vehicles
Most people are not aware of the process driving forward the adoption of electric vehicles (EVs). We all know bits and pieces, we hear rumors, we hear about major breakthroughs and important milestones, but we’re not particularly aware of the incentives behind it.
Policy initiatives, rising incomes, and technological advancements are all important factors in this process. However, mass adoption is predicated to a large extent on the availability of economic incentives and major players coming together and working as a team. Contrary to some beliefs, it’s not as easy as one visionary waking up one day, creating an irresistible electric vehicle model and - soon after - having everybody jumping on board. It takes consistency and strong collaboration to drive the EV revolution.
Even so, the revolution is happening as we speak, with EV sales soaring in 2020, despite the pandemic, potentially heralding the beginning of the end of ICE vehicles. A very bold prediction based on the green tidal wave - everything from greater environmental awareness to falling battery prices to government incentives - was made by analyst Dan Ives. He states that EV sales worldwide will top $5 trillion over the next decade. With such an optimistic assessment of the situation, we’re beyond thrilled to contribute as an active part of this powerful revolution and we’re working to turn the prediction into reality. But the bumpiness of this ride still depends on a lot of important factors we’re very much aware of.
A numbers game
According to the numbers, we’re in a good place. The best yet, even. Global EV registrations hit 321,000 in January this year, double the figure of any prior year and the fourth straight month of doubling sales. Europe emerged as a global leader, with EV sales accounting for over 5.1% of total passenger vehicle sales, which implies an almost 7% penetration rate by the end of 2021, or real disruption to global ICE vehicle sales by 2022. But Europe is now being overtaken by China, which is now on track to sell over 2.6 million EVs in 2021, taking back the global sales leadership title for itself.
At the same time, BloombergNEF (BNEF) has painted a picture of how the auto industry will evolve in its latest Long-term Electric Vehicle Outlook report. In the report, it is estimated that EVs will hit 10% of global passenger vehicle sales in 2025, with that number rising to 28% in 2030 and 58% in 2040. According to the study, EVs currently make up 3% of global car sales.
Beyond just new sales, EVs are predicted to represent 31% of all cars on the road in 2040, making up 67% of municipal buses, 47% of two-wheeled vehicles (scooters, mopeds, motorcycles and so on) and 24% of light commercial vehicles. Right now, in 2020, EVs make up 33% of municipal buses, 30% of two-wheeled vehicles and 2% of light commercial vehicles.
Norway - the poster child of the EV revolution
Norway is right now the best example of how the EV revolution can be done, as it has introduced many incentives to make it more attractive to buy zero-emission vehicles, mostly those powered by electricity. So it comes as no surprise when we learn that there are far more EVs on Norwegian roads as a proportion of total vehicles than anywhere else in the world.
Yet how did a tiny Scandinavian country manage to achieve that and become a main driver behind the wheel of the EV revolution? The answer may appear simple, yet not everyone seems to think so: favorable environmental math and economic incentives.
On the one hand the proactive involvement of the government plays a huge role. When it comes to dealing with the still preferred conventional, non-electric vehicles, the authorities found and applied the best solution: higher sales taxes. Taxation as a way to steer transportation policy has a long history in Norway. “Up until the end of the 1960, cars were considered a luxury good that should be taxed heavily. It had nothing to do with environmental concerns.”, said Christina Bu, Secretary General of EV Norway, a non-profit representing electric car owners in Norway, in a 2019 interview.
This looks like an elementary, simple solution that is basically a norm in the capitalist world: if you increase the price of the product, fewer people will purchase it. But while the aggressive taxation concept is broadly accepted in Norway and most of Europe, it may be political suicide in other parts of the world - especially in the United States, where the federal gas tax has remained pretty much the same since 1993 despite visible impacts on the nation’s transportation infrastructure.
But there’s another essential reason for Norway’s success: charging stations. The country has 2.400 charging stations; the ratio works out to about 44 stations for every 100,000 residents in the country of 5.4 million.
The key of equity
Governments around the world can make or break the EV revolution and it’s not hard to see why. As we move forward, it is increasingly clear that the upfront purchase price of Evs risks locking out the very people – those on low incomes – who would benefit the most from the cheap running costs of Evs. This is especially the case in countries where governments’ failure on EV policies can easily lead to an underdeveloped EV market. Therefore, governments need to recognise this problem of EV equity and take steps to make Evs more accessible to more people.
Getting over the hurdle of the upfront cost is crucial, because once you get over that, the decision is obvious and easy – the running costs of Evs are significantly cheaper than petrol or diesel vehicles. That is why it would make sense to provide consumers with information about the total cost of ownership when they buy a car.
While it is still common for people to think of Evs as fancy, expensive vehicles out of reach for most people, that reality is quickly changing. If you have a government with good incentives, your future EV could in fact be second-hand; an electric vehicle is not exclusively equivalent to a Tesla. A valid example of EV accessibility comes from China, where you can buy an EV for as little as 3.544 €. “These ultracheap Evs are reaching a new customer in China, as they likely will in other markets as prices come down,” says BloombergNEF analyst Siyi Mi.
Where do we come in?
Company fleets and fleets with a usership model - that is gaining more and more popularity - seem to be the ones everyone is counting on in the present and near future to push the EV adoption forward. In a userhip model, 3rd party players are required to support and simplify operations such as charging or fleet rebalancing. Ubiq has been ready, active and proactive in that sense, with the technology and products that can smoothen EV provider’s operations and - therefore - drive the EV revolution forward.
Ubiq’s solutions such as Charging as a Service (ChaaS) enable usership driven EV fleets to:
Mindfully build the right level of the operational resource and knowhow, while being able to scale
Efficiently run the fleets with a competitive cost structure
Enable profitability and ensure sustainability
All our efforts as a company go towards having a positive impact on pushing the change for the better forward. And since the transition to zero-emissions vehicles is critical for addressing climate change, we know that we need to get it right.
On the other hand, by introducing EV policy incentives we can accelerate the progressive process where the more EVs are sold, the faster the price will drop and the more used vehicles will be available in later years. Needless to say, everyone around the world would benefit from this type of policy. That’s why it’s essential to adapt, overcome and work together as a unit to address the limits and overcome them one by one. As this happens, EVs will be an even clearer choice for the new buyer, and parity pricing between EVs and petrol and diesel cars should be only a few years away.
And so, cleaner air and quieter streets for all of us to enjoy is closer than you might realise.
Ubiq enables operators to effectively position fleets to serve strategic goals. For more information, contact sales@ubiq.ai