#656 – Electric VehiclesPosted on
Electric vehicles have been on our radar here at Agracel for some time. We are particularly interested in the potential changes that are, and will be, taking place in auto manufacturing. Read on for more information.
As you may have heard, Toyota Motor Corp and Mazda Motor Corp announced they would join forces to develop electric vehicle technologies and build a $1.6 billion assembly plant in the U.S. The U.S. plant will have a capacity to produce 300,000 cars a year and provide jobs for about 4,000 people. It will begin operations in 2021.
Research, development and deployment (RD&D) and mass production prospects are leading to rapid battery cost declines and increases in energy density. Signs of continuous improvements from technologies currently being researched confirm that this trend will continue, narrowing the cost competitiveness gap between EVs and internal combustion engines (ICEs).
The global electric car stock surpassed 2 million vehicles in 2016 after crossing the 1 million threshold in 2015. Until 2015, the United States accounted for the largest portion of the global electric car stock. In 2016, China became the country with the largest electric car stock, with about a third of the global total. With more than 200 million electric two-wheelers, 3 3 to 4 million low-speed electric vehicles (LSEVs) and more than 300 thousand electric buses, China is also by far the global leader in the electrification of other transport modes.
Between 2025 and 2030, the Bloomberg New Energy Finance predicts, plug-in vehicles will become cost competitive with traditional petroleum-powered cars, even without subsidies and even before taking fuel savings into account. Once that happens, mass adoption should quickly follow.
Driven by the falling cost of batteries and the growing number of automakers producing a wider variety of electric cars, Bloomberg NEF expects that electric cars will account for 54 percent of all car sales globally by 2040. That’s a huge uptick from its forecast last year of electric vehicles accounting for 35 percent of all sales.
Policy support will remain indispensable at least in the medium term for lowering barriers to electric car adoption. As electric car sales keep growing, governments will need to reconsider their policy tools. Even if differentiated taxes based on environmental performance, fuel economy regulations and local measures (such as differentiated access to urban areas) are likely to remain important, the need for vehicle purchase incentives will diminish, and subsidies for electric cars will not be economically sustainable with large sales volumes. Revenues collected from conventional fuel taxes will also shrink, requiring a transition in the way revenues aiming to develop the road transport infrastructure are collected.
EV charging could also have a sizeable impact on the loads applied to the grid at certain times and locations, with consequences for adequacy and quality of power supply, the risk of cost increases for consumers and negative feedback on transport electrification prospects. Energy use from electric vehicles is expected to rise 300 times above current demand, putting more strain on power generation.
Exxon Mobil, which is studying the threat that electric cars could pose to its business model, still expects that plug-in vehicle sales will grow slowly, to just 10 percent of new sales in the United States by 2040, with little impact on global oil use. The federal Energy Information Administration projects a similarly sluggish uptick.