The automotive industry is undergoing a transformative shift as electric vehicles (EVs) ride the wave of exponential growth. With lower costs, significant technological advancements, and an increasing focus on environmental sustainability, electric vehicles are revolutionizing the way we think about transportation. In this article, we will explore the factors driving the remarkable surge in EV adoption and the impact it has on shaping our future.
Transport is responsible for around 23% of energy-related carbon dioxide emissions globally. This is expected to double by 2050. Motor vehicles also put a burden on society, especially in urban environments where they are chiefly responsible for noise and air pollution. Electric vehicles (EVs) have been considered as critical technology for addressing the concerns about energy cost, energy dependence and environmental damage.
Electric cars bring nice driving experience in form of instant acceleration, quieter and smoother driving experience, cheaper to run as well as cheaper to maintain, and also has environmental benefits. In the past, lack of appropriate technologies was barrier for EVs to become mainstream particularly the technologies that could help cut costs and significantly increase battery life. Changing to a vehicle needed several hours before it can go anywhere and was only able to travel 200 miles before it needs to be plugged in again, a challenge. Today, EVs represent less than half a percentage of the global vehicle fleet but they are poised for large growth.
EVs are becoming increasingly economical without subsidies as well as due to their extremely low operating costs and declining sticker price. EVs could become less expensive than their combustion-engine equivalents in just three to five years because the cost of lithium-ion batteries is falling so rapidly. That could cause a tipping point, accelerated by the fact that traditional gasoline cars cannot meet the tightening environmental regulations being adopted worldwide.
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- Lower Costs: One of the primary drivers behind the exponential growth of electric vehicles is the significant reduction in ownership costs. While the upfront price of EVs used to be a deterrent for many consumers, technological advancements and economies of scale have brought down costs. In addition, the lower running costs of EVs, including reduced fuel expenses and maintenance requirements, make them a financially appealing choice. As a result, more people are realizing that the long-term savings associated with owning an electric vehicle outweigh the initial investment.
- Technological Advancements: Electric vehicles offer an enhanced user experience, thanks to impressive technological advancements. The development of more efficient batteries has extended the driving range of EVs, alleviating range anxiety. Moreover, charging infrastructure has expanded significantly, with rapid charging stations becoming more accessible and convenient. Additionally, advancements in connectivity, autonomous driving features, and infotainment systems have elevated the overall driving experience. Electric vehicles are not just eco-friendly; they also provide a seamless and futuristic driving experience.
- Environmental Concerns: The growing awareness and concern for the environment have played a crucial role in the exponential growth of electric vehicles. As we strive to combat climate change and reduce our carbon footprint, EVs present a cleaner and more sustainable alternative to traditional internal combustion engines. By eliminating tailpipe emissions, electric vehicles contribute to improved air quality and a reduction in greenhouse gas emissions. Governments and organizations worldwide are recognizing the environmental benefits of EVs, incentivizing their adoption through policies, subsidies, and charging infrastructure development.
- Infrastructure Development: The expansion of charging infrastructure is a vital factor in the surge of electric vehicle adoption. Governments and private entities are investing heavily in the establishment of charging networks, making it easier for EV owners to charge their vehicles on the go. The increased accessibility and reliability of charging stations have addressed the concern of range anxiety and instilled confidence in potential buyers. As charging infrastructure continues to grow, it further accelerates the transition towards electric mobility.
EV sales rose by 55% in 2022, reaching a total of 10.5 million, according to the EV Volumes sales database. These figures include both battery electric vehicles (BEVs) and plug-in hybrids (PHEVs). There were 7.8 million electric vehicles sold worldwide in 2022, a 68% increase from 2021, the Wall Street Journal reported, citing preliminary research from the automotive research groups LMC Automotive and EV-Volumes.com. The uptick helped electric vehicles achieve a roughly 10% global market share in the automotive industry for the first time, WSJ reported.The same forces will further expand uptake over the coming years, but their evolution will vary by market.
While 10% is only a modest share of the total market, the industry is growing faster than some had predicted. In 2021, for instance, the International Energy Agency projected that it would take until 2030 for the EV industry to reach between 7% and 12% of global auto sales.
Electric car markets are seeing exponential growth as sales exceeded 10 million in 2022. A total of 14% of all new cars sold were electric in 2022, up from around 9% in 2021 and less than 5% in 2020. Three markets dominated global sales. China was the frontrunner once again, accounting for around 60% of global electric car sales. More than half of the electric cars on roads worldwide are now in China and the country has already exceeded its 2025 target for new energy vehicle sales. In Europe, the second largest market, electric car sales increased by over 15% in 2022, meaning that more than one in every five cars sold was electric. Electric car sales in the United States – the third largest market – increased 55% in 2022, reaching a sales share of 8%.
Sales of new EVs in China increased by 82% in 2022 compared to the year before. The country accounted for 59% of global EV sales last year, cementing its position as the world’s largest electric vehicles market. China is also the world’s biggest EV producer, with 64% of global volume. The Chinese government’s official target is for electric cars to reach a market share of 20% for the full year in 2025, and their performance in 2021 suggests they are well on track to do so.
Sales in the world’s second-largest EV market, Europe, increased by just 15% in 2022, according to the data. Persistent component shortages exacerbated by the war in Ukraine contributed to the slowdown in sales which had been strong in the previous two years. EV sales in the US and Canada fared better, increasing by 48% year on year.
In Europe, electric car sales increased by nearly 70% in 2021 to 2.3 million, about half of which were plug-in hybrids. While annual growth was slower than in 2020, when sales more than doubled, this took place against the backdrop of an overall European automotive market that had not recovered from the pandemic. Total car sales in 2021 were 25% lower than in 2019. The surge in EV sales in Europe last year was partially driven by new CO2 emissions standards.
EV adoption is also growing rapidly in the global South, the data shows.
The fastest growing markets last year were Indonesia, India and New Zealand. India experienced sales growth of 223% and New Zealand recorded a 151% increase in sales compared to 2021.
The United States made an impressive return to the electric car market in 2021 as sales more than doubled to surpass half a million. The overall US car market recovered as well, but electric cars doubled their share to 4.5%. The US electric car market is still mostly dominated by Tesla, which accounts for more than half of all electric units sold. This is far behind Europe and China, but 2021 marks a dramatic change on the policy front in the US.
The rapid rise in EV adoption has also been confirmed by the International Energy Agency (IEA). It says that one in every seven passenger cars bought worldwide was an EV in 2022. This compares to one in every 70 just five years earlier.
EVs could make up a third of the road transport market by 2035, more than half the market by 2040, and more than two thirds of market share by 2050. Electric cars are expected to penetrate the rest of the market quickly with prices becoming par with conventional cars by 2025. International Energy Agency, predicts at least 40m will be driving around by 2040.
Industry experts believe that price factor coupled with infrastructure limitation will not be able to give desired demand boost to EVs in India and the country will see about 8% new EV car sales by 2030. Cumulative investments, as per the report, in all types of charging hardware and installations, will reach USD500 billion globally by 2040. China will account for 50% of global cumulative investment in 2025 but by 2040 it will expand almost evenly between China, Europe, the US, and the rest of the world.
BloombergNEF recently released its updated Zero-Emission Vehicles Factbook, which estimates cumulative investment in EV charging hardware and installation will reach $62 billion at the end of this year, with $28.6 billion having been invested just in 2022, up 228% from the year before. Of the total investment in 2022, 61% is attributed to more than 600,000 public chargers built in China.
The biggest deals included USD2.8 billion raised by Chinese battery maker Contemporary Amperex Technology (CATL), USD846 million by the US fuel cell company Plug Power, and USD777 million by the Chinese PV manufacturer JA Solar Technology.
Cumulative investments, as per the report, in all types of charging hardware and installations will reach USD500 billion globally by 2040. China will account for 50% of global cumulative investment in 2025 but by 2040 it will expand almost evenly between China, Europe, the US and the rest of the world.
REE Automotive Ltd. (NASDAQ: REE), an innovator in e-mobility announced that its REEcorner™ technology was awarded £12.5 million GBP funding from the UK government as part of a £41.2 million GBP investment, coordinated through the Advanced Propulsion Centre (APC). The investment is in line with the UK government’s ambition to accelerate the shift to zero-emission vehicles and de-carbonize the UK’s transport networks. The award funding follows an intensive vetting and selection process from which REE’s project and three other transformational projects were selected amongst dozens of companies. Together, the 4 projects could save nearly 32m tons of carbon emissions, which is equivalent to the lifetime tailpipe emissions of 1.3m cars.
The UK funds will allow REE to facilitate commercial production of its breakthrough REEcorner™ technology and ultra-modular electric vehicle platforms, including engineering design, validation, verification and testing and product homologation. REEcorner™ technology packs critical vehicle components (e.g. steering, braking, suspension, powertrain and control) into a single compact module located between the chassis and the wheel, thus enabling fully-flat EV platforms. REE’s ultra-modular EV platforms are designed to offer enhanced payload capacity by providing more room for carrying passengers, cargo and batteries and enhanced body design flexibility and autonomous capability.
Competition among electric vehicles (EVs) and plug-in hybrids (PHEVs) has increased in recent years as more manufacturers have entered the market and the demand for these types of vehicles has grown. There are now several major players in the EV market, including Tesla, Chevrolet, Nissan, BMW, and Ford, among others. Each of these manufacturers offers a range of EVs and PHEVs with varying prices, ranges, and features.
In addition, many new start-up companies have also begun to launch EVs, which can make the market even more competitive. As a result, manufacturers are constantly trying to improve their vehicles’ performance, range, and price to appeal to a wider range of customers and stay ahead of the competition.
Automakers launched 143 new electric vehicles—105 BEVs and 38 plug-in hybrid electric vehicles (PHEVs)—in 2019. They plan to introduce around 450 additional models by 2022.
The electric vehicle (EV) industry is rapidly evolving, with new electric vehicles being introduced regularly by various manufacturers. Some of the latest electric vehicles include:
- Tesla Model S Plaid: This is Tesla’s flagship electric vehicle, which boasts a range of over 390 miles on a single charge and can accelerate from 0 to 60 mph in under 2 seconds.
- Ford Mustang Mach-E: This is Ford’s first electric SUV, which has a range of up to 300 miles on a single charge and can accelerate from 0 to 60 mph in around 3.5 seconds.
- Lucid Air: Lucid Motors’ first electric vehicle, the Air, has a range of up to 406 miles on a single charge and can accelerate from 0 to 60 mph in under 2.5 seconds.
- Rivian R1T: This is an all-electric pickup truck with a range of over 400 miles on a single charge and can accelerate from 0 to 60 mph in under 3 seconds.
- Volkswagen ID.4: Volkswagen’s first electric SUV, which has a range of up to 250 miles on a single charge and can accelerate from 0 to 60 mph in around 8 seconds.
These are just a few examples of the latest electric vehicles available on the market, and as the EV industry continues to grow, we can expect to see more and more new electric vehicles being introduced in the coming years.
With announced launches of new EV models spiking, both automakers and suppliers are increasing their global footprints in target markets by localizing the production of vehicles and components. For example, Tesla began construction of its Shanghai plant in January 2019 and delivered the first locally produced EV that December. The company plans to build its next production plant in Germany by 2021. Similarly, Volkswagen and Toyota have announced plans to set up EV plants in China.
These new regulations are expected to create a strong demand for electric vehicles and plug-in hybrids, as they will be the only vehicles that can meet the new emissions standards. These regulations pose major challenges for automakers since they will face potential penalties of up to several billion euros unless they increase their EV penetration rates significantly. This is likely to lead to increased competition among automakers as they try to gain a foothold in this growing market.
In a similar development, battery-cell manufacturers are increasing their production capacities in target markets. The total lithium-ion–battery market for EV passenger cars grew by 17 percent, to 117 gigawatt-hours in 2019, enough to power 2.4 million standard BEVs. Most of the new capacity will be established in Central Europe, with companies preparing to meet demand throughout the region. Company announcements suggest that the global market should expand to about 1,000 gigawatt-hours by 2025. The Chinese battery maker CATL had the largest market share in 2019, at 28 percent, while its absolute capacity grew by 39 percent. CATL has recently continued its global expansion, signing new contracts with several international OEMs and setting up a factory in Germany.
The BNEF report suggests that by 2023, lithium nickel will start to enter the EV market. Lithium nickel battery provides higher energy densities and has longer cycle life than its equivalent counterparts lithium nickel manganese cobalt oxide (NMC) and lithium nickel cobalt aluminum oxide battery (NCA). “By 2024, battery pack prices will go below USD100/kWh on a volume-weighted average basis, driven in part by the introduction of new cell chemistries and manufacturing equipment and techniques,” the BNEF report says.
Many challenges still remain. One of the biggest issues facing electric cars is range. While EVs might be ideal for inner city commuting or short distances, anything over 200 miles and even an advanced car like the forthcoming Tesla Model 3 is going to need a recharge. This of course takes time, so it makes long distances a challenge for electric vehicles to overcome. While filling at local gas station takes five minutes, electric cars still often need an entire night to recharge at home, and even at a commercial fast charging station, a fill-up can take an hour or more.
Mercedes-Benz similarly promised to make all its cars available with electric drive trains by 2020, while Hyundai Motor Co. promises eight plug-in hybrid models by 2020, plus two all-electric vehicles. The implementation of the Chevy Bolt and the Tesla Model 3 will likely launch the first mass adoption of EVs.
Electric vehicle ambitions spark race for raw materials
The huge growth in Electric vehicles and their batteries shall lead to large demand of materials from lithium to nickel, cobalt and graphite to rare-earths that are used in motors. This is leading to soaring of their prices with cobalt, a greyish metal mostly mined in the Democratic Republic of Congo, up more than 190 per cent over the past 18 months. Countries and vehicle industry are making agreements to ensure their long term supply as they are proposing stricter laws against diesel and petrol engines. Researchers are also developing batteries with new cathodes and anodes and battery chemistries which rely on more abundant materials.
Lithium demand is expected to soar and predicted to lead to supply shortfall. Lithium demand is expected to be four times greater at 779,000 tonnes by 2025, according to Goldman Sachs, but new projects are likely to face hurdles to coming into production.
Cobalt faces the most difficult supply dynamics for car and battery makers. As much as 65 per cent comes from the DRC, one of the world’s poorest countries. Analysts at UBS expect cobalt demand to double by 2020 to around 200,000 tonnes a year, and say new projects are required over the longer term to avoid a deficit. “The sheer volume of new supply needed by the market means there will be no EV industry without DRC cobalt,” says Simon Moores, head of London-based Benchmark Mineral Intelligence, which provides market price assessment for battery materials.
Electric vehicles are not merely a futuristic concept anymore; they are rapidly becoming a reality in our everyday lives. Lower costs, technological advancements, and environmental concerns have paved the way for the exponential growth of EVs. As we accelerate towards the future, electric vehicles offer a sustainable and efficient mode of transportation that aligns with our collective goal of reducing carbon emissions and protecting the environment. With the ongoing developments in battery technology, charging infrastructure, and supportive policies, the electric vehicle revolution shows no signs of slowing down. It’s an exciting time as we witness the transformation of the automotive industry and embark on a cleaner and more sustainable future.
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