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Electric vehicles enter exponential growth driven by lower running costs, lower battery prices, nice user experience and environmental benefits

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.


EV adoption is still extremely low, with market penetration remaining around 1% or less in most developed markets worldwide. After doubling between 2017 and 2018, in 2019, the number of units sold increased only to 2.3 million, from 2.1 million, for year-on-year growth of just 9 percent.


EVs’ share of global sales was relatively flat in 2020 at around 3%, but they continue rising and will hit 7% in 2023 with sales of around 5.4 million. Some automakers delay EV launches in North America, but the timelines in Europe and China remain largely unchanged. Delay in launches by leading manufacturers is seen in India also.


Global Market

In key markets, the transition from ICEs to electric powertrains reached a tipping point in 2019, fueled by more stringent emissions regulations, access restrictions in cities, advancing EV technologies that lengthen driving ranges and cut prices, and the expansion of the charging network. The same forces will further expand uptake over the coming years, but their evolution will vary by market.


China, the long-standing number one electric car market, was pushed to number two position by Europe with a 137% year-on-year increase in electric car sales to 1.4 million in 2020. Sales in China grew only moderately by 12% to 1.34 million.


Overall, Europe has seen the strongest growth in EVs. Outside of China and Norway, where car buyers enjoy generous incentives, the market is still driven by early adopters rather than the mainstream. EV sales for the 2019 have been sluggish. While some states such as California have seen EVs capture 8% of new sales (all-electric and plug-in hybrid), the rest of the country has not yet caught on.


EV adoption is set to rise quickly again in China this year with around 1.7 million passenger EV sales (1.8 million including commercial EVs), up from 1.2 million in 2020. There will still be an oversupply of New Energy Vehicle credits, but the fuel economy targets are getting tighter and city regulations will continue to be major drivers of adoption.


The North American EV sales should be a little over 500,000. This is far behind Europe and China, but 2021 marks a dramatic change on the policy front in the US. The Biden administration’s appointments and statements so far show strong ambitions on EVs and charging infrastructure.


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.



Global investment in electric transport surged 28% in 2020 year on year to USD139 billion. The world invested more than USD500 billion in 2020 in energy transition sectors such as renewable energy, electric vehicles and charging, and electric heat, according to the figures from BNEF.


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.



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. Most are midsize or large vehicles. Given the estimated production levels, German manufacturers, with an expected volume of 856,000 EVs, could overtake Chinese players in 2020. That would boost Germany’s global production share from 18 percent in 2019 to 27 percent in 2020. Ford showed off the upcoming electric Mustang Mach-E (a crossover SUV) and an electric F-150 pick-up. Consumer choice and competitive pricing will be key to attracting new buyers to the market.


New emissions regulations in Europe and China, which will come into force between 2020 and 2021, partly explain why EV-model launches have increased significantly. 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.


Among EV manufacturers, Tesla continued as market leader in 2019, with 370,000 units sold globally, for a market share of about 16 percent, up from 12 percent in 2018. The launch of the Model 3 outside of the United States was the main reason for this surge. With 300,000 units sold worldwide, the Model 3 outpaced sales of the BJEV EU-series threefold and sales of Nissan Leaf fourfold.


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.



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.


Competition among electric vehicles and plug-in hybrids will be intense, which will further drive down prices. General Motors has announced it will begin selling two new all-electric vehicles in the next 18 months, and will have at least 20 new zero-emission electric vehicles in its lineup by 2023.  Volkswagen Group, which last year was the world’s top automaker, has said it will offer 80 new electric vehicles by 2025, and will electrify its entire fleet by 2030.


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.



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