Coronavirus hits pause button in adoption of Electric Vehicles


The International Energy Agency (IEA) has published an update on the market for electric vehicles (EVs), ‘The Global EV Outlook 2020’. According to the IEA, sales of electric cars (that is, those cars powered either completely by battery or by plug-in hybrid) surpassed 2.1 million globally in 2019, increasing the stock to 7.2 million electric cars worldwide.

China is by far the largest market for both types of EVs, accounting for 2.58 million battery-powered cars and 0.77 million plug-in hybrids. However, the growth in sales of EVs declined – the category experienced a 6% expansion year-on-year down from annual growth levels of 30% plus seen since 2016.

The decline in growth was due to three factors:

  1. Overall passenger vehicle sales were depressed although EVs as a proportion of the total increased to 2.6%.
  2. Purchase subsidies have started to be withdrawn by governments which have replaced them with taxes and regulation of carbon-emitting alternatives.
  3. Consumers are expecting rapid improvements in technologies and performance (battery life and cost, for example) and hence putting off purchases.

The IEA believes that the Coronavirus crisis will have a big impact on sales of EVs in 2020. In its report it stated, ‘Based on car sales data during January to April 2020, our current estimate is that the passenger car market will contract by 15% over the year relative to 2019, while electric sales for passenger and commercial light-duty vehicles will remain broadly at 2019 levels.’ This will mean that EVs will make up 3% of the market by the end of the year.

Whilst growth may be checked, charging infrastructure, critical for the long term adoption of EVs continues to develop with the number of publicly accessible points increasing by 60% in 2019. There are now 7.3 million charging points around the world, 6.5 million of them at private addresses. Of the publicly accessible fast chargers, 82% are located in China.

Regarding electric trucks, sales rose to 6,000 units in 2019 and high power chargers are being developed and standardized globally, according to the agency. Opportunities exist for the adoption of the technology in ports, driven by clean air regulations, as well as the development of possible competing technologies such as catenary line models which could be used for long-distance trucking in some parts of the world.

As with all sectors of industry, the Coronavirus crisis will, at least in the short term, influence the adoption rate of EVs and possibly even decide whether government zero-emission targets will be met. It is likely that stimulus measures will be put in place throughout the world to encourage consumers to buy new cars as a way of supporting the automotive sector. Depending on how and where this support is targeted, investment in alternative energy technologies could benefit. However, if vehicle manufacturers find themselves in a struggle for survival, investment in alternative power could be side-lined. Tech start-ups, which have played such an important role in this sector could also find themselves starved of capital adding to delays in development.

If the IEA is right and the pause button has been hit in the adoption of EVs, this can only have significant implications for governments seeking to transition economies towards zero emissions and their targets to eliminate petrol or diesel alternatives. The length of this hiatus will rely heavily on how quickly the global economy recovers; consumer attitudes towards EVs; their lifetime costs as well as the amount of money which governments have available to invest in the sector.

Source: Transport Intelligence, 16 June, 2020

Author: John Manners-Bell

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