The atmosphere has paid the price for more than a billion cars on the road today. The transport sector is by far the largest oil consumer and a prime contributor to air pollution. The overarching convenience, freedom and flexibility that cars offer overshadows environmental concerns, and no matter how disastrous this is, humans are nowhere close to giving up on cars. According to the World Economic Forum, the number of cars is projected to surpass a staggering 2 billion by 2040.
Growing concerns over global warming & climate change, along with our overreliance on fossil fuels for transport is increasing the urgency of developing vehicles that rely less on fossil fuels and more on alternative (so-called clean) energy sources.
But is it possible to increase the number of cars while reducing emissions?
With a view to addressing the environmental impact, Electric Vehicles (EV) are increasingly seen as the preferred option and envisaged as a solution for greening road transportation. Electric cars emit 50% less greenhouse gases than diesel and these emissions will fall even further if the electricity used comes from renewable sources. EVs offer a step change technology based on much higher efficiency electric motors compared to the ubiquitous Internal Combustion Engines (ICEs) offering real potential to de-carbonise the transport energy chain.
So far, the narrative above seems sound – however, the suggested benefits rely on EVs overtime substituting ICEs. To understand if this is possible, it is important to understand the EV value chain: governments, automobile manufactures, electricity distributors and consumers. These stakeholders hold the potential to influence our ambitions and lead the change. Let us dive deeper into understanding the role and the challenges each group faces that will ultimately decide how the transport system will restructure in the future.
The role of government in encouraging EV uptake
The government is responsible for creating a sustainable transport & infrastructure policy to ensure that our transport systems meet society’s economic, social and environmental needs.
The UK has already taken firm steps to tackle air pollution (thereby supporting the adaptation of EVs) by committing to a ban of new diesel and petrol cars and vans from 2040.
The government’s scheme in building a sustainable infrastructure urges public authorities as well as businesses and individuals to join & engage in the initiative. Several vehicle grants and incentives have been launched to encourage the EV uptake. Building a public recharging infrastructure is a prerequisite to the adoption of EVs. Even though most EV drivers charge their cars at their homes or offices, a public recharging infrastructure is necessary for those without private parking facilities and for ad-hoc charging during trips. There is also uncertainty about optimal business models and the commercial viability of EV recharging networks. The key challenge for the government lies in the development of a framework to stimulate EV demand and launching concrete guidelines for phasing out conventional vehicles. The government will also need to address financial and legal requirements, define purchase grants, create legislation on tariff rates & promote educational and awareness campaigns.
Electricity producers & distributors – Grid expansion
Adequate charging infrastructure is crucial to the growth of Electric Vehicles. Increasing the adoption of EVs will require significant and thoughtful investment in a network of charging stations. When and where cars charge are critical issues to grid development, as excess demand can overburden the grid (especially at peak hours). This adds to the existing concerns of utilities not able to provide an adequate supply of electricity to meet future demand. The government’s announcement to ban sales of petrol and diesel cars as underlined above has increased the concerns about building additional power stations to meet demand which is further accentuating the challenge of balancing the electricity grid.
Influence of technology & price on EV ownership
The Automotive industry is in full swing, enticing customers with technical specifications and price brackets as more and more companies introduce their EV models to the market. A better understanding of the basic characteristics such as vehicle range, battery capacity, energy consumption will define the type of audience that will be attracted to each vehicle segment. At present, the battery costs account for a large proportion of the EV cost.
According to Bloomberg New Energy Finance, battery prices need to drop by more than half before EVs get competitive with cars powered by internal-combustion engines.
Such change is currently predicted to happen by 2026 when the cost for lithium-ion battery packs is projected to fall to about $100 per kilowatt hour. The high battery cost can become a huge hurdle, hindering the EV adaption rate. Moreover, a large proportion of customers shun EV ownership due to the fear of running out of power. While most gas cars can travel over 300 miles between fuelling, the existing electric vehicles models tops out at 100-200 miles depending on how the driver uses standard facilities such as air conditioning and radio. The driving population is used to a technology where the range is almost never a concern, as gas stations are readily available every few miles. With charging infrastructure still scattered, customers are worried about the limited flexibility of taking EVs on long road trips. And while some of the new EV models such as Tesla model S offer longer ranges, these, unfortunately, are not cheap.
Car owners are choosing EVs to reduce both their running costs & carbon footprint. The currently available EVs represent a small percentage of the total vehicles on the road and are viewed as being relatively unsophisticated and underpowered. EVs, however, are now attracting more attention with the advent of sleeker new models (Tesla 3 and BMW i) and going forward the demand is set to increase exponentially. Like any new technology, the adoption of Electric Vehicles requires consumers to step out into the relative unknown and put aside tried and true technology. Buying an Electric Vehicle not only requires adjusting to a new product with new features but also adapting to a novel infrastructure and way of life. Most consumers still know relatively little about EVs and what owning one would mean to their everyday lives. As such, the speed with which consumers become comfortable with the realities of EV ownership will have a significant impact on how rapidly this market expands.
Beyond the specific concern about range, EVs are also subject to an array of other anxieties that attach to most new technologies. Is the technology reliable? Do local service providers know how to fix things that go wrong? Have all the safety issues really been worked out? Will the technology be much cheaper in a few years?
Future of EVs
The transformations happening in the fields of energy and mobility are inevitable. Whilst we have a rudimentary understanding of the key factors that will influence how the EV market will grow going forward – only time will show whether the achieved benefits were truly worth the wait & the efforts.
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