6 minute read
Charging forward
by Wardour
A new report shows sales of electric vehicles across the world are growing significantly. Jess Unwin finds out why this has happened, who the big players are and what the future holds
Sales of electric vehicles (EVs) are moving into the fast lane and many analysts believe they will overtake those of conventional cars – powered by petrol or diesel – by the end of this decade.
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According to the International Energy Agency’s Global EV Outlook 2020 report, just 17,000 EVs were on the world’s roads in 2010, but by 2019 that number had swelled to 7.2 million, nearly half of which were in China. The report shows an industry in rapid growth mode: electric car sales topped 2.1 million globally in 2019, surpassing 2018, which was already a record year.
Covid-19 may bring a slowdown but only temporarily. Ram Chandrasekaran, of global research consultancy Wood MacKenzie, echoes other analysts when he says the pandemic “has left a dent in the EV sector, but it’s a scratch on the paintwork, not a big repair job”.
This year really does seem like the year of the EV – we’ve seen the launch of flagship electric models with familiar names, such as the Mini, the Vauxhall Corsa and the Fiat all-electric 500. And for the next five years, the automotive industry has announced plans to release another 200 new electric car models.
Electric car renaissance
Yet EVs aren’t new – they outsold internal combustion (IC) cars at the end of the 19th century. And the fastest early cars were also electric: the Belgian-built La Jamais Contente set the world land speed record at 66mph in 1899.
A century of dominance for IC cars began in the early 1900s with advances in their engines – in particular, the use of electric starters – and mass production of cheaper petrol and diesel vehicles. Only in the late 20th century did concern about their environmental impact and fears about diminishing oil supplies lead to renewed interest in EVs.
There were false starts in the race to produce viable
View of the construction site for Tesla’s Grünheide plant in Germany. Starting next summer, the US electric car manufacturer plans to produce up to 500,000 vehicles annually in Grünheide
La Jamais Contente
The Citroën Ami electric car EVs – moves in 1990s California to push for loweremission vehicles prompted US and Japanese automakers to develop electric models but these were all eventually withdrawn from the US market.
The real renaissance in EVs came with technology advances like the invention of the lithium-ion battery, and it was Californian company Tesla that in 2008 delivered its Roadster model, the first highway-legal, all-electric car to use lithium-ion.
Mass production EVs like the Mitsubishi i-MiEV soon followed, with the Nissan Leaf eventually becoming the world’s best-selling EV – a title it lost to the Tesla Model 3 in spring 2020.
Technical advances
Professor David Greenwood, who leads the Advanced Propulsion Systems team at University of Warwick’s WMG department, agrees one reason EV sales are now moving up a gear is batteries that are both 10 times cheaper and able to store twice as much energy as a decade ago.
He adds: “At the same time, there’s political momentum to mitigate climate change, which has seen regulatory measures like setting limits on the amount of CO2 produced by automotive manufacturers.”
A number of countries have announced goals to ban the sales of petrol- and diesel-powered vehicles, including the UK, China, India and Germany by 2030.
Photos: Alamy, Citroen
Incentives to promote EVs include tax credits and subsidies – in the UK, for example, there’s a £3,000 grant for buying an electric car and schemes to help pay for a charging point.
But let’s not get too carried away. The IEA report reveals that EVs still only accounted for 2.6% of global car sales in 2019. Dr Colin Herron, CBE, who has more than 40 years’ experience in the automotive industry, including 18 years with Nissan, says: “The signs are encouraging for EVs but there need to be more factories making EVs and batteries before we have a significant volume. I think that’s still five years away.”
Manufacturing challenge
Although Tesla has attracted many of the headlines around EVs, nearly all the major car manufacturers are now also producing them. Professor Greenwood believes new players could yet establish themselves: “New names are emerging, like Rivian in the US, but it’s going to be difficult for any company that can’t produce in volume.”
Dr Herron, who’s also the MD of Zero Carbon Futures, which works to support the growth of the EV industry, believes Tesla does have one clear advantage: “The older car companies have 100 years of history to bin before they can recreate themselves with factories working in a different way, while Tesla doesn’t have that baggage. It’s a challenge the established manufacturers will meet but, in the process, we could see more consolidation in the industry.”
He continues: “The big question is whether the Chinese will make cars to sell in Europe and other markets. At the moment, it’s expensive to convert their cars for export so I think the demand in China will keep them occupied for the next five years.”
Price parity
Whoever is making EVs, Professor Greenwood is convinced sales will overtake IC cars in the next decade, especially as he sees EVs having price parity with IC cars by the mid to late 2020s.
Looking at other future trends, he says: “At the moment, the push is towards EVs with long range because the charging infrastructure is still quite sparse. But when that changes, most cars will drop to a range of 150 miles. After
Electric dreams
The electric vehicle industry attracts a lot of investment, which is enabling it to scale up rapidly towards a cleaner future. At Sanlam we applaud this and the important role it is playing in the transition towards a lowcarbon economy.
From an individual investor’s point of view, though, EVs are a far from simple investment. EVs represent an investment risk because of the speed at which the technology is changing. And while lots of manufacturers are investing in EVs, the automotive industry is fiercely competitive and it’s uncertain who the winners and losers will be.
Phil Smeaton, Chief Investment Officer for Sanlam, says: “There is a growth opportunity tailwind behind EVs, but our investment strategy is more rounded than that. We look at companies that not only make profits but can defend those profits for a meaningful length of time. That’s about the quality, uniqueness and competitive edge of the business.”
In fact, if you want to make a difference, the best approach is to talk to us about your aspirations and we can help to guide you towards the best investments to both do good and increase your wealth.
all, 98% of journeys in the UK are less than 50 miles.
“Home charging will be sufficient for most people, but for that once-in-a-while long-distance drive, or for those who don’t have off-street parking, there will be public stations where charging will take just as long as it takes to get a coffee or go to the loo.”
Dr Herron predicts further improvement in EV technology, including the introduction of solid-state batteries that could prove to be smaller, cheaper, safer and have higher storage capacity.
Both men believe buses and light commercial use vehicles will also transition to electric power during the 21st century but accept there are challenges in finding a viable petrol replacement for the largest commercial vehicles.
While there may still be practical issues to solve and some years to go before all road traffic is electric, it seems the direction of travel is towards EVs. n
Find out more
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