Nearly there yet?

Questions remain before electric motoring hits the road

The race is on in the electric car industry. Volvo recently announced that it will become the first major car manufacturer to go all electric, with the Swedish company saying that every new car in its range will have an electric powertrain available from 2019.

Shortly after, Tesla, owned by billionaire Elon Musk, announced its Model 3 electric car – its first targeted at the mass market – had gone on sale.

Electric cars are forging the way to the future: carmakers want to get their hands on the technology, as many governments look to cut down their carbon emissions. However, the data show that there’s a long way to go, with more traditional models still holding the biggest slice of the market.

Electric car sales reached a record high in 2016

Sales of electric vehicles reached a new record in 2016, with 750,000 new electric vehicles being sold worldwide. China accounted for almost half this figure, with 336,000 sold.

In 2016, there were more than 2m electric cars on the roads globally, an increase of 1,500pc on 2005.

The latest Bloomberg New Energy Finance report estimates that by 2040, 54pc of new car sales and 33pc of the global car fleet will be electric. China has the highest number of electric cars, about 650,000.

Norway is leading the way in shifting to electric cars

While China boasts the highest number of car sales and production, Norway is the leader in deploying electric vehicles successfully in its car market. Almost a third of cars sold in 2016 in the country were electric.

Norway’s success boils down to generous government subsidies. The country first introduced big incentives in the Nineties, and electric cardriving Norwegians enjoy exemptions from purchasing taxes, toll roads, free parking and access to public bus lanes.

However, many countries are lagging their targets. The International Energy Agency (IEA) set a global target, agreed in the Paris climate talks, to have 30pc of all new cars sales be electric by 2030. Fourteen countries have since set ambitious targets to increase their electric car adoption as a means to reduce their carbon footprint. However, the statistics show that most still have a long way to go.

The UK has pledged to ensure “almost every car and van is a zero emission vehicle by 2050”. This means that by 2030, electric cars should make up at least 60pc of new cars and vans sold in the UK, according to the Committee on Climate Change. The electric car market share in the UK stands at slightly above 1pc.

France will outlaw the sale of all petrol and diesel vehicles by 2040, Nicolas Hulot, its environment minister, announced. Germany aims to have 1m electric cars by 2020, but it is nowhere close to the target, with only 70,000 electric cars on the road.

The Department of Energy under the Obama administration previously set a target of having 1m electric cars by 2015. However, as of 2016, they have only reached half the target and would not hit the number until 2020.

China, the world’s biggest car market and the biggest greenhouse gas emitter, has said it wants alternative fuel vehicles to account for at least one-fifth of its projected 35m annual vehicle sales by 2025.

India is mulling an even more radical plan to support electrifying all vehicles in the country by 2032. The IEA noted this would mean India needs to sell 10m electric cars in 2030.

How could electric cars become mainstream?

Various experts estimate that demand for electric cars will accelerate, with many revising their forecasts upwards in 2016. Both Exxonmobil and BP raised their forecast to 100m electric cars by 2040 and 2035, respectively. The IEA has more than doubled its base-case electric car forecast for 2030. Opec also revised its forecast to 266m electric cars in 2040.

Still, the success of electric car adoption hinges on its ability to become commercially viable and the availability of charging infrastructure.

“Direct incentives, such as purchase rebates or VAT exemptions, bear the risk of becoming economically unsustainable for governments,” said Marine Goerner, author of the IEA’S Global EV Outlook report.

“They will need to be progressively phased out, as the market develops.”

Falling battery prices would be crucial as they make up a huge part of the vehicle’s retail price. The progress of battery innovation is on track to meet the targets set for manufacturers, according to IEA analysis.

Bloomberg forecasts that electric vehicles will become price competitive on an unsubsidised basis beginning in 2025. Real mass market adoption would only start then.

Moreover, most electric cars still have low drive range. Hence, the availability of charging infrastructure is crucial, and it is a problem that many countries have yet to solve.

Currently, electric cars still outnumber public charging stations by more than six to one.

Should this problem persist, the growth of electric cars would hit a roadblock. According to Bloomberg analysis, many early adopters, such as China, the US and parts of Europe, will hit this “infrastructure cap” in the mid-2030s and sales growth will slow.

‘Bloomberg forecasts electric cars will be price competitive on an unsubsidised basis beginning in 2025’