Imagine we improve the world’s public transport, increase the use of ride-hailing services and manage to keep the global car fleet size down to 1 billion cars despite adding another 3 billion people by the end of this century? We 're looking for a sustainable transition to electric vehicles with breakthrough technologies.
The Explosive Growth of the EV Market
The electrification of transportation is now one of the major trends of the 21st century. After entering commercial markets in the first half of the decade, electric vehicle (EV) sales have soared. Only approximately 17,000 electric cars were on the world’s roads in 2010. By 2019, that number had grown to 7.2 million, 47% of which were in China. Nine countries had more than 100,000 electric cars on the road in 2019, and at least 20 countries reached market shares above 1%. The electric vehicles market is projected to grow to approximately 27 million units on the road by 2030. The global electric vehicle market was valued at $162.34 billion in 2019, and is projected to reach $802.81 billion by 2027.
What is Causing the Explosive Growth?
The key factors propelling the electric vehicle market have been favorable government policies and direct financial support, including subsidies, grants, and tax rebates, and non-financial support such as car pool lane access, and new car registration (specifically in China where fossil fueled new car registrations are banned in some urban areas). And, of course, growing concerns over climate change and pollution obviously also has been a major driver of the EV industry.
Road transport reportedly accounted for almost 70% of America’s oil consumption in 2019 – a major focus of “green” government policies. Electric vehicles are a key technology to reduce air pollution in densely populated areas and a promising option to contribute to energy diversification and greenhouse gas emissions reduction objectives. Electric vehicle benefits include zero tailpipe emissions, better efficiency than internal combustion engine vehicles and large potential for greenhouse gas emissions reductions when coupled with a low-carbon electricity sector. These objectives are major drivers behind countries’ policy support in the development and deployment of EVs. To date, 17 countries have announced 100% zero-emission vehicle targets or the phase-out of internal combustion engine vehicles through 2050. In December 2019, France became the first country to put this goal into law (with a 2040 timeframe).
Environmental and sustainability objectives drive electric vehicle policy support at all governance levels. Many nations (as well as states in the US) offer some form of subsidy or tax reduction for the purchase of an individual or company electric car (as well as incentives for development of charging infrastructure). Many building codes now encourage the construction of charging facilities, and incentives for “EV-readiness” of buildings are becoming more common. Other key drivers of the industry include the increasing vehicle range, better availability of charging infrastructure, and growing interest by automobile manufacturers.
What is the current state of the EV market?
The consumer profile in the electric car market also is evolving dramatically, from “technophiles” and “autophiles” to general market acceptance/mass adoption – an evolution largely driven by improvements in technology and a wider variety of available models that have piqued consumer interest. In addition, battery costs have experience dramatic decreases. The delivery of new mass-market models such as the Tesla Model 3 caused a spike in sales in 2018 in key markets (e.g., the US). The range of EV choices continue to increase in 2020 and beyond. Automakers have announced plans to release 200 new electric car models over the next five years, with many options in the popular sport utility vehicle (SUV) market.
Obviously, Tesla and other electric car manufacturers present interesting investment opportunities – but so, too, do the manufacturers of the charging stations and equipment and other infrastructure needed to power the electric vehicle revolution.
Charging stations and other infrastructure
The EV charging infrastructure industry continues to expand. In 2019, there were approximately 7.3 million chargers worldwide. Of those, approximately 6.5 million were private, light-duty vehicle chargers in homes, apartment and condo buildings, and workplaces (i.e., office building parking garages). Publicly accessible chargers accounted for 12% of global light-duty vehicle chargers in 2019 (most of which are “slow chargers”). Globally, the total number of publicly accessible chargers increased by 60% in 2019 compared with the previous year. China continues to lead in the rollout of publicly accessible chargers, particularly fast chargers, which are suited to its dense urban areas with less opportunity for private charging at home.
Lack of standardization of charging infrastructure continues to be a key restraint on the industry. Stringent rules for the installation of charging stations and high cost of an electric vehicle pose challenges for the growth of the electric vehicle market.
Use of vehicle-to-grid (V2G) EV charging stations: Vehicle-to-grid (V2G) EV charging is a system that has a bi-directional electrical energy flow between plug-in EVs and the power grid. V2G technology enables EVs to store unused power and discharge it to the grid. V2G technology can improve the electrical component’s performance and add value for EV owners.
EV charging stations powered by renewable energy: EVs can be charged at an electric charging station or using a solar panel. The use of renewable energy to power EV charging stations is one of the key opportunities for players in the electric vehicle charging market. With the lower price and easier installation of solar panels, solar powered charging stations are becoming popular for homeowners and commercial buildings.