Electric vehicles (EV) market has experienced a boom and saw numerous developments last year from large manufacturers like Tesla, Ford and Porsche. Some see such rapid development as wonderful, as electric vehicles remove dirty fossil-fuelled cars from roads, but not all stand to such opinion. EVs are not the perfect solutions but they offer a more sustainable pathway to reduce greenhouse gas emissions by combining greater deployment of renewables and decarbonisation of the electricity grid.
EVs give clear emission savings. That, on one hand, is good news, but on the other hand, not so much as EVs will not reduce road congestion, and will lead to the need for more roads and more parking space. Besides this, EVs will also create a greater demand for power, experts say 20 percent or more, which may create problems for balancing and even running the power grid, especially given that peak EVs charging times coincide with peak-heating demand in cold countries. There are also arguments that say the electricity used by EVs are often generated using fossil fuels, which is also another form of dirty electricity.
Car manufacturers have made claims about how fast they will be introducing new electric and hybrid vehicles over the next few years – partially in response to tightening efficiency and emissions standards. Some manufacturers plan to reach electrification targets sooner than expected.
In 2019, the electric vehicle market made big gains across multiple car manufacturers, and in the coming years, this industry has even bigger plans to come. This also comes as a result of increasingly restrictive emission and fuel-efficiency regulations around the globe, that are compelling carmakers to roll out vehicles that are more able to fit within those restrictions.
What is the current progress of some of the large players?
- Toyota, whose cars currently make up more than 80% of the global hybrid vehicle market, has announced plans to generate half of its sales from electrified vehicles by 2025, five years earlier than it previously estimated.
- Volkswagen announced last year that it would be spending more than $30 billion developing Electric vehicles by 2023. One of the aims of the German automaker includes reaching its target of 1 million electric cars in the same years as well as to make up 40% of its global fleet seven years later, by 2030.
- Volvo’s first Electric Car XC40 Recharge was released last year and is expected to go on sale in the US in the last quarter of 2020. Volvo, like other carmakers that have dived into EVs, has pledged that the company would generate 50% of its global sales from EVs by 2025 and promised that, by the same year, it will reduce the total carbon footprint of each vehicle manufactured by 40%.
- BMW Group has estimated that electric vehicles would account for 15% to 25% of its sales by 2025. The Bavarian brand has also stated that it will offer 25 electrified vehicles by 2023, two years earlier than it had initially planned. BMW also projects a twofold increase in electrified vehicle sales by 2021, as compared with 2019, and a 30% growth in those sales year over year through 2025.
It seems that the development of EVs is closely linked with environmental sustainability. As people become more conscious and countries pass various legislation about environmental protection, automakers have a growing interest to bring something sustainable and valuable into the market.
As global carmakers reach their potential and compete against each other, it is important to consider the question of whether electric automobiles actually save the planet, considering they are actually powered by fossil fuels, mostly.
India, Australia and China use coal power to generate electricity for electric cars, which generated the car’s carbon emissions ranging from 370 to 258 g CO2 e/km. The amount of carbon dioxide being released is relatively high compared to other countries like Iceland, which uses the low carbon from volcanic activity as the power source, releases only 70 g CO2 e/km. Therefore, some studies claimed that EVs running with coal is dirtier than gasoline.
From the US perspective, these researchers found that over the lifetime of an electric vehicle powered by the U.S. electric grid, that vehicle will produce about 30.82 metric tons of carbon dioxide. This is not considered as great compared to cars that are powered 100% by renewable energy.
However, if comparing gasoline-powered cars to coal-powered vehicles, the latter is considered cleaner. According to Argonne National Laboratory findings, EVs produce fewer carbon emissions, regardless of how electricity is produced. Since emissions from vehicles traveling on roads need to be drastically lowered in order to meet emissions-reduction goals in any climate-change scenario, it seems electric cars are a vital part of any emissions-reduction solution.
Mobility solution of the future: Electric Vehicles
Electric vehicles will slowly become a norm in this decade as the demand rises in order to be environmentally sustainable and more become environmentally conscious and are pressured by politicians and legislation. Challenges on battery capacity and vehicle performance will improve as more technology breakthroughs are on the way in the coming years. Automobile manufacturers will need to embrace themselves with the new market and quickly adjust the production line to adapt to the market shift and rethink their new market position in the next decades.
Written by Yasuna Ogimura, Intern at 27 Advisory, Bachelor of Business and Commerce (Accountancy and Banking and Financial Management), School of Business, Monash University. Yasuna has an interest and passion for financial services and investment banking. After her internship, she aims to pursue a career in finance.
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