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Major Auto Markets Spearhead Global Push To Electric Vehicles

Change is coming...

Although electric vehicles (EVs) have been around since the 1800s and there was a spike of interest in the early 1990s, we have yet to see mass adoption of them globally.

The reasons are numerous. If you believe the 2006 documentary Who Killed the Electric Car, 1990s' EVs were crushed by a combination of collusion between auto manufacturers, the oil industry, the U.S. government and lack lustre consumer perceptions.

Despite this, mounting fears that we may have reached peak oil, advances in battery technology and a renewed focus on saving the environment mean that EVs made a comeback in the early 2000s. Elon Musk's Tesla Motors began developing its Tesla Roadster in 2004, finally releasing it in 2008. Other automakers soon followed suit with companies such as Mitsubishi, Nissan and General Motors (GM) all releasing EVs.

"All the geniuses here at General Motors kept saying 'lithium-ion technology is 10 years away', and Toyota agreed with us – and boom, along comes Tesla," said GM vice-chairman Bob Lutz told The New Yorker in 2009. "So I said, 'How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can't?' That was the crowbar that helped break up the logjam."

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Fast forward to today, and we are now seeing a global shift towards EVs that is being spearheaded by governments worldwide. So what are the top global auto markets doing to drive this change?

China (Largest auto market)

In early September, Bloomberg reported that China will set a deadline for a ban on sales of internal combustion engine (ICE) vehicles.

Coming from the world's largest auto market, this is huge news for EVs. Although China has not officially set a date for the ban to come into effect, China's leading EV maker BYD predicts that all vehicles in China will either be fully electric or hybrids by 2030. More conservative estimates put China's complete shift to EVs closer to 2040. In the short term, China plans to install 100,000 charging stations along 11 major routes by 2020, covering 202 cities and 36,000 km of expressway.

In the last few years, China has emerged as global leader in green technology. It is officially the world's top clean energy investor and has bold ambitions to continue in this direction. In January, the Chinese government announced that it will spend more than $USD360 billion on renewable energy by 2020.

EVs are no doubt a huge part of this effort. In some ways, China has no choice since air pollution is strangling its main cities. But there are economic incentives too, with green technologies providing a massive investment opportunity in the form of renewable technology exports.

Although China has never been a noted exporter of ICE vehicles, that doesn't exclude it from becoming a world leader in EV exports. As noted by Mark Wakefield, managing director of consulting firm Alix Partners, China was never a major exporter of old fashioned lightbulbs, but it now dominates LED lighting.

India (6th largest auto market)

Meanwhile, India is preparing for a massive transformation of its own with plans to move completely to EVs by 2030.

As in the case of China, India has both environmental and economic reasons for the move. India has some of the world's worst pollution, and in June it signed the Paris Agreement, pledging to reduce its emissions by 2030.

Economically speaking, India is heavily reliant on imported oil, so by switching to EVs it can reduce its annual 85 billion US dollar oil bill. Making the switch to EVs won't be easy, but Narendi Modi's government has launched a scheme to promote EV sales, created national policies including subsidies and is planning to set up a large-scale lithium battery facility.

Germany, UK and France (4th, 5th and 7th largest auto markets)

Looking at Europe and the U.K., we see the top auto markets all making similar moves as China and India towards a totally EV world. Germany has just launched an ambitious campaign to put 1 million EVs on the road by 2020, and France and the U.K. have announced that they plan to ban the sale of ICE vehicles by 2040.

As of July 2017, U.K. is marginally ahead of Germany and France when it comes to market share of EVs already on the road. According to the European Alternative Fuels Observatory (EAFO), 1.7% of U.K. passenger vehicles are electric, followed by France (1.5%) and Germany (1.3%). If we consider all of Europe though, Norway leads by a long, long way, with more than half a million electric vehicles for its population of 5.2 million people. WIth a goal of only selling zero-emissions vehicles by 2025, more than 40% of the new cars sold in Norway in 2016 were electric.

Japan (3rd largest auto market)

While se carmakers are innovators when it comes to EVs and the country reportedly has more EV charge points than petrol stations, the government has recently made a push towards hydrogen-powered vehicles. In the last few years, hydrogen fuel cells have become cheaper and garnered the support of Prime Minister Shinzo Abe. For the Olympic Games in 2020, Tokyo says it will spend $USD 400 million on fuel-cell vehicle subsidies and hydrogen stations and Toyota is planning to have more than 100 fuel-cell buses operating in the capital by then. This puts Japan in an odd position – it is a leading exporter of EVs and has numerous charging stations but has not announced plans for mass adoption, and is now pushing towards hydrogen.

U.S. (2nd largest auto market)

Up until recently, the U.S was the world leader. Home of Tesla, the Chevy Volt and Bolt and a major source of Nissan Leaf sales, it seemed as if the U.S was poised to dominate the EV market for a while to come.

In 2008, former President Barack Obama set a goal of getting one million EVs on American roads by 2015. Throughout his first and second terms, Obama backed billions in subsidies for EV makers and consumers. While he was unable to reach his target, about 550,000 EVs have been sold in the U.S., with 159,000 of those sales taking place in 2016.

Current US President Donald Trump has a slightly different view when it comes to the environment however. His administration has slashed regulations, scrapped credits for EV buyers, and pulled the country out of the Paris Agreement. While the US remains the second largest market for EVs in the world, this has all assisted in creating an opening for China to seize the top spot.

The big question then is what does all of this mean for Australia? As we discussed in our podcast, research has shown that price and range anxiety remain significant barriers for consumers, and at this point, we haven't yet seen any federal incentives or tax exemptions to drive growth. This can all change swiftly though, so we'll be tracking and revisiting these topics in coming months.

To stay up to date with our latest automotive market news and views, subscribe to our Roadworthy podcast series, follow us on Twitter at @ACAAuto, or contact us on auto@acaresearch.com.au.

Topics: Automotive Research automotive trends electric vehicles