Electrification and the Future of Electric Vehicles
Posted: 08/19/2021 | Author: Jim Lochner for Creatives On Call | Tags: Thought Leadership
There has been a global call over the past decade for drivers, companies, and auto manufacturers to reduce their carbon footprint. Today, there are 12 million passenger electric vehicles (EVs), 1 million commercial EVs, and over 260 million electric two- and three-wheelers on the road. And despite the pandemic restrictions and difficulties, there will be 500+ different models of EVs developed and launched by 2022.
Passenger EV sales are set to increase from 3.1 million in 2020 to 14 million in 2025. Norway (74.8%) and Iceland (45%) lead the way with the highest share of passenger EV sales in 2020, while the US ranks 17th with just 2.3%. Interested in chatting more about how to build a team to help with your auto and electrification needs? Reach out here.
President Biden recently called for 40% of new US cars to be electric by 2030. But today’s passenger EV prices are prohibitive for large consumer adoption, ranging from a Chevrolet Bolt ($31,000) to a Tesla Model S ($80,000+). While many electric and hybrid vehicles qualify for a federal tax credit that can lower the sticker price by as much as $7,500, it no longer applies to Tesla and GM models, and the value of the credit varies by brand and model.
And while most popular EVs have a 250-mile range, what happens if owners need to travel 300 miles in a day? What sort of chargers will they find to support them and where? The recently passed bipartisan infrastructure bill allocated $7.5 billion for electric vehicle charging stations (half of the $15 billion requested by the White House). But the US will need 2.4 million public and workplace chargers by 2030, a steep investment from the 216,000 available today.
In addition, accommodating EVs on a large scale will significantly impact small businesses like quick-stop oil-change shops and local independent repair facilities. The existing infrastructure for gas-powered vehicles also will need to change. Since EVs don’t require oil changes or transmission repairs, gas stations will see less revenue from traditional gasoline overall. They’ll also need to upgrade their infrastructure to support an influx of charging stations. Even then, they will compete with at-home charging stations, limiting the number of trips drivers take to the gas station. An at-home charge requires 6–8 hours and can be done overnight. But fast chargers that can refill a vehicle’s battery in 20 minutes are tens of thousands of dollars more expensive.
What’s Being Done
The major car manufacturers have stepped up their electrification efforts, investing billions of dollars in EVs and other initiatives.
• Toyota. With more than 80% of the global hybrid vehicle market, Toyota plans to generate half of its sales from electrified vehicles by 2025.
• Volkswagen. The German manufacturer is spending more than $30 billion to produce 1 million EVs by 2023, with plans for EVs to make up 40% of its global fleet by 2030.
• General Motors. Cadillac will lead the way for GM’s EVs, with most of the brand’s models going electric by 2030.
• Ford. Investing $30 billion in electrification efforts over the next five years, Ford plans to have 40% of its global production completely electric by 2030 and achieve 100% zero-emission by 2035.
• Volvo. The Swedish manufacturer plans to generate 50% of its global sales from EVs by 2025 and reduce the total carbon footprint by 40%, becoming fully climate neutral by 2040.
• Honda. The fully electric Honda E and hybrid Jazz (aka the Fit in the US) will jumpstart an initiative to have every model in Europe at least partially electrified by 2022.
• BMW Group. The German automaker says that its electrified vehicles, which are not fully electric, will account for 15% to 25% of its sales by 2025.
• Nissan. The Japanese auto giant plans to introduce 8 new electric cars by 2022, like the upcoming Ariya EV, which will travel 300 miles on a single charge and go from 0 to 60 mph in less than 5 seconds.
• Fiat Chrysler Automobiles. In 2018, FCA invested $10 billion in electrification through 2022 with plans to offer at least 12 hybrid and all-electric powertrain options. It also invested $4.5 billion in new and existing plants to produce at least 4 plug-in hybrid Jeep models.
The electrification of US vehicles won’t happen overnight. The number of EVs anticipated in the next few years is still small compared to gas-powered vehicles. US EVs are projected to reach 18.7 million on the road in 2030, roughly 7% of the global total of 259 million vehicles.
While there are numerous environmental benefits to electrification—reduced dependence on fossil-based sources, energy independence, lower carbon footprint—the revenue stream from replacing all 236 million gas-powered cars in the US with EVs could be $115 billion.
And that just might make all the difference.
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