EVs for All
A look at the latest stats, trends, and policy action around electric vehicles and transportation
Electric vehicles (EVs) have been a big topic of discussion for environmentalists, car manufacturers, legislators, and the general public in recent years. All in, EVs offer a range of benefits: reduced carbon emissions and air pollution, lower maintenance costs, and lower operating costs. The Edison Electric Institute (EEI) predicts EVs on the road in the US will increase from around 3 million today to 26 million by 2030. That’s a 767% increase in EVs in seven years.
Where is the EV market today? And what are the biggest challenges, risks, and opportunities?
Let’s break it down.
The EV Policy Picture
Because electric vehicles are a greener alternative to gas and diesel cars, many governments are starting to enforce regulations around EVs to help achieve their emissions and net zero targets.
European (EU) EV Landscape
Last week, the European Union announced the approval of legislation to ban the sale of new fossil fuel cars starting in 2035. Additionally, the region will limit carbon emissions on new cars starting in 2030 to 55% of emissions from 2021. The law is expected to get final approval in March 2023.
Needless to say, this is a big deal. Today, roughly 33% of new cars purchased in the EU are hybrids, while around 10% are fully electric. Over the next decade, over 50% of the EU new car market will transition from fossil fuels to EVs, benefitting leading EU EV brands like Telsa (despite its recent recall troubles), Volkswagen, BMW, Volvo, and Fiat.
Niche carmakers who produce less than 10,000 cars per year, plus heavy trucks and buses, will not have to comply with this law, although they have their own set of emissions reduction regulations to follow.
The legislation is part of a broader package of EU sustainability laws aimed at transitioning the region to carbon neutral by 2050. A fossil fuel car phase-out is a significant and necessary step to reduce the EU’s greenhouse gas (GHG) emissions, with transportation representing about a quarter of its total emissions (and the fatest growing economic sector).
United States (US) EV Landscape
While the EU’s 2035 fossil fuel car phase-out is currently one of the world’s most ambitious, there’s meaningful EV regulatory and consumer momentum in other jurisdictions too. In mid-2022, the United Kingdom also set a goal to end the sale of new gas and diesel vehicles by 2030 and to have all new cars and vans produce zero emissions by 2035.
And then there’s the United States.
The day after the EU announced its upcoming ban on selling new fossil fuel cars, the US shared an action plan for making EV charging stations more accessible for all Americans, with a target of EVs representing at least 50% of new car sales by 2030.
EV Challenge #1: Charging Infrastructure
One of the biggest challenges for EV ownership and adoption continues to be the lack of accessible public charging stations, particularly in rural and more remote areas. It can be especially hard for drivers making longer trips who need to plan routes that include charging stations.
Currently, there are around 130,000 charging stations around the US, and the Biden administration plans to install 500,000 more by 2030, providing $7.5 billion in federal funding and setting up a Charging and Fueling Infrastructure (CFI) discretionary grant program for local governments. That means EV charging stations will soon outnumber gas stations nationwide.
A related issue in the EV market is also the need for consistent standards. That includes consistent plug types, alignment with the ISO 15118 “Plug & Charge” standard, and easier charging station discovery (rather than having to use multiple network- or provider-specific maps). Tesla recently agreed to make 7,500 of its charging stations available to non-Tesla drivers starting in 2024. Others in the auto industry like General Motors, EVgo, Pilot, and Hertz have also committed to expanding the US public charging station ecosystem too.
Top 10 States by EV Deployment
Source: EVAdoption
In 2022, California announced its own roadmap for the electrification of all new cars, pickup trucks, and SUVs sold by 2035. New York’s also proposed a rule to adopt California’s phase out plan, however, New York will have to wait for California to implement the regulation before that follow-on action can proceed.
EV Challenge #2: Cost to Consumers
A second challenge is around EV affordability, with many models priced at a significant cost premium compared to conventional cars. In pursuit of more “EV equity” (and circularity), the Inflation Reduction Act includes a 2023 federal tax credit of up to $4,000 for the purchase of a used electric vehicle costing no more than $25,000. Nonetheless, on average, an EV currently costs 15% more than its non-electric equivalent.
Whether we’re talking about the switch from meat to plant-based alternatives or gas cars to EVs, the equity argument is the same: more sustainable options shouldn’t be a tax on consumers, or only available to wealthy. Everyone who needs a car should be able to afford an EV. There’s still important work to be done to bring EVs down the cost curve to party with regular autos.
EVs: Momentum Despite Headwinds
With all the momentum and stimulus support for EVs, car makers are also catching on. Various auto manufacturers from GM to Audi have made public commitments to stop selling fossil fuel-based cars in the coming years, in line with regulatory transition pathways.
With EV production and use set to grow by leaps and bounds, there remain three other issues beyond affordability and charging infrastructure the market will also need to address:
EV Challenge #3: Grid Adaptation
Facing an influx of EVs and intermittent renewable energy, most electrical grids rely on decades-old infrastructure designed for an entirely different energy reality. According to the US Department of Energy, 70% of transmission lines and power transformers are more than 25 years old. Major grid infrastructure changes and upgrades will be needed to support the growing use of EVs, and the US Inflation Reduction Act, EU Green Economic Plan, and the UK Government are all introducing public funding for grid modernization.
Source: Puget Sound Energy
Some of these changes are structural, but also behavioral. If solar energy is primarily generating during the day while the sun is out, and wind turbines rely on air flow, grid-scale battery storage will be needed to store that energy for usage at other times. Should incentives be established to encourage EV owners to charge their vehicles when the sun is shining or it’s windy? Or during off-peak load hours more generally?
The shift to ‘EVs for all’ won’t happen overnight, which affords us some time to modernize grids and implement incentives to support this transition.
EV Challenge #4: Cold
As one of the primary technology paths to mitigating climate change, one challenge in the EV market that’s often under-discussed is exactly that: the climate.
In particular, EV’s are very susceptible to cold, which can require diverting a large percentage of its charge to car heating and battery temperature management, instead of powering the engine. And, just like traditional cars, an EV’s true mileage per charge is also influenced by other factors like road conditions, topography, speed, tire inflation, and driving approach.
That said, cold weather is a particularly challenging environment for EVs to operate in. On extremely cold days, an EV’s range can be reduced by as much as 50%. Moreover, charging itself also takes longer in cold weather. In areas with limited charging options, that can pose major problems for drivers.
Here again, there are also practical steps drivers can take in many cases to address some of these issues. Examples include warming up the car while it’s still charging in the garage before departing, and parking EVs indoors whenever possible. Technology innovation will hopefully handle the rest.
EV Challenge #5: Supply Chains
The final challenge the EV industry will need to overcome to reach its full scale and potential is input-related: can we make enough EVs cost-effectively without doing more ecological and social harm from raw material extraction?
Here, the major focus are the lithium-ion batteries that power them. EV batteries are made of mined natural resources like lithium, manganese, nickel, and cobalt. Because EVs have substantially increased the demand for these batteries, there’s more economic incentive to mine more of these metals, each with their own environmental and social issues.
For example, lithium mining is very water and energy intensive and, in the US, the majority of it takes place in Nevada, a state that’s already vulnerable to extreme droughts. Cobalt mining, meanwhile, poses major social and human rights concerns. Two-thirds of the world’s cobalt supply is from the Democratic Republic of the Congo, where reports of child labor, inadequate worker pay, and worker health and safety risks have all been linked to cobalt extraction.
Lithium mines in Chile. Source: The Guardian
There’s additional concern over how to dispose of discarded EV batteries. If the batteries end up in landfills, they’ll release toxins, but, currently, it’s incredibly difficult and costly to recycle them. Some experts worry that batteries will become another flavor of the Earth’s plastic waste problem if new recycling technologies aren’t introduced soon.
Nonetheless, it’s a hopeful time for the electric vehicle market, and there’s reason to believe the EV ecosystem will be able to address most or all of these challenges, given the key role EVs will play in transitioning the world towards net zero emissions. With more regulations, stimulus, and consumer appetite for vehicle electrification, we expect to see continued strong investment into EV technology, the modernization of charging infrastructure and grid adaptation, and safer approaches to sourcing, manufacturing, and handling end-of-life lithium-ion batteries.
It’s important to remember that the transition to electric vehicles will take years to complete, so there's an opportunity to solve many of the issues the market’s currently facing. With the elimination of fossil fuel cars, we can finally expect to see a reduction in emissions across the transportation sector. We still have a ways to go in reducing global emissions and minimizing global warming, but these recent actions are vital steps in the right direction.
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