Sales of electric cars continue to grow even if it remains a niche market positioned between the luxury and green-tech segments. According to IHS Markit forecasts the electric engine will be the technology of the future, accounting for over 60% of the vehicles manufactured annually across the globe (55 million) by 2040. Nevertheless, there is still a great deal of uncertainty as regards the timescale of large-scale adoption.
Currently, one of the biggest barriers to the mass development of electric cars is logistics. In short, even if you own an electric car it isn’t always easy to find recharge stations. Electric car penetration forecasts are connected with the development of suitable supporting infrastructure. Carmakers and governments intending to support the spread of electric mobility must come together to design and develop an efficient, widespread and innovative infrastructure system.
Electric cars: the industries involved in the change
The EV market requires work at various levels. The infrastructure is divided into three different parts. Before the manufacturers of electric cars and public authorities, the key stakeholders are leaders in the utilities market and the extraction and processing of raw materials. Electric car market projections underline a need for over 4000 TwH of electricity by 2040 and the production of batteries is expected to increase at an annual compound growth rate of close to 30% for the next 20 years. To support this demand the electricity grid must undergo significant development and expansion. In the raw materials sector demand for some metals is expected to increase very quickly with extreme scenarios that will seriously test the current potential of the mining industry. According to Bloomberg’s study Electric Market Outlook 2017, the demand for lithium, for example, will rise twelvefold and the demand for cobalt will increase by three and-a-half times by 2040.
Manufacturers of electric cars and batteries are already investing in the development of electric car production plants and gigafactories. The only gigafactory at the present time, a huge battery factory powered by solar energy, was constructed by Tesla in Nevada. In all likelihood, in the future we will see some of the plants that were developed for combustion engine cars converted into plants for the manufacturing of electric cars. In this scenario the difficulty of transferring skills to meet the professional requisites of the new electric-digital model could potentially slow down the process and have economic and social implications particularly for the workforce.
Finally, in both Italy and most of Europe, there is still a complete absence of a network of recharge and service stations dedicated to the management and use of electric cars. Such a network will increase the battery life of the cars and the distances they travel by 32% in the next 20 years. To this end, recharge stations (including home chargers, superchargers, destination chargers and service centres) will have to become a widespread commodity. And this challenge will require an overall investment of around $900 billion.
All in all, an estimated $2.7 trillion of investments will be required with 70% of these taking place between 2030 and 2040. The need for such significant sums of capital rightly raises questions about the sustainability of this market and therefore also electric vehicle penetration forecasts. With this in mind technological innovation and the involvement of governments in the investment plans will be two key factors in ensuring that the electric vehicle boom in the mobility market becomes a reality.
Electric cars: state of play in the major markets
China has witnessed the quickest growth thanks to its relatively new infrastructure, which does not require major strengthening, and a coordinated regulatory framework at national level that is able to support the transition towards electric models. The government has introduced incentive plans for the purchase of electric vehicles that reduce the cost for consumers and has also laid down restrictions on the circulation of vehicles with combustion engines in certain urban areas. As of this year a quota system will come into force by which a certain percentage of the vehicles produced by local manufacturers will have to be electric.
Europe is the market with the greatest potential in terms of the penetration of electric cars with a figure close to 95% and an exponential increase in the marketing of electric models expected to take place between 2030 and 2040. The main problem area appears to be regulation at supranational level. The creation of “Standard Practices” at EU level with a clear definition of the investment objectives could be the main driver behind a significant flow of capital into the sector. Conversely, the penetration level in the US is expected to be one of the lowest among developed countries.