Since the invention in the first half of the XIXth century to the present days, electric vehicles had local successes repeatedly and the automotive industry seemed to come to a turn after which the large-scale electrification of the road transport would happen. However, each time the technological evolution made its choice not in favor of electric vehicles. Today, electric vehicles experience a renaissance again and are predicted to become widespread. What are prerequisites and chances of success this time?
Trends in spreading electric vehicles have been impressing in recent years. In 2014, the increase in their sales was 53%, while the global fleet of passenger electric vehicles was around 700 thou. units. However, this is just 0.08% of the total number of cars in the world and the sales growth rate decreases: from 150% in 2012 to just 70% in 2013. In 2014, sales of electric vehicles exceeded 1% only in 4 countries: Norway, Netherlands, the USA and Sweden, where this was closely connected with governmental support measures and explained by the automobile market size in these countries, among other things.
The Norwegian electric vehicle sale promotion program existing since 2012 is especially noteworthy. Buyers of electric vehicles are exempt from the road tax and VAT and enjoy the right to free parking, charging, use of ferries, toll roads, bridges, tunnels, etc. Some experts evaluate total subsidies significantly higher than the cost of an electric vehicle. Initially, the program was to last until 2018, but its purposes were achieved almost 3 years earlier in spring 2015 when 50 thou. electric vehicles (around 2% of the automobile fleet in the country) were registered in Norway. Opponents of the program say that it costs SEK 3-4 bln per year (USD 400-533 mln) to the budget and subsidizes persons with a high income level.
In the Netherlands, the electric vehicle sales promotion program prematurely went beyond its budget. Until 2014, electric vehicles were completely exempt from the registration fee and vehicle tax and had some advantages and subsidies in certain cities. As a result, in 2013 the budget of the country spend EUR 500 mln on supporting electric vehicles, having increased their sales to 22 thou units per year. The partial cancellation of subsidies immediately affected sales of electric vehicles, whose share dropped from 5.3% in 2013 to 3.9% in 2014. Examples of falling sales of electric vehicles after reducing subsidies are aplenty in other countries too.
A considerable support is provided to spreading of electric vehicles in the USA. A buyer of an electric vehicle is entitled to a subsidy in the form of a tax deduction reaching USD 10,000. Many states offer additional incentives in various forms. In 2011, the U.S. President promised that by 2015 the country would become the first state where a million of electric vehicles would hit roads. However, by the beginning of the current year their quantity was slightly more than 270 thou. The U.S. policy in the electric vehicle industry is more interesting due to the fact that the government provides special support to producers. For example, in 2009 it was announced that USD 2.4 bln would be provided for producing batteries and relevant components that would increase their capacity and reduce costs, producing other parts, creating the charging infrastructure, training of skilled personnel, and many other things. In view of the aid provided by the governments of some states and other tools, producers received much more large-scale support from the government. According to some evaluations, Tesla alone received USD 2.4 bln.
The specific feature of the current situation is the fact that all possible stimulation of the electric vehicle market occurs synchronically in many countries of the world. An intergovernmental initiative dedicated to spreading electric vehicles – Electric Vehicle Initiative (EVI) – comprises 17 member states, 8 of which are in the dozen of countries having the highest automotive market capacity. EVI member states hope to increase their total fleet of electric vehicles and plug-in hybrids to 20 mln by 2020 that will be around 2% of the global automobile fleet. There is no question of impossibility to achieve this goal subject to the recent progress in overcoming various constraints to spreading electric vehicles.
The infrastructure for charging electric vehicles becomes more and more available every year. While there were 46,000 “slow” charging stations all over the world in 2012, their number increased to 94,000 in 2014 and the number of “fast” charging stations (CHAdeMo and SuperCharger) grew from 1.9 to 15 thou. in the same period.
The ability to build up the generating capacity also causes no special concerns. Given the fact that the electricity consumption per 1 km of electric car run is currently 0.16-0.28 kWh, replacing 2% of the car fleet will require to increase the global electricity generation by 0.3%. However, a high concentration of electric vehicles in large cities may cause temporary local problems due to a high load on electric grids. While in Sweden and Norway 98% of electricity are generated by renewable energy sources and nuclear power plants, the expediency to promote replacing internal combustion engine cars with electric vehicles, for example, in China with prevailing coal generation, may cause doubt, unless proper control is carried out.
The problem of a relatively high cost of electric vehicles is also gradually solved through active scientific researches and economy of scale. Especial success has been achieved in reducing costs of electric batteries that are the most expensive component of an electric vehicle. Since 2007, costs of lithium-ion batteries for electric vehicle producers decreased from USD 1,000 to USD 300 per 1 kWh. Until recently, it was considered that electric vehicles would be able to compete on equal ground with cars using petroleum and diesel fuel subject to the cost of batteries falling to USD 150 per 1 kWh. It is difficult to predict further trends in the cost of batteries unambiguously and the question is not only successes of science, which have surpassed all expectations in recent years, but the availability of cheap raw materials. Spreading of electric vehicles may easily cause a growth of prices for lithium, nickel, cobalt and some other metals that will result in additional costs. Experts also see other factors that complicate the development of electric vehicles, for example, improving fuel efficiency of vehicles growing by 2.6% in the last 10 years. Specialists predict that the recent fall of oil prices, which has significantly reduced the cost of hydrocarbon fuel all over the world, will also have a constraining effect on higher competitiveness of electric vehicles.
According to IEA evaluations, the number of electric vehicles may reach 80 mln units by 2025. However, according to the key scenario of the long-term power industry development forecast, the mankind will not reach the peak of oil consumption by 2040 and it is early to speak of soon refusal from traditional transport with internal combustion engines.
The material is prepared based on Energy Review No 25 “In Search for New Resources”.