Electric Vehicles are the future, here’s what you need to know.
5 ways this sector is charging up new opportunities
One of the biggest transitions happening in climate is that of the transportation sector. So for the next few articles I’ll be digging into the methods we depend upon (whether we know it or not). Let’s start with Electric Vehicles, the topic you’ve probably heard about the most.
🚘 TL;DR
Electric Vehicles made up 1 in 7 of all new cars sold in 2022. Although this trend was originally consumer-driven, it is now being turbo-charged by regulation. Road transportation, mostly passenger vehicles, accounts for 15% of carbon emissions worldwide. So EVs are seen as a good way to make a dent. And whilst this pace of acceleration is being challenged by some, it is also opening up space for those who want to be in the fast lane.
🏁 And what pace of change are we seeing?
In the whole of 2012, about 130,000 electric cars were sold worldwide. Today, that many are sold in the space of a single week.
There are carrots and sticks at work here.
Carrots include the technological advances in design which enable EVs to run for longer and reduce ‘charge anxiety’ a.k.a. will I make it to the next charge point?
There are now more than 450 car models to choose from, from suppliers like Tesla to traditional car companies to ride-sharing platforms like Uber and now even Foxconn, which makes 70% of Apple’s iPhones
Governments incentives for purchasing cars and installing chargepoints are available in the EU, UK and USA
We now know that 1 in 6 deaths worldwide is attributable to pollution. In 2020, EVs saved more than 50 million tonnes of emissions globally. Finding ways to reduce pollution, especially in cities, is starting to get local government attention
The sticks are also increasing, mostly through a lot of regulation.
The EU has proposed that all new cars sold from 2035 onwards must be zero-emission
In the USA, President Biden has a target to make half of all new vehicles sold in 2030 zero-emission
Countries accounting for 1/4 of global car sales in 2019, including India, signed a pledge to phase out sales of gas and diesel cars between 2035-2040
With current trajectories, EVs are projected to make up 22% of cars on the road in 2030.
👀 What’s up for grabs if this happens?
A part of the new industrial age. Literally.
The shift to EVs is a chance to level the playing field in the automotive industry, which for decades has been dominated by the same countries (China, USA, Japan, Germany) and companies (Honda, Toyota, Volkswagen).
Being a frontrunner in the race for EVs will require investment and planning now. But given the industry’s direction of travel, it seems like the right race to be part of.
Here are 5 ways that EVs represent new opportunities:
🔋 1. Production of components and supply chains
Tesla is unique for building all its parts in-house. Instead most companies will need to purchase items from specialist providers. Whilst traditionally dependent on Asian producers, the USA and European Union are implementing schemes to build more in their own backyard.
This is especially true for:
Batteries: there are currently 22 battery gigafactories in the pipeline for Europe over the next decade. The USA wants to scale production from 55 gigawatt-hours per year in 2021 to almost 1,000 gigawatt-hours per year by 2030, with Georgia, Kentucky, and Michigan as hotspots for production
Micro-processing chips: whilst traditionally made in Japan and South Korea, the European Chips Act aims to product 20% of the world’s chips by 2030.
⚙️ 2. Manufacturing and maintenance
Encouraging domestic manufacturing and take-up of EVs is a good opportunity for governments to demonstrate job potential in the ‘green economy’.
Governments: France, which previously saw much of their auto-industry decamp to Germany, is looking to get back in the game. They’re targeting a domestic production target of 2 million full-electric and hybrid vehicles by 2030. It also explains why they are saying “arrêt” as Germany tries to push back against the EU’s 2035 regulation.
Corporations: traditional automobile companies have also taken an “if you can’t beat’em, join ‘em” approach to EVs. Well-known brands like Honda, Mercedes-Benz, and Jaguar have committed to a 100% electric future, whilst others are aiming for 50% electric.
Source: S&P Global Market Intelligence
⛽ 3. Installing and maintaining charging stations
Although a key bottleneck today, the charging market will grow at 27% annually until 2030. Over 300 charging firms already exist, with more raising capital each year.
Rising EV-specific electricity demand will reshape the load curve: it is predicted to represent 6% of all electricity consumed in the EU and 2% in the USA by 2030.
To meet this demand will require upgrades to the grid, integrations of renewable energy production, and renewable storage. This will create roles for utility companies, urban and regional planners, electricians, construction workers, and architects amongst others.
💳 4. Growth of tangential industries like financing, insurance, and data utilisation
More EVs on the road means opportunities for companies to develop related services.
Financing: new companies and business models are emerging to cover the costs of EVs. This includes a range of mechanisms like car loans, personal contract purchases (PCP), hire purchases (HP), and car leasing.
Insurance: the global EV insurance market will jump from $51.4 billion in 2021 to $210.4 billion by 2031 as a result of the increased number of EVs on the road
Data utilisation: analytics are used to help EV owners and operators make more informed decisions about vehicles and infrastructure. Companies are emerging to distil insights into charging station usage, customer behaviour, and energy consumption to help optimise grids.
🚦 5. And an upside for consumers, as electric vehicles become cheaper than combustion vehicles over their lifespan
The upfront costs for EVs have dropped substantially, with new hatchback models available from £25,000 in the UK or $28,000 in the USA
In the UK, an EV costs £6 less for every 100 miles driven than the average petrol car and can enjoy exemptions from road taxes
EVs have fewer moving parts than traditional vehicles, so require less maintenance - servicing costs can be 49% lower than for petrol models
There will even be opportunities in the near future for EV drivers to export excess energy back to the grid to offset some of their costs
➡️ Of course, just like any transition, the shift to EVs won’t be a smooth ride. Manufacturers of combustion engine-related parts will suffer job losses unless their businesses pivot. And the opening of at least 384 new mines for raw materials like graphite, lithium, and cobalt creates its own ethical and environmental challenges to be solved.
It is however pretty certain that sales of EVs will only pick up speed, and new and exciting opportunities will be catalysed. Of those, charging is one needing a lot of creativity. Stay tuned for an interview with Tiya Gordon, COO of itselectric, about how Design Thinking can help.
Further reading:
Know your electric car - a digestible summary of how they differ from combustion engines
Does the world have enough lithium to move to electric vehicles? A post by the awesome Sustainability by Numbers publication
How much does an electric car cost? A breakdown from Octopus Energy [caveat: they have moved into EV leasing]
V2G (vehicle 2 grid) could not only provide financial offsets but it could also enables a greener grid by providing the capacity to balance the grid frequency with intermittent renewable power gen - provided enough cars are connected to it. Mutually beneficial for both renewables and EV's