“You’ve got to go back a hundred years or so before we had such a transition” says Bank of America analyst Martyn Briggs about the ongoing EV revolution. EVs represent only 2% of total vehicle sales, but that number is projected to reach 26% by 2030, according to Reuters. This incredible growth has been powered by the growing climate crisis, government regulation, and private sector investments in the industry.
What are EVs
Electric vehicles (EVs) are powered by an electric motor instead of a traditional combustion engine and do not rely on fossil fuels to generate power, but rather a battery pack attached to the electric motor that refuels via an electric charger. EVs are meant to be a more environmentally friendly alternative to traditional gas-powered vehicles. According to the Alternative Fuels Data Center, the average EV emits 67% less carbon dioxide than a traditional gasoline-powered vehicle each year. Consumers also benefit, with the average EV driver saving up to $1000 per year and $9000 over the vehicle’s lifetime on fuel costs alone.
The players
EV technology is being embraced not just by firms like Tesla, but by traditional automakers trying to remain competitive in the market. Ford recently announced plans to increase EV production, with “at least 40% of our global vehicle volume being all-electric by 2030.” The company plans to invest more than $30 billion on electrification through 2025.
A newcomer in the industry is Rivian, an EV automaker that filed for IPO in November 2021 and currently has a $99 billion valuation, higher than either Ford or GM. Unlike Tesla, Rivian is focused specifically on producing electric trucks and SUVs, and its models boast a driving range of more than 300 miles per charge. Interestingly, one of Rivian’s largest investors is Ford, whose CEO recently stated “Ford will not give up its leadership in trucks as it moves to BEVs.”
Emerging trends
This revolutionary growth is driven by a few key trends, first being governments’ embrace of EVs. President Biden recently announced a plan for the United States to have 500,000 public EV charging stations by 2030, an increase from today’s 43,000. Many European countries offer grants for consumers to purchase fully electric vehicles, and have created regulatory targets for EVs to represent 50% of the total auto market share by 2030.
Another key trend is fleet electrification. Major players like Amazon, FedEx, DHL, and UPS have already begun adopting electric vehicles to make up their delivery van fleets. School buses and public transportation have also been targeted for electrification by governments, especially since these vehicles are often left idle overnight or during specific schedules, making them the ideal candidate for overnight electric charging. As new technologies increase mileage, even the electrification of heavy freight trucks becomes possible.
Challenges Ahead
To achieve these goals of EV adoption, there are some key challenges preventing widespread adoption to the point of reducing carbon emissions on a wide scale. First is the infrastructure required for EVs. Significant investments are needed in charging infrastructure, and improvements to existing electric grids are necessary to ensure stability and reliability. Another challenge is getting consumers to switch from gas-powered vehicles to EVs. This confidence should grow as technology continues to improve driving range and battery life, and lowers cost of production. While many improvements are needed to reach the full potential of EVs, government buy-in and industry-wide investments are proof that EVs will be a critical component of the future of mobility