If the actions of global automakers are anything to go by, the internal combustion engine, which powered automobiles for over a century, could become obsolete within a few decades. But the shift to electric vehicles (EV), slow to materialize at first, is now accelerating on a global scale due to more stringent government emissions regulations, falling costs, an increasingly positive public attitude towards a growing number of EV choices and a societal reckoning about climate change.

California said this week it plans to phase out sales of conventional new gasoline-powered cars by 2035 in favor of zero-emission vehicles that run on electricity. Governor Gavin Newsom’s executive order no doubt faces a giant legal fight and could, in all truth, depend heavily on the election outcome and the shape of the Supreme Court.

The rest of the world is far ahead, with at least 15 countries including France, the U.K., the Netherlands and Belgium, already banning new gasoline cars and others adopting strict policies to accelerate EV adoption between 2030-2035. “Europe and China have woken up to the fact that the combustion engine is dead,” says Arndt Ellinghorst, automotive analyst at Bernstein Research. “Now, it looks like the U.S. is waking up.”

Automakers are already jockeying for position, investing some $200 billion on EV technology over the next five years, according to consulting firm AlixPartners. Although the launches of some new production EVs were delayed this year due to the coronavirus pandemic, by the end of 2021, we will see more than two dozen electric vehicles appear on the market. These include the Ford Mustang E and Rivian R1T, the Tesla Cybertruck, Model Y and Roadster. Meanwhile General Motors has committed to 20 new EVs by 2023 including models from Chevrolet, Cadillac, GMC and Buick. 

The Europeans are getting into the act in a big way as well with models like the Audi e-Tron, BMW i4 and iX3, Polestar 2, Volvo XC40 Recharge, Porsche Taycan and Macan EV and Mini Cooper SE. Within the next six months, the Japanese will start selling the Honda e, Nissan Ariya SUV, Toyota Mirai fuel-call car and Mazda’s MX-30, the firm’s first-ever electric SUV.

Sales of EVs topped 2.1 million globally in 2019, registering a 40% year-on-year increase. Electric cars accounted for 2.6% of global car sales and about 1% of global car stock in 2019.

“We have to realistically believe that around 2035 there will be a serious discussion about banning the internal combustion engine, and not just in California,” Volvo Cars CEO Håkan Samuelsson says. Climate change is here to stay and eliminating emissions from cars and trucks is critical in efforts to retard CO2 emissions. 

Urban planners aim to redesign cities around people, not automobiles, by investing in walkable neighborhoods instead of suburban freeways and using electric technology. In January this year, Toyota announced plans to build “Woven City,” a prototype city near Mt Fuji that will be a fully connected ecosystem powered by hydrogen fuel cells and serviced by EVs, robots and drones. In contrast, Porsche is working on new modes of transport that will focus on electric cars coupled with smart traffic guidance systems to avoid urban road congestion.

Until that happens, people will just keep driving, warns Brookings fellow Adie Tomer. “Metropolitan America is stuck with driving for the time being so we have to electrify the fleet immediately,” he adds. 

In the U.S., fewer than 2% of U.S. cars today are electric and barely 6% in California. Even if every other state followed California’s example by 2035, it would be decades before all gasoline vehicles disappeared from American roads.

One analyst sees EVs growing to 58% of new car sales worldwide by 2040, but still only 31% of all cars on the road. Even so, investors are energized. Stocks of EV and renewable energy companies have been soaring, even those that haven’t yet produced any vehicles. Shares in little-known SPI Energy, for example, skyrocketed as much as 4000% recently after the company announced it was entering the EV business.

However, even with the multi-billion investment and changing societal acceptance of EVs, there are serious hurdles that still must be overcome before EVs become affordable and convenient for everyone. These include lower-cost batteries and reasonably priced EVs, a stable supply of cobalt and other minerals to construct the huge number of lithium-ion batteries required, greater range, and more widely accessible and quicker charging infrastructure.

As if the challenge the car industry while offering solid solutions to those questions, Tesla last week laid out a road map for cheaper batteries with higher energy density and the goal of bringing a $25,000 EV to market within the next three years, a car that boasts a 300-miles plus range. Now that might just be an industry-changer.

Source Article