Over the last 5 years electric vehicles (EVs) have become the darling of the automotive world. Sales have been rising quickly and every vehicle OEM is focused on developing and releasing new product to feed what appears to be an insatiable appetite for buying EVs. Yet doubters still exist, with some touting other potential technologies.
So, what is driving the growth of EVs? What is their future? What new technologies should we expect on the horizon? We’ll answer some of these questions in a series of charts with contextual explanation to help understand the bigger picture.
EV Market
The electric vehicle market is expanding at a very rapid pace, following an adoption ‘S curve’ similar to what we’ve seen in the past for other new technologies, such as cell phones, computers and the internet. As a vehicle is typically the second largest purchase for most household (behind housing), it is to be expected that adoption rates will be slower when compared to household electronics.
Below graph shows the adoption of products. After 12 years of electric vehicles being available in the mainstream, most countries are well below 5% of total vehicles in the car park that are electric.
Technology adoption curves for a range of modern innovations
Source: Adaptation of Diffusion of Innovations by Everett M. Rogers
However, the rate of new vehicle sales is what drives adoption in the car park. Many countries are now above 20% of new vehicles sold being electric, particularly in Europe. In most countries a vehicle fleet is usually fully turned over every 12 to 15 years, the average life span of vehicles today. This means that once sales of EVs reach 100%, it will be another 12 to 15 years before the car park reaches 100% EV. We expect that by 2050 the vast majority of vehicles on the road will be electric.
Today, Norway leads adoption rates of electric vehicles by a long way, but even they still have less than 20% of vehicles in operation as electric.
While Europe has been leading EV adoption on a percentage of sales basis, China still leads EV adoption on a volume basis due to its massive population.
Source: IEA Global EV Outlook 2022
10 years of global EV sales
Source: Visual Capitalist, IEA Argonne National Labs
The rate of adoption by country has several key drivers, such as cultural and governmental support and high levels of urbanization. The most favourable EV adoption tailwinds are found in countries with strong cultural and governmental support, that are highly urbanized with easy access to home charging infrastructure.
Positive drivers of EV adoption
Source: New Mobility Survey 2022 Curiosity CX Insights
Per the table above, the more variables in green, the faster the adoption of electric vehicles.
Many, if not most, governments globally have introduced incentives to increase focus on electric vehicle sales, including discounts, income tax breaks, road tax reductions, access to High Occupancy Vehicle (HOV) lanes and other measures.
Combined with a political and societal will to move, as well as an advantageous use case, this can have an enormous impact on sales.
Global phase-outs of gasoline cars
Source: Coltura, Statista Research
Note: As of February 2023. Slovenia, Japan, Canada, Singapore and some US states will continue to allow sale of hybrids. Sri Lanka: combustion road ban.
1. Including EU-wide ban
2. Including signatories of respective COP26 pledge
Another area that governments are focusing on is a phase-out and banning of new car sales of Internal Combustion (IC) vehicles. In the phase-out period, Zero Emission Vehicle (ZEV) mandates are typically introduced, with fines for OEMs who do not meet these requirements.
The first country to completely ban IC vehicles is Norway, beginning in 2025, with many other countries introducing bans between 2025 and 2040. These jurisdictions represent approximately 35 million vehicles annually, or a little under half the global market.
Convergence with Energy
When looking at vehicles, there are 3 types of buckets that emissions generally fall in to over a vehicle’s life. These are:
- Manufacturing Emissions (often called embedded emissions)
- Use Emissions
- Energy Production Emissions
Typically, battery electric vehicles have higher production emissions than gasoline vehicles as batteries are very energy intensive to make.
For Use Emissions, electric vehicles produce no tailpipe emissions, while for IC vehicles this is very high, accounting for the majority of emissions produced by the vehicle during its life. It also accounts for the majority of pollution caused in transportation.
For Energy Production Emissions, IC vehicles add an additional 30% of emissions for gasoline and 24% for diesel above and beyond the emissions of the consumed fuel that are calculated in Use Emissions. For electric vehicles, the Energy Production Emissions vary wildly depending on how the electricity is generated. Typically, a coal power station generates emissions at the rate of 800g CO2/kWh, while renewable energy systems are around 25 to 40g CO2 kWh.
Running an electric vehicle on a purely coal grid may see only a small CO2 improvement, while running it on a predominantly renewable energy grid can reduce Use Emissions by 95% or more.
Source: Polestar
When factoring in all types of emissions, converting to electric vehicles can reduce total lifecycle emissions by well over 50% when used on a clean energy grid.
The growth of clean energy
The good news is that electric vehicles and clean energy are growing together. Wind and solar generation are forecast by the US government to continue to grow strongly through to 2050, by which time it will make up almost half of US electricity generation versus 21% in 2021.
US electricity generation AEO2022 Reference case
US renewable electricity generation including end use
This generation growth can be attributed to the domination of wind and solar in powerplant capacity additions, of which in 2021, 85% were renewables. This is primarily due to significantly lower cost per kWh generated, both in capital and operational expenditures.
US power plant capacity additions
Source: EIA and SEIA, 2022
Renewable energy is growing just as fast, if not faster than electric vehicles, which means that overall transportation emissions can be significantly lowered as time progresses. This leads to the situation where an EV typically gets cleaner the longer you drive it.
What about other energy technologies?
There are two other major alternatives to electric vehicles, e-fuels and hydrogen, both of which have not as yet progressed beyond very niche offerings.
Hydrogen
Today, electric vehicles outsell hydrogen fuel cell vehicles by about 400 to 1. This means more EVs are sold in one day than fuel cell vehicles sell in 1 year.
Global BEV versus FCV sales
Battery electric vehicles
Fuel cell vehicles
Source: BNEF
Because of poor sales, hydrogen infrastructure roll-out remains stagnant. In the UK, Shell have removed all their public H2 refuelling stations, leaving just 7 available over the entire country. In the US there are 54 refuelling stations, with all but 1 located in California. In comparison, there are 115,000 gas stations and 160,000 public EV chargers in the US.
Number of Hydrogen refueling stations by country in 2023
Source: Statista
e-fuels
While there is a significant market for e-fuels like bio-derived ethanol and methanol, production of synthetic e-fuels derived from electricity and hydrogen is close to non-existent.
Synthetic e-fuels are made from a power to liquid process. Unfortunately, as the fuel is still burned through an internal combustion engine, NOx emissions, a primary smog forming emission, are not lowered.
Tests compare car powered by 3 e-petrol blends to fossil fuel
Source: IFPEN (2021)
Efficiency
A major concern with both hydrogen fuel cell and e-fuel vehicles is that they have poor round-trip efficiency, although this could improve over time.
Cars: battery electric most efficient by far
Source: WTT (LBST, IEA, World Bank), TTW, T&E calculations
For electric vehicles, per kWh taken from the grid, 73% makes it to drive the wheels. For hydrogen, this is only 22% and for e-fuels only 13%. This because when changing from one energy type to another there is always an energy loss that follows the law of thermodynamics. These are impossible to innovate or improve out of the equation.
Thus, for each kWh used, an EV travels 3 times further than a hydrogen fuel cell vehicle, and 5 times further than an e-fuels vehicle. Seen another way, to travel the same distance for the total fleet of vehicles, 3x for hydrogen and 5x for e-fuels, more generating capacity like wind turbines and solar panels need to be installed.
Climate-neutral transport: which is more efficient?
Source: Research Center for Energy Networks and Energy Storage
Note:
1. Created from renewable energy and climate neutral
New EV technologies
Like all new technologies and their rollouts, EVs have had more than their share of growing pains.
While both have been around for more than a century, they have only really been available at scale for just over 12 years, supported by the development and commercialization of the lithium-ion battery for consumer electronics.
However, even in that time, both EVs and lithium-ion battery technology have dramatically improved, and we expect this to continue. Here are some top-level directions where we see new technology for electric vehicles developing.
Batteries
Since the Nissan Leaf was first launched in 2011, lithium-ion batteries for electric vehicles have dropped in price by more than 90%. This has allowed larger batteries to power long range EVs that can complete long drives without charging. Today the leading vehicles, like the Lucid Air offering over 500 miles of range. We expect that more and more vehicles at mainstream price points will offer 300 mile capable vehicles.
Moving forward, we see 3 major areas of development for batteries: new cell chemistries, new physical cell designs and redesigning of the battery pack.
An example of new chemistries includes the adoption of more common minerals for anode, cathode and electrolyte to continue to reduce costs. These include adopting low cost iron and sulphur for cathode, as well as adding metals like zinc and tungsten, all of which offer advantages and disadvantages that appeal to different use cases. Therefore, we expect to see a significant increase in the types of chemistries that are available for new vehicles.
New physical designs include a change in cell type towards cylindrical for ease of manufacture as well as the adoption of solid electrolyte (solid state) that are completely stable even when severely damaged, and have better energy density at a pack level.
Battery cells are almost always enclosed in a pack so that a group of cells can operate as one large battery. They must be heated and cooled to the optimum operating temperature and managed to minimize a thermal runaway event (i.e. fire or explosion), which is typically controlled by a Battery Management System (BMS). Improvements in BMS operating controls are occurring all the time and we expect that improvements will significantly improve reliability and efficiency.
Another design change is moving the battery pack towards becoming a structural part of the vehicle. This have been pioneered with the Tesla Model Y significantly lowers vehicle manufacturing costs.
Battery swapping has also been discussed by many, but to date this technology has gained little traction due to the high cost of swapping infrastructure, lack of common design standards and reluctance of OEMs to work together on battery technology.
Efficiency
OEMs have been working towards increasing the “smart range” of their vehicles by finding efficiencies, rather than adding battery size. This has included more efficient motors, better aerodynamics, reducing in-cabin power use, more efficient heaters, low rolling resistance tires, improved regenerative braking systems and changing the ancillary electrical system to a 48V architecture and the power electronics to 800V. Further efficiencies are likely to be found in these and other areas moving forward.
Usability
With less range and fewer charging / refill opportunities, EVs have taken a while to match the usability of gas vehicles, particularly on long trips. However, charging infrastructure roll-out is happening very quickly and more streamlined payment systems are being adopted.
There is also a need to significantly improve home charging for “garage orphans” – those without ‘at home’ parking near a plug. These include people living in an apartment or flat, townhouse dwellers and even renters of single family homes where an outdoor plug is not available.
Plug and charge usability for those vehicles with Combined Charging System (CCS) charging is likely to improve to match the Tesla Supercharger system.
Digital
Cars are becoming significantly more digital in their focus. One of the biggest changes, pioneered by Tesla, is Over the Air (OTA) updating of software through the cellular network or wifi. This enables the OEMs to develop new features, as well as iron out bugs in the system right down to a firmware level. This also includes handling warranty work and recalls.
Furthermore, this digital layer allows OEMs to add unparalleled experiences to vehicles, including video streaming, games, communication with charging networks and trip recommendations.
We believe that this level of ‘software first’ thinking will become a much greater feature for all vehicles in the future.
In conclusion
Electric vehicles will come to dominate our roads over the coming years. While complete roll-out may take some time, we will continue to see new technologies that make EVs cheaper with longer range and new, customer friendly technologies and features.
These changes, combined with the roll-out of renewable energy generation, will drastically reduce emissions: both greenhouse gases that are contributing to climate change, and smog forming emissions that shorten the lives of millions every year.
It’s progress like this that makes our world a better place, and one that we should all be investing in.
This article was written by
James Carter, Principal Consultant at Vision Mobility
