Six reasons why Electric Vehicles on roads will triple in next 2 years - The Financial Express

Six reasons why Electric Vehicles on roads will triple in next 2 years

International Energy Agency’s Global Electric Vehicles 2018 reports say that with the rise in electric vehicles, Government across the world will need to find alternative sources of tax revenue. China’s fuel tax revenue has already reduced by $2.6 billion because of the growing share of EVs.

By: | Published: May 31, 2018 11:54 AM
Representational Image

The huge paradigm shift towards electric vehicles is very evident, the buyers perspective globally towards driving an electric vehicle is changing and the users are now very accepting of EVs. The latest edition of the International Energy Agency’s Global Electric Vehicles Outlook confirms that the total number of electric and plug-in hybrids cars in the world has exceeded 3 million units in 2017. This is a 54% increase when compared to units sold in 2016.

The number of EVs and hybrid vehicles sold just in 2017 crossed 1 million units globally setting a new world record. More than half of these sales were reported in China. Leading from the front, China is setting a big example by adopting to e-mobility and reducing the air-pollution in the country. Electric car sales in China went up by over 72% with total sales of 5.80 lakh units. The United States of America falls behind China, with about 280,000 cars sold in 2017, up from 160,000 in 2016.

Likes of Tesla electric cars and Nissan Leafs are likely to become a much more common sight on the world’s roads in the next two years, the International Energy Agency says.

Source: IEA Global Electric Vehicle (EV) Outlook 2018

The study by IEA showcases the pace at which the world's mobility system is shifting towards cleaner fuels. Major automakers including Volkswagen Group, Toyota, Tesla, Nissan and Volvo have already announced huge investments to develop the battery powered cars.

The growth of EVs has largely been driven by government policy, including public procurement programmes, financial incentives reducing the cost of purchase of EVs, tightened fuel-economy standards and regulations on the emission of local pollutants, low- and zero-emission vehicle mandates and a variety of local measures, such as restrictions on the circulation of vehicles based on their pollutant emission performances.

 

Key findings of the IEA’s report:

1. China will lead the charge towards EVs and will remain the biggest market

The Chinese government has a number of policies in place to encourage the shift towards EVs, A few cities in China are choked in smog and counter that in 2017 extended a 10% tax rebate for consumers until 2020. In Beijing, it set minimum requirements for domestic carmakers on electric vehicle production through a credit trading system.

2. EVs will save the outflow of petrol/diesel:

The IEA reports that with about 130 million light-duty vehicles will ply on roads worldwide by 2030. This is expected to save 2.57 million barrels of oil per day. That’s about as much as Germany uses each day. Last year, the global EV fleet displaced 380,000 barrels a day of demand, about half of what Belgium consumes.

3. Governments will have to alternative sources of tax revenue:

With the rise in electric vehicles, Governments around the world might lose out on $42 billion in tax revenue from road fuel sales by 2030 says IEA. In the report’s most aggressive forecast for EV uptake, it was as high as $92 billion.

Last year, China’s fuel tax revenue was already cut by $2.6 billion because of the growing share of electric vehicles on the country’s roads, the IEA said.

4. Over 10 more giant battery gigafactories required:

Demand for batteries is expected to rise by a factor of 15 by 2030, largely driven by light-duty vehicles such as cars and vans. China’s burgeoning market is expected to make up half of the world’s demand, followed by Europe, India and the U.S.

That means the world needs many more battery production plants like the Gigafactory that billionaire Elon Musk’s Tesla is building in Nevada. That facility draws its name from the word giga, meaning billion. It will produce 35 gigawatt-hours of batteries over 4.9 million square feet of operating area.

5. Buses first to go electric:
There will be 1.5 million electric buses in use worldwide by 2030, up from 370,000 last year, according to the IEA. Almost 100,000 electrified city buses were sold last year, 99 percent of them in China. The Chinese city of Shenzhen is leading the pack with an all-electric bus fleet. A number of cities in Europe’s Nordic region such as Oslo, Trondheim and Gothenburg also have electric buses in operation.

6. The surge in demand for Cobalt and lithium:

Cobalt and lithium are key ingredients in the rechargeable batteries that power electric vehicles as well as electronics from mobile phones to laptops. Demand could possibly rise tenfold, but technological advances and adjustments to battery chemistry could also significantly reduce this.

Since about 60 percent of the world’s cobalt is mined in the Democratic Republic of Congo where child labor still exists, battery makers are under pressure to show that their products are made sustainably. This may provide an incentive to shift away from cobalt-heavy batteries.

Electric mobility is not limited to cars. In 2017, the stock of electric buses rose to 370,000 from 345,000 in 2016, and electric two-wheelers reached 250 million. The electrification of these modes of transport has been driven almost entirely by China, which accounts for more than 99% of both electric bus and two-wheeler stock, though registrations in Europe and India are also growing.

Charging infrastructure is also keeping pace. In 2017, the number of private chargers at homes and workplaces was estimated at almost 3 million worldwide. In addition, there were about 430,000 publicly accessible chargers worldwide in 2017, a quarter of which were fast chargers. Fast chargers are especially important in densely populated cities and serve an essential role in boosting the appeal of EVs by enabling long-distance travel.

 

With inputs from Bloomberg

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.