How Electric Cars will change the Automotive Industry
Already around us for a couple of years, the electric vehicles (EV) businesses are taking on a whole new dimension since the past 2 years. A trend that is expected to be amplified in the future. In fact, a study conducted by Deloitte showed that the global sales of battery electric vehicles (BEV) will rise to 25.3 million in 2030 (compared to only 1.9 million in 2020). Lower taxations, energy transition, global change in mindsets, or government support, several facts can explain it. What is certain, however, is that competition between automobile manufacturers is swiftly increasing. Among them, we can find historical carmakers, such as Fiat, Audi, or Toyota that have started a transition within their fleets towards more eco-friendly vehicles. And the younger, fast-growth companies such as Tesla, Nio, or Xpeng that focus on electric vehicle production, through massive R&D investments.
Present of EV
The boom in electric vehicle production has not only depended on the increasing demand but also on the reforms approved by supranational entities to dampen the effects of climate change. The EU, for instance, has stated through recent regulations, that as of 2020 the average pollutants emitted across the entire fleet of vehicles must be below 95 grams per kilometer. Firms who surpass this stringent threshold, face fines of up to €90 per gram of carbon dioxide in excess per vehicle. As a result, the only way manufacturers can avoid huge fines is to either produce fully electric vehicles, which emit 0 grams of CO2 per kilometer, or to build hybrid plug-in models, which are largely, but not entirely, emission-free. As a matter of fact, the Italian automobile company Fiat is now planning a new series of EVs, the first model of which being the new FIAT 500, which has been on sale on the market since 2020.
Companies, however, have to create incentives for customers to be interested and willing to buy electric vehicles, thus an actual race to create the best offers possible for the clients, has started.
Governments have also begun to help their home firms by lowering taxation on the sale of EVs. This will ease companies to sell them to the public at competitive prices (following the example set by the US government and Tesla). In the European Union, twenty out of the twenty-seven Member States are already offering incentives such as bonus payments or premiums to buyers of EVs. Some of them have established, as well, disincentives to use non-electric cars by allowing only vehicles that respect limitations to access some areas of the cities. Other countries, instead, offer tax reductions for electric cars.
All these new incentives are slowly showing their effectiveness since, in the last few years, electric vehicle sales have shown tremendous growth in Europe. We can clearly see the consequence of such expansion in the stock prices of many car making firms, one of them being Volkswagen. The German producer has recently announced plans to build six new “giga factories” for battery cells in Europe. Since this news was released to the public, its US listed shares rose by 13% in the stock market. This new price has been the highest recorded since 2009 by the company. Generally, because of high investments in research and development on EVs, Volkswagen has risen by over 50% in the stock market in 2021 alone.
The future of EV
The future for electric vehicles has never looked brighter. It seems that nowadays, the entire world is working together to transform our roads and the way we move within cities. From established manufacturers such as BMW, Audi, and Volkswagen, to innovative startups such as Byton, Lordstown, and Rivian, electric vehicles are continuously developed, improved, and produced at an increasing rate. These developments are further catalyzed by governments’ efforts to reduce global greenhouse gas emissions.
Although polluting diesel and petrol cars still dominate global sales, there are encouraging signs that 2021 will be the tipping point for this to change. Nowhere is this clearer than in Norway, the first country where sales of electric cars exceeded those powered by petrol, diesel, and hybrid engines, despite being a nation whose wealth derives almost entirely on fossil fuels. Furthermore, it aims to ban sales of all internal combustion engine vehicles by 2025 along with the UK, which aims to achieve this by 2030. This exemplifies how targeted policies are helping change consumer behavior and spur private-sector investments towards a greener future.
As consumer’s demand for EVs rises, companies must shift their focus towards this sector, creating a knock-on effect. For instance, General Motors (GM) is creating an alliance with Nikola Motor Company (a successful electric start-up) to engineer and manufacture the Badger, an all-electric and hydrogen fuel cell pickup truck. This alliance is a validation of GM’s Ultium battery and hydrogen fuel cell technology, proving that worldwide manufacturing giants are investing in the development of cost-competitive electric vehicles. Even companies such as Apple are entering the industry through partnering with existing carmakers such as Hyundai, showing that even tech companies are jumping onto this revolutionary change.
Ultimately, the goal is for EVs to become commercially viable for both producers and consumers alike. This goal will undoubtedly be achieved quickly, with giants such as Tesla beginning mass production alongside the increasing competition. Another key challenge will be producing cheaper and more efficient batteries.
For now, there is huge optimism, and it is forecasted that global EV sales will grow 50% in 2021 alone. Simultaneously, the remarkable stock market runs of companies such as Tesla and Nio prove that investors are betting that electric cars are here to stay, regardless of who comes out on top.
The automotive industry saw enormous changes throughout the years, the last of them being caused by the research and development of electric vehicles. The EV sector is growing at a fast rate and, until now, its rise has shown no signs of decline. The consumer demand for electric vehicles is increasing and someday will become higher than the one for traditional cars. Especially if the developed economies will set up a global transition towards green energy, taking advantage of the covid-19 crisis. This could give even rosier perspectives to the EV industry, with an encouraging future ahead. A tendency confirmed by the current general enthusiasm for the entire range of goods and services resulting from this movement.