As countries outline climate control norms, about 45pc of the world’s vehicles will transition to electric models, noted McKinsey in its report on the future of global automation.
In order to achieve net-zero emissions, however, electric vehicles (EVs) will have to comprise 75pc of worldwide car sales by 2030. McKinsey has estimated that some of the largest automotive markets; Europe, China, and the US will only produce electric models in the next decade.
Several automakers have already announced plans and are working towards making the shift. General Motors (GM), Lotus, and Volkswagen have each announced a lineup overhaul to EVs within the next 5 to 10 years. GM has also revealed plans of becoming carbon neutral by 2040.
Push for EVs in 2020
The strong push towards EV adoption for passenger vehicles happened in the second half of 2020 and has seen a steady increase. In 2021, the focus has shifted to end sales of internal combustion engine (ICE) vehicles by 2030. Several original equipment manufacturers (OEMs) have joined the foray and hinted at not investing in new ICE platforms and models with a fraction outlining a specific date.
Consumers are also now more open to shared mobility choices and shared bicycle and e-scooter use has seen a 60pc surge year-over-year. Buyer behavior is gradually shifting toward sustainable choices for cars.
EV battery demand to exceed supply
This steady transition will also impact EV battery demand with expectations of sufficient supply in the medium term. Within the next decade, it is estimated that the price of materials for battery production will increase owing to several reasons like supply constraints and legislation.
In an effort to combat this, there has been a move from dependency on Asian factories to the construction of hubs in different regions as well as new companies entering the industry. Many automakers have also formed joint ventures with cell manufacturers to ensure an efficient value chain.
The automotive industry will have to work towards cutting emissions across to the entire life cycle to reach climate targets. Europe will also need to construct new gigafactories, charging infrastructure, and increase renewable energy production to meet the EV demand.
Europe’s Fit for 55
Aiming to achieve a 55pc decrease in carbon emissions by 2030 from 1990 levels, the European transport sector initiated a Fit for 55 program. However, current sales and production regulations on EVs may have to be revised.
The most efficient solution will be to speed up the ICE emissions turnover and using different programs, such as offering cash for old ICE vehicles. Other recommendations are to remove vehicles from the fleet that contribute significantly to pollution. Additionally, miles traveled for ICE vehicles can be reduced by decreasing private car usage by increasing shared mobility and boosting interest in walking or biking as an alternative.