While replacing combustion engine vehicles would be hugely beneficial to emissions reduction efforts, this transition has been hampered by the higher price points of EVs. However, as many predicted, this barrier of entry is about to be overcome through economies of scale. The growing number of EVs being produced is reducing the cost per unit as the fixed costs are being spread out over more units of output. The cost of an item goes down as the volume of units goes up.
Many predictions about the adoption rate of EVs have been way below the actual numbers. In the US President Obama had hoped to see one million EVs on the road, so far there is only around 280,000. Although the current global EV penetration rate is only around 1 percent, the future of EVs looks bright. This is the view espoused by the Electric Power Research Institute (EPRI) and the Natural Resources Defense Council (NRDC) in a report titled “Environmental Assessment of a Full Electric Transportation Portfolio”. The report indicates that widespread adoption of EVs could reduce GHGs by hundreds of million metric tons by 2050. This translates to the equivalent to removing between 80 and 100 million passenger cars from the road.
"Today’s study gives us a clear vision of how expanding transportation electrification is a key strategy to achieving critical greenhouse gas and air quality goals," stated Ted Craver, chairman, the president and CEO of Edison International. "This underscores the important role utilities can play nationally in accelerating the market through efforts such as investing in infrastructure to support public and workplace charging stations and incorporating EVs into our own fleets."
According to a Bloomberg New Energy Finance (BNEF) analysis, the costs of EVs is declining and a electric power is about to revolutionize the transportation sector. As reported by The Guardian, the Bloomberg report suggests that EVs will be cheaper than combustion engine cars by 2022.
A key part of these price declines will come from advances in EV battery production which are already declining and becoming more efficient. According to the BNEF report a total of 41 million cars per year or 35 percent of global new car sales will be electric by 2040. Almost half of all new car sales could be electric if oil prices rebound.
The positive outcome at COP21 will help to spur this growth. National efforts will help to drive the transition to EVs in order to meet emissions reduction pledges. "If anyone takes the commitments made at the UN summit in Paris with any degree of seriousness, you have to decarbonise transport," Colin McKerracher, lead analyst at BNEF said.
Such widespread adoption of EVs will reduce oil consumption by at least 14 percent or 2 million barrels a day as early as 2023.
Government support is essential and many nations around the world are helping to make EVs more accessible. According to the UK’s government’s official advisers, the Committee on Climate Change, 60 percent of new car sales in the UK should be electric by 2030.
While new US action can be expected there is already government support for EVs. Federal income-tax credits of $2,500 to $7,500 are available for the purchase of a plug-in electric vehicle. A US bill mandates the Department of Transportation (DOT) to designate corridors for electric-car charging and hydrogen on US highways. These corridors must be designated by December 2016. The renewed home-refueling tax credit that covers electric-car charging stations was renewed. The tax credit for up to 30 percent of the cost of installing alternative-vehicle refueling infrastructure for businesses was also renewed. The General Services Administration has also been mandated to install charging stations at its facilities for use by its employees and those of other Federal agencies.
The near future of EVs is destined to be nothing short of a revolutionary disruption to transportation. "In the next 60 months the automotive industry will see more change than in the last 60 years," reports Cleantechnica.
While EVs enjoy price declines new regulatory regimes will drive up the price of fossil fuel powered vehicles.
Car companies and governments have a powerful incentive to support and lead the coming EV revolution. In addition to reducing emissions and cleaning the air, trillions of dollars are at stake as are jobs and an expanded tax base.
There are already a number of reasonably priced EVs on the market including the Chevrolet Volt which retails for a base price of around $33,000. The even more economical Chevy Bolt sells for around $30,000 as do EV offerings from Nissan, Fiat, Ford, Volkswagen, and Mitsubishi. These price points will continue to fall as the production of EVs increases.
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