EVs: Who Is in the Driver’s Seat?

Electric vehicle (EV) adoption has caused the biggest shake-up to the automotive sector for decades. And there are no signs of it stopping soon. It is hardly surprising as EVs offer their owners lower running costs, reduced maintenance expenses, and rising fuel prices. In fact, in 2023 nearly one in five cars sold contained electric engines. 

By Dr. Henning Dransfeld, Director of Strategy Industry & Solutions at Infor

However, while things might appear perfect, for many, EVs are still too expensive to purchase. This is restricting any further plans for widescale adoption. 

The Good, the Bad and the Electric

The tide might be about to turn, though, as we are starting to track price drops following increased competition from Korean and Chinese manufacturers. Overall growth rates are more cautious than previous estimates as the industry recognizes the gap between their expectations and consumer reality. 

But it isn’t just cost holding buyers back. Once considered a solution to climate change, we haven’t seen a boom in EV adoption for several reasons. For example, the removal of government subsidies has significantly impacted consumer demand, as has the extended phase-out timeline for conventional petrol and diesel cars which has reduced the urgency for consumers to switch to electric options.

It doesn’t stop there though as persistent challenges such as rapid depreciation, limited driving range, battery concerns, charging infrastructure limitations, higher repair costs, increased insurance premiums, and fluctuating electricity prices add to the many reasons that now doesn’t feel the right time to switch to an EV. 

To reignite the move to EVs, the industry and governments must act. Despite initiatives like that of Tesla in reducing leasing options by 21% to drivers, a large part of the responsibility of making EVs affordable falls to governments. Yes, any technical aspects of resolving some of these problems lie with the manufacturers, such as battery lifespan and depreciation rates. But the high investment costs in research and development (R&D), new technologies, and infrastructure investments mean that natural market forces would struggle to make EVs affordable for mainstream adoption without some level of assistance.

Change Starts From Above

As with many things, change requires someone to drive it. And while manufacturers do all they can to innovate, if the national infrastructure is not fit for purpose, EV adoption will fail before it has been given a chance to succeed. 

That’s the take that the iea has taken; in a 2021 report it outlined the vital need for the 2020s to be the decade of EV transition – but they too recognize that such a period will require global investment in widely available charging stations with the committed policy on a governmental level.  

We have already seen several nations including Norway, Sweden and Iceland achieve high adoption rates because they have supportive government policies, significant investment in charging infrastructure, and incentives that generally make EVs more attractive to consumers. 

For other countries that want to expedite the transition to EVs, their governments should prioritize building EV charging infrastructure in densely populated urban areas that grapple with pollution and congestion.

New Charging Points

They must also consider accelerating the approval process for new charging points and fostering public-private partnerships to incentivize private-sector investment to ensure long-term commitment and engagement in such projects. Finally, integrating energy storage solutions, such as batteries, into the charging infrastructure will help balance energy demand and ensure a reliable power supply, streamlining the overall development and implementation of charging networks.

It doesn’t stop there though as charging points must come as standard in both new and existing buildings, as well as public spaces. While challenges such as planning and construction may arise, particularly in less densely populated areas, incentives and subsidies can stimulate private sector investment and overcome these obstacles.

Private Sector Involvment

To maximize the impact of these initiatives, governments should create a favorable environment for private sector involvement in the EV market. Streamlined planning permissions and transparent regulations can encourage businesses to invest in charging infrastructure and related technologies. However, targeted subsidies may still be necessary to support EV adoption in regions with lower population densities.

Low-emission Zone Policies

Another route to take is implementing low-emission zone policies. By imposing charges on vehicles with high emissions, cities can incentivize the shift to cleaner energy options and significantly improve air quality. This approach, already implemented in London and Paris, can be adapted to suit various urban contexts without requiring entirely new legislation.

The Long and Winding Road Ahead?

The future of dominant power sources for vehicles remains uncertain. While EVs are currently at the forefront of sustainable transportation, a diverse approach encompassing various clean alternatives such as hydrogen fuel cells and advanced biofuels should also be pursued by governments and industry leaders. The dynamic interplay of market forces and consumer preferences over the coming decades will ultimately determine the preferred power source, a choice that governments must safeguard.

Effective collaboration among automotive manufacturers, technology companies, and governmental bodies is essential to foster innovation and create a conducive environment for consumers to adopt EVs or other clean mobility solutions. By cultivating such an ecosystem that supports technological advancements and infrastructure development, nations can position themselves as global leaders in the transition to sustainable transportation.