Categories:
Energy
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General Market Commentary
Topics:
General Energy
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General Market Commentary
Electric Cars Reach a Tipping Point
Say goodbye to gasoline. The world's slow drift toward electric cars is about to enter full flood.
The announcement is important because the most influential players in the global auto market have always been not companies, but governments. Diesel cars make up about half of the market in the European Union and less than a percentage point in the U.S., largely because of different fuel-taxation and emissions regimes. Carburetors have been regulated out of most developed markets because fuel injection -- originally a more costly technology -- results in less tailpipe pollution.
I Sing the Battery Electric
Almost 80 percent of the global auto market is pushing toward phase-out of petroleum cars and adoption of electric vehicles
Moves toward electrification of the world's cars have been tentative. Just 695,000 electric vehicles were sold in 2016, according to Bloomberg New Energy Finance, equivalent to about three days of sales in an 84 million-strong market. Including those already on the roads, the global car fleet is roughly a billion-strong.
At the same time, the direction of travel is unambiguous. China's auto industry plan released in April envisages new energy vehicles -- including electric and hybrids -- making up all the future sales growth in the country. With conventional cars plateauing at current levels, new-energy vehicle sales will reach 7 million annually in 2025. As many as 800,000 charging stations will be built this year alone, according to the official China Daily. Government mandates will require manufacturers to sell 8 percent of their vehicles with electric or hybrid powertrains from next year, or purchase credits to make up the difference, rising to 20 percent by 2025.
India, due to overtake Germany and then Japan as the world's third-biggest auto market by 2020, is on a similar path. Prime Minister Narendra Modi's think-tank Niti Aayog aims to get electric vehicles to 44 percent of the fleet by 2030, and is aggressively favoring them with tax rates 31 percentage points below those on hybrids and internal-combustion-engine cars under its new harmonized GST sales tax.
France and the U.K., the world's sixth- and seventh-biggest markets, are planning to phase out sales of non-electric cars by 2040, while tiny Norway aims to reach that line 10 years earlier. Neither of those targets looks especially ambitious, given the rapid drop in battery costs: In the U.S. and EU, electric cars will reach price parity with conventional vehicles in terms of purchase and running costs around the mid-2020s, according to BNEF. The International Energy Agency believes the use of oil in passenger cars has already more or less peaked, with just 7 percent of demand growth by 2040 coming from the sector.