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Analysts promised electric future – seems they’re wrong

LONDON, England – The reduction of carbon emissions is high on the agenda for several countries, among them Britain, the UK, India and China. The introduction of affordable electric vehicles (EVs) is held up as a panacea to the pollution problem around the world.

In Norway, EV’s are exempt from purchase tax, VAT, tolls and ferry fees. Some cities allow free parking and in the UK  a Road to Zero strategy wants to eliminate petrol and diesel vehicles by 2040; France offers a €4000 (about R64 000) rebate to people who trade-in their diesel vehicle. Denmark has plans to ban petrol and diesel car sales within the next by 2030.

Most automakers have at least one hybrid or fully electric model for the mass market in the works, others have them on the road, and forecasts by Det Norske Veritas believe half of all car sales in 2033 will be electric. ChargePoint, operator of the world’s largest charging station networks, predicts that they will see a 50-fold increase in the next six years.

SALES LESS THAN 1%

However Nunben Dixon, head of Gumtree Auto, says while governments and industries are gearing up to go green the reality is that the uptake has been, and could remain, slow.

“Despite more than half of consumers saying they would consider buying an EV,” he said, ”electric vehicles represent less than 1% of all vehicles sold globally. There is still a long way to go and many markets have realised that their projections were overly ambitious.”

READ MORE EV features on Carman’s Corner

In Australia only 1350 of the 1.15-million cars sold in the country are electric despite initial predictions that half of all sales would be electric by 2020.

Det Norske Veritas says price is the most prominent reason for poor sales. A vehicle making use of a 90-100kWh battery pack is dependent on a cell costing the equivalent of R250 000 to R350 000 – the average cost of an entire fossil fuel-powered car. In Australia, the cheapest EV is still about R700 000.

RAW MATERIALS UNREGULATED

“Ordinarily, with economies of scale, you can assume that mass production will always reduce costs. However, these batteries depend on a number of materials whose price could increase (with scarcity – Ed) – cobalt and lithium.”

While policies are encouraging the sale of EVs, raw materials supply is largely unregulated and unstable. The politics surrounding the acquisition of such materials are also notable:  60% of lithium use lies in non-battery applications but McKinsey suggests that EVs will need 75% of the lithium requirements for the next six years – a sizeable shift.

The control of the market lies with four companies which jointly hold 98% of the market, two in the US and one in China.

Dickson added: “Whether we like it or not, political control plays a significant role in the cost of your car. Consider the effects of the trade war between the US and China in 2019. China is the world’s biggest market for EVs and, as the situation intensified, imposed a 40% import tax on Tesla resulting in an overnight price hike of R280 000 per vehicle.”

BIG SPENDING, MORE WASTE

The use of cobalt is another contentious issue: 65% of the world’s cobalt reserves are concentrated in the Democratic Republic of the Congo – a notoriously unstable country. This could pose the next challenge for automakers: cobalt is critical to long battery life. Removing it leads to more electronic waste.

AlixPartners conducted a study that has found more than a quarter-billion-dollars in research and development and capital expenditures have been spent on EVs around the globe but many models proved unprofitable.

Dixon again: “Automakers are in a tough position. EVs are lauded as the future of transport, buyers are supportive of it, their competitors are working hard on it, and they cannot afford to miss the opportunity. But they may also take on a significant financial loss if pursuing that opportunity,

“The lesson is that we should not put all our eggs in one basket. Most R&D budgets are steering towards the development of EVs rather than the improvement of petrol and diesel models. The solution that will lower emissions and replace fossil fuels may not have been invented yet.”

Editor: A survey in the UK two years ago showed that electric vehicles, including the production of their batteries, electrical consumption, running costs, and ultimate destruction, were more polluting than fossil-fuel vehicles.

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