By NUNBEN DIXON
Head of Gumtree Auto
ANALYSTS around the world promised an electric future. Fine, but there’s a problem – the automakers might not be able to deliver.
The reduction of carbon-dioxide emissions is high on the agenda of a number of nations – among them the UK, India and China – but the promise of affordable electric vehicles (EVs), punted as a cure-all to air pollution, has not been fulfilled.
He names a few, with explanations…
- Norway has exempted EV’s from purchase tax, VAT, road tolls, ferry fees and, in some cities, they enjoy free parking.
- The UK’s ‘Road to Zero’ strategy seeks to eliminate petrol and diesel vehicles by 2040.
- France offers the equivalent of a R64 000 rebate to car owners who swop a diesel car for electric.
- Denmark has plans to ban petrol and diesel car sales by 2030.
Most automakers, Dixon says, have (at least) a hybrid or electric vehicle in the works for the mass-market; forecasts from such as DNV GL (Det Norske Veritas) believe 50% of all cars sold in 2033 will be electric. ChargePoint, operator of the world’s largest charging station networks, predicts a 50-fold increase by 2026!
SALES MINUSCULE SO FAR
The reality, says Nunben Dixon, head of Gumtree Auto, is that the uptake has been, and could remain, slow. Here’s one of his points…
“Despite more than half of potential buyers saying they would consider buying an EV, electric vehicles represent less than ONE PERCENT of global vehicle sales. There’s still a long way to go – many markets have realised their projections were overly ambitious.”
RUNNING OUT OF COBALT
In Australia, for instance, only 1350 of 1.15-million cars sold there have been electric – and that despite initial predictions that half of new sales were be electric by, well, now!
The most prominent reason for tiny sales Down Under is cost. A vehicle with a 90 to 100kWh battery pack needs a cell that costs from the equivalent of R250 000 to R350 000 – the average cost of an entire conventional car.
“Ordinarily,” Dixon continues, ”mass production would reduce retail prices. However, EV batteries depend on raw materials that are perhaps poised for a price increase as their rarity increases – cobalt and lithium.”
What then? Miniature reactors for atomic cars? – Editor
EVs are being punted by governments but sourcing raw material is largely unregulated and unstable. Politics around such materials are also notable. For instance, 60% of lithium is used in applications other than batteries but McKinsey suggests EVs will demand 75% of the lithium supply within a half-dozen years ”a sizeable shift”, says Dixon.
…AND THEN THERE’S THE TAXES
”Control of the market is within four companies which jointly hold 98% of the market, two of which are in the US and one in China. Whether we like it or not, political control plays a significant role in the cost of a car.
”Consider the effect of the trade war between the US and China last year; China is the world’s biggest market for EVs. As the situation intensified, China imposed a 40% import tax on Tesla vehicles, resulting in, overnight, a premium equivalent to R280 000 per vehicle.”
MANY MODELS UNPROFITABLE
Cobalt is another contentious issue: 65% of reserves are in Africa’s Democratic Republic of the Congo – a notably unstable country. This, Dixon points out, could pose the next challenge for automakers: removing cobalt (critical to extending battery life) from worn-out batteries.
AlixPartners conducted a study that showed more than $250-billion had been spent worldwide on EV research and development. As such, many models will be unprofitable.
Dixon again: “Automakers are in a tough position. EVs are lauded as the future of transport; people support that; competitors are working hard on it but cannot afford to miss the opportunity.
”Some will make a significant loss.
“The lesson here is that we shouldn’t put all our eggs in one basket. Most R&D budgets are steering towards the development of EVs rather than reducing the emissions of petrol and diesel vehicles.
”A solution that will reduce emissions and replace fossil fuels may not yet have been invented.”
NOTE FROM our Editor: Research in the UK, in London – if I remember correctly a couple of years ago – showed that, from creation to destruction, DIESEL vehicles are the least-polluting. That, of course, doesn’t doesn’t suit the narrative…