I am resigned to the knowledge that I am going buy an electric car eventually, although I am resisting the inevitable. The simple reason is electric cars being sold today are not likely to be around for very long.
The current trend of switching from petrol and diesel vehicles to hybrid and electric reminds me of the music industry’s move from cassette tapes to compact discs in the 1990s. Back then, I naively believed CDs were the end of the audio evolution.
With electric vehicles I have no such illusions. The real solution to sustainable mobility as we move forward on the path to global net zero carbon emissions is as yet, still to fully emerge.
The global motor industry has increasingly committed to EVs and the backing of this trend is in overdrive in the US, Europe and Asia.
Worldwide sales of EVs doubled in 2021 compared to a year earlier, to a new record of 6.6 million, the International Energy Agency said. In 2012, just 120,000 electric cars were sold. About 16.5 million electric cars are on the roads currently, triple the number from four years ago.
In the first three months of this year, 2 million have been sold, up 75 per cent from the same period in 2021. However, total car sales were above 60 million last year – from a low base, the market share of electric cars is set to grow amid government and business backing. The current scenario of record high petrol prices in the US and elsewhere is adding further momentum.
This week, European Union environment ministers agreed on proposals including a law requiring new cars sold in the EU to emit zero carbon emissions from 2035. In Australia, the new Labour Party government expects EVs will account for 89 per cent of Australian new car sales by 2030. The Chinese electric vehicle maker BYD reported record monthly production and sales in May. Analysts forecast it will sell 1.5 million vehicles this year, doubling from 2021.
And the White House said on Tuesday that companies are planning to invest more than $700 million to boost US manufacturing capacity for electric vehicle chargers. Germany’s Volkswagen and Siemens will provide much of this figure.
Despite this, a scarcity of charging points and the limited range of the cars are obstacles to them becoming ubiquitous. There are also very real concerns about the environmental cost of increasing the production of the minerals needed for electric cars. The sector is already suffering from a squeeze on its supply chains amid rising demand.
Meanwhile, Elon Musk has plans to cut 10 per cent of salaried staff at Tesla, the world’s most successful EV maker. The Swedish electric carmaker Polestar went public last week but its share price is already affected by softer investor sentiment.
“When you are spending that kind of money for a vehicle, you at least want it to be reliable and know that the company will be around in a few years time,” Greg Martin, managing director and co-founder of Rainmaker Securities, told Bloomberg.
The concerns that the EV market is a bubble are based on fundamentals. Start-ups like Rivian and Lucid Group are already valued at about half of what century-old Ford is. These levels are not sustainable.
The chairman of India’s largest automaker Maruti Suzuki RC Bhargava voiced his scepticism to Bloomberg this week.
“EVs are not going to be a large part of car sales, irrespective of what other manufacturers are saying or planning,” Mr Bhargava said. “The ability to get green transportation is going to take time in India because of the nature of our electricity generation.”
Maruti will move “aggressively” into cars that run on compressed natural gas because they are cleaner than petrol or diesel models and cheaper than EVs, he said.
Maruti expects to sell 600,000 compressed natural gas cars in the year ending March 2023 versus 230,000 units the previous fiscal year. Maruti currently has nine compressed natural gas models and is planning to introduce more.
Using biofuels to power passenger cars is another alternative, however the investment to make it commercially viable is lacking, Mr Bhargava said.
“Talking about electric cars without looking at the greenness of the electricity generated in the country is an inadequate approach to this problem,” he said. “Until the time we have a cleaner grid power, it’s necessary to use all the available technologies like compressed natural gas, ethanol, hybrid and biogas, which will help reduce the carbon footprint and not push any one technology.”
Thinking back 30 years, I wish I had been as aware as Mr Bhargava. Perhaps there might not be so many worthless CDs cluttering up my house as there are today.