Electric tipping point
We’ve heard it all before. Electrification in the form of pure electric vehicles is ready to go mainstream. After billions of dollars of investing in propulsion systems, motors, and batteries, the industry was planning and hoping for the cleaner option to take hold—and sooner rather than later. Low petroleum fuel prices and consumer indifference have gotten in the way.
However, once again, a tipping point seems to be upon us.
BloombergNEF (BNEF), Bloomberg’s primary research service covering clean energy and advanced transport among other subjects, just published its annual ten predictions with insights from its experts on the outlook for clean energy overall, and electric vehicles made the list (https://about.bnef.com/blog/transition-energy-transport-10-predictions-2019/).
There are now almost 5 million passenger electric vehicles on the road globally (over 5 million including buses and other commercial vehicles), reported Colin McKerracher, head of advanced transport. BNEF expects another 2.6 million to be sold in 2019, representing around 40% growth rate. Broader macroeconomic factors (higher interest rates and slowing consumer spending) will also impact global sales.
China will again lead, with some 1.5 million of those sales, representing around 57% of the global market. That market is in transition, and the recent annual doubling of sales every year looks unlikely to hold in 2019. In markets like the U.S. and the U.K., direct-purchase subsidies are already starting to wind down. BNEF expect European EV sales to come in just under 500,000. North America sales should come in around 425,000, up from 405,000. The Tesla Model 3 surge boosted 2H 2018 sales, but McKerracher says the momentum will be difficult to maintain unless a lower-cost model can be introduced quickly. Sales in Japan and South Korea combined should be around 100,000.
Meanwhile, Arthur D. Little (ADL) released its worldwide automotive market report (www.adl.com/FOAM) showing that drivers are now much more willing to embrace alternative drivetrains. Fifty-eight percent would accept paying more for hybrids and 50% for EVs. Of those planning to replace their car, 48% said they’d consider an electrified vehicle (BEV, hybrid, or plugin hybrid), 36% a gasoline-engine vehicle, and 12% diesel.
These trends are expected to continue to impact manufacturer and supplier engine strategies and push for faster development of EV ecosystems such as charging solutions. One of the major shifts for the U.S. market was signaled by Ford when President Jim Farley told investors in January that a battery-electric version of the F-150 is coming. An electric F-150 would join the Rivian R1T pickup launching in late 2020 and an anticipated Tesla electric truck expected to be revealed sometime in 2019.
Of course, the major electric vehicle sales barriers of low fuel prices, an unclear future U.S. regulatory structure, and the relatively limited range and high cost of batteries would have to be overcome. However, the electrification of the perennially best-selling F-150 model and the arrival of new electric truck competitors could represent the U.S. tipping point many have predicted.