Overview
Even as consumer spending on electric vehicles dips due to the novel coronavirus, these environmentally-friendly cars show promise and the electric vehicle industry continues to grow.
Drops in consumer spending, closed dealerships and an uncertain macroeconomic environment have all resulted in a pull-back of the number of cars driven off dealership lots since the onset of the novel coronavirus. Electric vehicle sales have been no different, stricken by the same set of problems depressing the entire automobile industry.
I am a new electric vehicle owner. My purchase was just prior to the COVID-19 outbreak and my decision to purchase was driven by a desire to go green and by cost-based economic analyses. I believe I am no different than other consumers in my car-purchasing analysis, and I must confess that if COVID-19 had started a few months earlier, I would have hit pause on my purchase decision, like many others who were in the market for cars.
In fact, data from the International Energy Agency indicates that 2020 electric vehicle sales worldwide have slowed due to the coronavirus. Electric vehicles had been on a year-over-year double-digit upward trajectory over the past few years but are now expected to remain flat in 2020 compared to 2019 levels.
But despite the temporary slowdown, the future of electric vehicles is promising, with a convergence of stimuli that will shine a bright light on the sector for years to come. The growth course for electric vehicles remains robust, with projections that they will account for 58% of new car sales globally by 2040, according to BloombergNEF. Even peering over the COVID-19 horizon, there are many reasons for short-term optimism.
Extended Battery Life
Innovation in battery technology continues, with lifespans improving and talk about the million-mile battery circulating in the press. This type of advancement helps offset concerns about the degradation of battery life over the long haul, particularly among commercial or ride-hailing service drivers.
Additionally, advances in lithium-ion batteries, which account for the majority of electric vehicle installations, are well underway with the goal of extending and squeezing more capacity while lowering costs.
As battery capacity increases, so does an electric vehicle’s ability to travel longer distances on a single charge. Although some current models go less than the 200 miles that is typically sought after in the industry, future electric vehicles will travel 200 plus-miles, alleviating another consumer concern (certainly one of mine), which is running out of charge.
Charging Stations on the Rise
Fortunately, I can charge my electric vehicle both at home and at work, but for many, charging presents a challenge. For example, for people living in urban centers or in condo or apartment buildings, charging stations may not be easily accessible.
However, the number of stations is on the rise. The amount of public charging stations has grown significantly over the past few years, reaching almost 25,000 stations and 78,000 charging units (Level 2 and DC fast charging – types used by electric vehicles) in the U.S. at the end of March 2020.
Companies are also investing heavily in electric vehicle infrastructure. For example, Tesla is continually expanding their Supercharger stations, with almost 2,000 in the U.S. as of this writing and Elon Musk (Tesla CEO) tweeting about the next generation of chargers (V3) in January “V3 Supercharger deployment will accelerate considerably this year.“ Also, Volkswagen created Electrify America in 2017, with the goal of investing $2B over 10 years on zero-emissions vehicle (ZEV) infrastructure, access, and educational programs, which includes building DC and Level 2 stations in 17 U.S. metropolitan areas.
More Choices and Lower Prices
Global OEMs and startups are entering the fray with more than 50 new models planned over the next couple years, including vehicles from Audi, Kia, Nissan, BMW, Ford, Honda, Jaguar, Mercedes and Tesla. More products on the market creates competition and the consumers stand to benefit by having more choices depending on their driving patterns, commutes and financial conditions.
Competition also pushes down prices. OEMs will be looking to produce cars that address mass market needs at prices comparable to internal combustion engine vehicles. The road to lower prices is not straightforward, given the initial research, development and production costs associated with developing a new line of products. However, to attract buyers, OEMs are aiming high by investing in battery and other types of innovation to address consumers’ concerns. When the industry comes together to solve a problem, it is an encouraging sign and a win for consumers.
The dynamics of the electric vehicle market are changing favorably. Concerns exist about sufficient supplies of raw materials for batteries, regulations for building charging stations, access to charging units for long road trips, and the high cost of electric vehicles compared to vehicles with internal combustion engines. But in time, as prices drop, travel distances per charge rise, and the availability of charging stations increases, many consumers will elect to charge-and-go in an electric vehicle in a post-COVID world. This is, of course, when we’re back on the roads.