Electric mobility: Adoption and reforms

  • Jan 05, 2020 AEDT
  • Team Kalkine
Electric mobility: Adoption and reforms

                                        

The transition to electric mobility is progressing at a faster rate than estimated, with regular reviewal to the sector’s outlook. Automotive majors have committed over $200 billion to the electrification of the sector with the likes of Ford Mustang, the iconic muscle car, rolling out its EV variant, the all-new “Ford Mustang Mach-E”. Such initiatives help change the mindset of people in favour of electric cars. The sector faced issues such as subsidy cuts by the People's Republic of China, the world's largest EV market, but still couldn't make the internal combustion engine (ICE) majors, such as Porsche and Aston Martin, roll out their first EV models.

Source: The International Council on Clean Transportation

Global EV Outlook

The EV sales surpassed the milestone of 2 million units in 2018, and the future depends on multiple factors affecting the sector. As per the EV Volumes portal, the global plug-in electric sales reached a volume of 1.134 million units during the first half of 2019, which indicates a staggering 46% growth in comparison to 2018. The global EV adoption increased, reaching a share of 2.5% of the total vehicles market in H1 2019. The first half growth accounted to the implementation of amendment in taxation and subsidy schemes globally, full availability of Tesla Model 3, and Europe’s enactment of rigorous regulations for CO2 emissions.

In the second half of 2019, the new Chinese subsidy schemes came into existence. Under the revised plan, vehicles with an e-range less than 250 km were excluding which for others, the subsidies were cut to half. This was reflected with the immediate dip in the sales figures. However, the decline expected to subside in a couple of months.  

EV adoption and reforms

A big debate goes on the green nature of the electric vehicles since a significant portion of the electricity in the developing world is still generated from thermal or other conventional sources. However, these issues have not stopped countries from launching pro-EV reforms in their respective markets to increase EV adoption. Policies and reforms of the following regions have revolutionised the automotive sector in the 21st century:

China

In July 2019, China cut its subsidies for the electric vehicles by about half for long-range electric vehicles (range greater than 250 km) and removing all subsidies vehicles with ranges under 250 km. The news took the world's largest EV market by storm and led to a short-term decline in sales. With the nation grappling with pollution issues, China intends to sell more and more electric vehicles in the future. The country already hosts three of the five biggest EV manufacturers in the world by units. BYD, BAIC and Geely lead the market with the higher range offerings to its consumers to replace the current fossil fuel-run vehicles on the road in the world's largest automobile market.   

China aims to further raise its fuel economy for light-duty passenger vehicles by 2025. The local and provincial governments are collaborating with ride-hailing companies such as Didi Chuxing, to add more EV to their fleet. The country is also increasing its targeted market share to 25% by 2025 for the electric, plug-in hybrid and fuel cell vehicle segment.

BYD, the largest EV player in China, experienced a surge of 7.58% to 216,407 units in the first 11 months of 2019.

Europe

In 2016, the European Commission published a plan for low-emission mobility, which emphasised the relevance of availability of charging infrastructure for EVs, the use of renewable electricity for transport, and awareness among the public for the advances made regarding EVs. EU directed the member states to review their tax system and introduce incentives for cleaner vehicles.

In some regions of Europe, full or partial exemption from paying the vehicle registration tax has been granted. Also, other tax reductions are offered, such as the exemption of annual circulation tax for 10 years in Germany. Ireland charges the minimum rate of the road tax from its EV owners. Besides, purchase grants and other benefits are not uncommon in the region.

Apart from the monetary incentives, EVs have gathered additional support in the EU. Several governments have included EVs for public transportation or have granted access to bus lanes to avoid traffic in the wee hours to lure people into buying cleaner vehicles. Some of the countries also offer free parking to the EV owners, further reducing their lifetime cost.

In the EU, reformative policies were approved. These included the raising of bars for fuel economy standards for cars and commercial vehicles and encouraged the procurement of electric vehicles for public transportation. The Energy Performance Buildings ordinance lays out the basic requirements for charging infrastructure in both the upcoming modern and older sections of the cities. Most of the European nations already provide incentives for the roll-out of electric vehicles and their charging infrastructure. Such policies have led Norway to become the world leader in market share of electric vehicles.

United States

In 2017, new regulations on emissions for the vehicles with a gross vehicle weight of up to 14,000 lbs was enforced. The US Tier 3 standards phase in from 2017–2025 and already have the most stringent regulations for NOx gases in the world. The carbon dioxide emissions from the power sector have decreased to 27 per cent below 2005 levels with the transportation sector emerging as the leading source of emission in the country. Electric companies have invested billions of dollars on an annual basis on cleaner and modern energy infrastructure. As per the report from Edison electric institute and the Institute for Electric Innovation, US EV sales will surpass 3.5 million units per year, requiring about 9.6 million charging stations.  

Other Geographies

Japan aims to reduce 80% of greenhouse gas (GHG) emissions from vehicles by 2050, therefore, promoting cleaner vehicles. In addition, India launched its FAME II (Faster Adoption and Manufacturing of Hybrid and EV) initiative which will invest almost $1.4 billion to share incentives on purchase and setting up of charging infrastructure.

With support from the respective governments and innovations from the likes of Tesla, EV would be a sustainable alternative in the current ICE based automotive market.


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

 

All pictures are copyright to their respective owner(s).Kalkinemedia.com does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.

 

There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

CLICK HERE FOR YOUR FREE REPORT!
   
x
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK