The Top 5: Global Tipping Points for EVs

09.16.20 | Blog | By:

Hello friends! The Top 5 is back after a summer hiatus! Here’s my monthly take on five most interesting developments in fuels and vehicles trends. What I try to do each month is select stories, studies and other interesting items that you may not have seen elsewhere but that really represents an important issue or trend that I think you would want to know about. Or, I try to poke behind the hype to provide a deeper understanding of what’s happening. Items I selected this month include:

  • EV Tipping Points: According to a recent study from Castrol, globally they are 31-minute charging, 291 miles of range and a vehicle price point at $36,000.
  • Shipping Fuels: The Getting to Zero Coalition has begun to map zero emission pilot and demonstration projects globally that include methanol, batteries, hydrogen, ammonia and biofuels.
  • Mass Exodus from the Cities: Much has been made of the new urban flight in U.S. cities, but a report from the real estate firm Zillow suggests that is overhyped.
  • Does Carbon Pricing Work?: A new study suggest that it does.
  • Meet Ultium Drive: GM will design, develop and manufacture a family of five interchangeable electric drive units and three motors, known collectively as “Ultium Drive,” which it says will help it transition to a fully electric lineup.

1. GreenCar Reports: Study Finds Global Tipping Points for EVs: 31-Minute Charging, 291 Miles of Range, $36,000 – Hat tip to Jeff Hove of the Fuels Institute for sending me this one! According a study from Castrol, meeting these three metrics will lead to mass adoption of EVs globally. The findings in Accelerating the Evolution were based on surveys of 9,000 consumers, 750 fleet managers, and 30 automotive industry professionals in 8 countries—the United States, United Kingdom, Norway, France, Germany, India, China, and Japan.

What are the barriers in these countries? In order of importance, consumers noted (1) vehicle price, (2) charging time, (3) range, (4) charging infrastructure and (5) vehicle choice.  Interestingly, most car buyers surveyed seem to expect some breakthrough in battery technology soon, as 61% are adopting a “wait and see” approach, according to the study. I think the last four barriers will begin to dissolve for consumers in the next few years. Range is improving with a number of new models expected to surpass 300 miles, charging infrastructure is being built out relatively quickly in most of these countries and hundreds of new models will be introduced in these markets over the next 3-4 years.

That leaves price. When would consumers surveyed consider purchasing an EV? On average, global survey respondents said they would consider buying an EV beginning in 2024 (no reason was provided so we assume that this is when they think more models will be available and the foregoing barriers are no longer an issue). Respondents predicted mainstream adoption on a global basis beginning in 2030. The figure below highlights the varying predictions for the countries included in the survey for both individual and mainstream adoption of EVs.

Source: Castrol, August 2020

With respect to the cost, Castrol notes:

“For the consumers in our survey, purchase price is the number one consideration when looking to buy a new vehicle. This suggests that when it comes to the EV market, the price tag is putting off many interested customers. It is likely that many ICE drivers are not aware of the extent to which the initial outlay may be offset by lower running costs. Also, finance products that spread the upfront cost over time may not be available in all markets and to all consumers. To reach the tipping point for price, EVs would need to roll off the forecourt for around $36,000.”

That’s a global average with regional variation. For the U.S., as an example, it doesn’t appear to include the tax credit, which would give purchasers US$7,500 “wiggle room” depending on the vehicle they buy. How many vehicles in the U.S. (as an example) will be available in 2024 in the $36,000-43,500 range? According to data from EV Adoption, in addition to models currently on the market, there will be another 13 in that price range.

And some of these models will be interesting to watch because they are vehicles consumers are already very familiar with; for example, the Ford Escape, the Jeep Renegade, the Toyota RAV4 and the Mitsubishi Outlander are examples. What do they have in common? They’re all SUVs. Big drawback though: the average range for these vehicles is 35 miles. Not sure that’s going to work for the mainstream consumer (in the U.S. or elsewhere, for that matter). Right behind them and slightly more expensive (US$45,000) is the Volkswagen ID.4, an electric cross-over utility vehicle (CUV) that is expected to get 260 miles in range. That’s the vehicle to watch for the U.S. market.

2. Global Maritime Forum: Mapping of Zero Emission Pilots and Demonstration Projects – The Getting to Zero Coalition has begun to map zero emission pilot and demonstration projects globally. Projects have been categorized in terms of their geographical focus, project focus, project type, fuel choice, and the existence of public funding. The Coalition notes that on a general level, the mapping shows that a huge amount and variety of work is already underway globally, demonstrating progress along a range of different fuel choices.

It also shows that there have recently been a number of projects launched looking into the potential of hydrogen-based fuels such as green ammonia or green methanol for deep-sea vessels. The Coalition notes the mapping also reveals a strong positive trend between the uptake of larger projects and the presence of public funding, which is particularly observable in the European context. A few key findings follows:

  • Geographic focus: Most of the identified projects came from Europe (49), with the next highest geographical concentration being in Asia (16). The most represented regional focus was Northern European. The most represented Asian countries with projects in the mapping were Japan, South Korea and China. The Coalition notes that the geographical spread of projects is likely skewed due to the more European makeup of the Getting to Zero Coalition.
  • Project focus: The main focus of projects in the mapping are on the development of ship technologies, but it also includes fuel production projects. For projects covering fuel production, the majority focused on green hydrogen (which is produced using renewable energy to split water into hydrogen and oxygen through electrolysis). This is largely due to hydrogen’s position as a ‘building block’ for the production of other fuels such as ammonia and methanol/ethanol. The figure below shows fuel projects by ship size.

Projects on Fuels and Shipping

Source: Getting to Zero Coalition, August 2020

  • Project type: More mature fuels (biofuels, methanol/ethanol) saw a higher relative amount of demonstration projects. In some cases, some of these projects are already at a stage of commercial viability in terms of customers being willing to bear higher costs for lower-emission shipping. For comparison, ammonia projects were made up of more concept studies, showing the lower maturity of ammonia in terms of technological development.
  • Fuel production projects: Projects which have a direct link to hydrogen made up the majority of the fuel production projects identified. General production of biofuels has moved beyond the demonstration stage, which explains the relatively small number of projects identified. Of these, all projects are focused on producing biofuels from new types of sustainable feedstocks.

3. Curbed: No, the Pandemic Is Not Emptying Out America’s Cities – This story takes on the media stories about mass exodus from America’s cities into the suburbs and rural areas as a result of the pandemic. “Given that the media industry is concentrated in Manhattan — with another good chunk in San Francisco — journalists seem to be confusing the minor outbound migration from two ridiculously expensive areas with the double dose of demand happening across the country.” There is some data behind that. In a post from the real estate site Zillow, analysts note that:

 

“Among the country’s largest metros, the San Francisco Bay Area is home to the most renters who could maybe leave and buy a home elsewhere if telework became the norm — perhaps unsurprisingly, given how expensive the area is relative to both the U.S. and most other large metros. In the San Francisco and San Jose metro areas, 22% and 25.2% of local renters, respectively, would be able to leave the area and buy a home in a cheaper local if telework were an option — almost a quarter million renters total. Los Angeles (17.2% of renters could leave and buy a starter home elsewhere), San Diego (15.4%) and Denver (14.6%) round out the top 5 list of large markets in which the largest share of renters could afford a home elsewhere.

 

But while homes in most of the nation’s largest 50 metros are more expensive than the U.S. at large, home values for starter homes in 13 of these areas are less than the U.S. median — leaving residents in those areas little incentive to leave and buy a starter home elsewhere.”

4. World Economic Forum: Carbon Pricing Is Effective in Reducing Emissions, Largest-Ever Study Finds – Emissions tend to fall in countries with carbon pricing. Researchers analyzed data for 142 countries over more than two decades, 43 of which had a carbon price of some form by the end of the study period. The results show that countries with carbon prices on average have annual carbon dioxide emissions growth rates that are about two percentage points lower than countries without a carbon price, after taking many other factors into account.

The average annual emissions growth rate for the 142 countries was about 2% per year. The researchers note this size of effect adds up to large differences over time. It is often enough to make the difference between a country having a rising or a declining emissions trajectory. The figure below shows countries that had a carbon price in 2007 as a black triangle, and countries that did not as a green circle. On average, carbon dioxide emissions fell by 2% per year over 2007–2017 in countries with a carbon price in 2007 and increased by 3% per year in the others.

Carbon Dioxide Emissions Growth in Countries with and without a Carbon Price in 2007

Source: Best, et al., 2020

The challenge, the researchers say, was pinning down the extent to which the change was due to the implementation of a carbon price and the extent to which it was due to a raft of other things happening at the same time, including improving technologies, population and economic growth, economic shocks, measures to support renewables and differences in fuel tax rates.

Researchers controlled for a long list of other factors, including the use of other policy instruments. “It would be reasonable to expect a higher carbon price to have bigger effects, and this is indeed what we found,” they note. On average an extra euro per ton of carbon dioxide price is associated with a lowering in the annual emissions growth rate in the sectors it covers of about 0.3 percentage points.

5. General Motors: Ultium Drive to Help Power GM’s All-Electric Future General Motors – The company announced that it will design, develop and manufacture a family of five interchangeable electric drive units and three motors, known collectively as “Ultium Drive.” This will help it transition to a fully electric lineup and provide significant advantages over GM’s previous EVs in performance, scale, speed to market and manufacturing efficiencies. In integrating the power electronics into the drive units’ assemblies, the mass of the power electronics has been reduced by nearly 50% from GM’s previous EV generation, saving cost and packaging space while increasing capability by 25%, according to the company.

 

Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.

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