Electric vehicles – the road to net zero

Lisa Woodruff

Vice President, Global Head of Retail

Rapid global adoption of electric vehicles is a critical step in the world’s path to a net zero future. But this vital move away from internal combustion engines is not without its challenges.

More than 200 years ago, electric vehicles (EVs) were first invented and saw only brief popularity throughout the late 1800’s. However, when Henry Ford launched his mass-produced Model T in 1908, he provided customers with a lower cost and more readily available option – kickstarting the world’s love affair with the internal combustion engine (ICE). It was an affair that has accelerated mostly unchallenged for over a century, to the point that there are now some 1.4 billion petrol and diesel powered vehicles on the road.

Whether driven by a desire to cut carbon emissions and air pollution, or by a recognition that the superior technology of EVs will secure future sales, manufacturers are seeking to rekindle our love affair with electric vehicles and steal the internal combustion engine’s place in our hearts. Today, every major automotive manufacturer around the world is investing in EV technology, racing to catch up with Elon Musk and his futuristic, high performing Tesla models, to deliver a similar range of battery powered and hybrid vehicles.

This evolution to EV is also sparked by global commitments and pressure to reduce carbon emissions to net zero by 2050 (or earlier) and new government regulations placing onerous requirements on manufacturers to meet EV quotas in support of evolving sustainability agendas.

Overcoming resistance to change

The time really has come for change. Major car manufacturers and fuel companies are investing, rebranding, and adjusting their business models to overtly transition towards electric vehicles and deliver on their commitment to net zero.

But we haven’t yet reached the tipping point for consumer adoption, as ironically, the EV sector is still wrestling with the same set of factors that originally enabled the internal combustion engine to gain market dominance in the early 1900s, namely:

  • Affordability – the cost of EVs remains high compared to internal combustion engines
  • Range anxiety – ranges possible from one charge are still less than a full tank of fuel
  • Fuel availability – the infrastructure required to rapidly recharge batteries is substantially incomplete in many markets

While we have seen great strides in these areas over the past decade, there is more work to be done. Both customer confidence and customer experience are key to accelerating the transition towards EVs.

Slow consumer adoption

Global car sales fell by 15 percent in 2020 to 56 million, however, we saw consumer registration of EVs grow in the same period, to over 3.2 million. Despite this growth, adoption of EV technology is still too low if the car industry is to make a serious development towards a net zero future for personal transport by 2050. On-going consumer barriers mean that enthusiasm for change has not yet matured on a global scale.

In the US, for example, EV take up is particularly poor compared to other regions of similar size, accounting for just over two percent of total EV car sales. California is perhaps the exception, with market friendly policies and regulations accelerating the migration towards EVs and hybrid models.

But this isn’t just a US problem. Countries such as Australia and Russia also lag adoption due to lack of fast charging infrastructure and incentives.

While there is much progress to be made to reach the tipping point of consumer adoption, there are some clear market leaders emerging. Europe leads the way and is growing, despite the pandemic, with 2020 sales of 1.4 million EVs and hybrids and at a rate of 137 percent growth. Europe’s success can likely be attributed to the presence of coordinated government plans and fast charging infrastructure, which is currently double that of the USA.

While the regulatory landscape is transforming, it could also be argued that this regulation is simply catching up to the transformation of the industry that is already well underway. Not only are all major automotive manufacturers transforming their product line towards EVs, but new EV companies are rapidly emerging, bringing both supply and competition to the industry.

Collaboration is the key to accelerating transition

An EV future is an important element in delivering a low carbon, low pollution ambition. But the scale of the public and private sector challenge needs to be overcome if we are to make this transition a reality.

Collaboration must be at the heart of the solution to remap the EV landscape and achieve a transition at a global scale.

Car manufacturers need to work more closely with the entire EV supply chain, energy companies, and Governments to put in place the charging infrastructure, business models and operational expertise needed to reach the tipping point for consumer adoption of EVs.

Our challenge in the construction sector is to bring clients together to have meaningful conversations about new and innovative ways that they might come together to improve the customer experience and boost overall EV adoption. Critically, this will require both co-operation and risk-sharing to achieve rapid expansion, due to inevitable high start-up costs and low, short-term returns.

Solutions that span the industry

Automotive manufacturers need wide-spread fast-charging infrastructure in place to reduce consumer range anxiety and increase EV sales, while public and private entities need to see growth in EV sales to justify any substantial investment in fast-charging infrastructure. As both product and infrastructure are critical in the transformation to EV, the risk must be shared across multiple industries – including assessing the return on investment across key markets and locations, such as interstates, shopping centres and major urban markets.

Charge time is also a key factor in customer adoption of EVs, as both battery and charging dock technologies play an important part in moving the needle. Charging time, using a fast charger, currently takes an average of six times longer than fuelling a hydrogen powered or internal combustion engine vehicle.

New business models to achieve net zero

Whether battery or hydrogen powered, electric vehicles are an important element in delivering a low carbon, low pollution ambition towards net zero. The customer experience will be key to accelerating EV adoption. From the showroom floor, to the charging dock, to the service experience, customers want to know that they are investing in a product that is at the cutting edge of technology. They also want to know that companies are delivering on their promise to achieve net zero, both inside and outside of their product.

But the scale of wider public and private sector challenges must be overcome if we are to achieve a global transition. As a starting point, both public and private developers around the world now understand that investment in EV charging networks is critical to meet global EV demands. But more can, and should, be done to achieve net zero.

Whether public or privately-led developments, clients are considering EV and other sustainable elements as part of their overall net zero strategies. With an increase of EVs, electricity demands on buildings, and therefore electricity costs and dependence on fossil fuels, are likely to rise. To combat this, integration of sustainable solutions into existing buildings, such as implementation of LED lighting and alternative energy systems – such as solar, water and wind power – can help to lower operating costs and reduce a building’s overall carbon footprint.

Ultimately, collaboration is key to create the new business models that will give investors, and customers, the confidence to make change at scale. Forming public-private partnerships and cross sector co-operation will be central to delivering solutions that are both commercially affordable and realistic.

Having been overlooked for a century, the electric vehicle's time has surely now arrived. Our challenge is to create the genuine collaboration and trust between a vast, highly siloed and, until now, largely unconnected group of public and private partners, to accelerate this transition at the pace required to achieve net zero.

For further information contact:

Lisa Woodruff
Vice President, Global Head of Retail

t: +1 615 725 6106
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