Tesla has made great strides in proving to the world that electric cars can be beautiful, convenient, and affordable. And the world has responded.
Reports on the global market show a meteoric rise of electric cars over the past decade.
According to the World Economic Forum, the industry today is six times the size it was back in 2013, and has doubled since 2015.
At Wesrom, we’re big enthusiasts of the electric vehicle (EV) trend and we’re keeping a close eye on the industry’s evolution. Here are some of the most fascinating industry insights we’ve come across.
What’s Propelling The Rise of Electric Cars
Dropping battery costs are one of the main drivers of competitiveness for electric vehicles. Let’s look at an example provided by Bloomberg New Energy Finance (BNEF).
In 2015, the battery of an average US car represented more than 57% of the total vehicle cost. In 2019, it dropped to 33% and it’s estimated that by 2020 it will plunge to 20%. But how do these numbers affect the industry as a whole?
First, lower manufacturing costs translate into cheaper products for end customers. We’re getting closer and closer to the point where electric cars can compete on price with conventional vehicles.
In fact, the most recent BloombergNEF analysis forecasts that the crossover point will be in 2022, when electric cars will become cheaper than combustion-engine vehicles.
Second, lower battery costs will make it easy and convenient to electrify conventional cars. This will enable a smooth, gradual transition from petrol to electric-powered cars.
Tesla’s open-source patents
Tesla is leading the way for mainstream PEV adoption. So far, the company has built huge manufacturing facilities able to mass produce both cars and batteries.
Not only is Tesla paving the way for the future of automotive, proving that innovation can be done; they’re literally showing everyone how to do it.
In his viral blog post “All Our Patent Are Belong To You”, Elon Musk announced that Tesla would release all their knowledge, all their software code to the public.
Much to his investors’ dismay, the technology became widely available for all electric car companies to use without fear of a patent lawsuit.
However, Musk’s goal had nothing to do with becoming the main car manufacturer. The reason behind his decision was to stay true to Tesla's mission “to accelerate the world’s transition to sustainable energy”.
By releasing its tech know-how, Tesla is making no attempt to dominate the market. Instead, the company’s focus is on creating the market of sustainable transport.
Government grants for businesses and individuals
Governments around the world are backing the sustainable transport initiative. Authorities are offering incentives for businesses and individuals to purchase hybrid and all-electric vehicles.
China had one of the most ambitious grant projects for electric cars. The Electric Vehicle Subsidy Scheme (EVSS) started in 2009, in an attempt to spur the adoption of sustainable transport.
The incentive, 50,000 yuan ($3,700) per vehicle, applied to purchases of electric cars with a range of at least 150 kilometers.
However, the program was scaled back by 50% earlier this year with the minimum range increased to at least 250 kilometers.
As the industry is ripening and manufacturing costs are decreasing, authorities are trying to promote competitiveness through innovation.
Under the UK Plug-in Car Grant, electric car manufacturers and dealers in the United Kingdom can apply for a subsidy. For the end customer, this brings about a discount of max. £3,500 on the price of new low-emission cars.
Similarly, the federal government and a number of US states have financial schemes in place to promote the purchase of EVs. This way, the upfront cost of purchasing an electric car is lowered through tax credits.
Some may argue that one of the shortcomings to the rise of electric cars is that there are fewer chargers than there are petrol stations. That allegedly makes operating an EV less convenient.
But remember that the same was true of petrol stations back in the day, when the industry was young. It was only later on that they started booming.
There is, in fact, a great benefit of electric charging stations: they’re so much easier to install. And inexpensive to set up.
That’s what makes them convenient to install in any parking lot, whether interior or exterior. Hotels, malls, supermarkets, streets, they can all set up an electric charging station.
Just think about it. Right now there are 13,000 public charging stations in the UK, according to CAR Magazine. That is 5 times the number back in 2011.
Nissan predicts that public electric charging stations will outnumber petrol gas stations by 2020.
And here’s the best part yet: when you’re making a buying decision, whether to purchase a car, a house, or make any sort of investment, it's helpful to see the long-term prospect.
You wouldn't buy real estate in a neighborhood that's losing value, would you? Instead, you would buy a house in a neighborhood that has prospects to grow and increase in value.
Similarly, when investing in an electric car, note that they keep getting more and more efficient. At the same time, charging stations are spreading like wildfire.
Here’s our recommendation to all those who can afford it. The next time you buy a vehicle, we highly encourage you to make it at least a hybrid, if not fully-electric.
Oil Giants Are Upping Their Renewable Game
Petroleum incumbents are also shifting towards this new trend. As global demand for gasoline is expected to reach its peak in 2021, companies are seeking new efficiencies.
Across the UK, oil giant BP is championing the adoption of electric charging stations. Its spin-off company, BP Chargemaster, now services the largest electric vehicle charging network in the UK, Polar (7000 public charging points).
Not only did they set a first for the industry, but they also now own one of the largest electric vehicle charging networks in Europe.
Oil incumbents’ eagerness to service the EV industry is a vote of confidence for its future. It foretells a surge in demand and confirms the industry’s long-term sustainability.
There’s no doubt that the industry is gaining more and more momentum. If Bloomberg were right in their forecasts for the crossover point, we’re looking towards some major changes in the near future.
It remains to be seen whether investment in the complementary infrastructure will be on par with that which is pumped into electric vehicle technology.
What better way to wrap up other than quoting the pioneer of electric cars, Elon Musk: “Every time someone chooses electric, the future gets a little bit brighter!”
What has your experience been with electric cars? How do you see the future of the industry? Let us know in the comments.