Several looming concerns like a post-apocalyptic climate scenario, tied with the equally horrific war in Ukraine have pushed the demand for electric vehicles. With gas price graphs looking like cliffs since February, and the ever-worsening climate crisis, owning an electric vehicle has become an attractive option for many consumers. This was confirmed by Edmunds who said that searches for hybrids, plug-in hybrids and battery electric vehicles in the US increased by 40 percent in March. In the US, the war has reignited Carter-era remnants of energy independence, while the EU’s consumer-centric energy policy objectives are essentially thrown out of the window.
The EV market brings together environmentalists and energy-policy analysts alike in a shared - and rare - support for the transition to EVs. In the UK, the CO2 emissions of new cars sold dropped by 11.2 percent - at the lowest level ever in 2021 due to a surge in EV sales.
In Europe, car travel accounts for 12 percent of all the continent’s CO2 emissions and to remain within the Paris Agreement requirements, emissions from cars and vans will need to drop by a third by 2030 - something envisaged in the EU’s Fit for 55 Plan. Norway - an oil exporter - has proposed to ban the sale of diesel and petrol vehicles as early as 2025. Paris had announced its ban on older and polluting vehicles which was due to be rolled out in the summer of 2022 [which has been postponed until 2023]. Bearing this in mind: what can such a ‘revolutionary’ shift bring with it? What are the technical problems, as well as the geopolitical implications for countries who are now seeking to ensure their ‘mining independence’?
Market overview
According to the IEA, sales of electric cars hit 6.6 million in 2021, which more than tripled their market share from 2019. For comparison: in 2012, 130,000 electric cars were sold worldwide.
China
China has led the growth in the electric car market in 2021 with sales tripling to 3.4 million - which meant that more electric cars were sold in 2021 in China alone than in the entire world in 2020 and their share of the overall market on a monthly basis is around 20 percent. This is due to several factors according to the IEA. The government extended EV subsidies for two years after the pandemic broke out - with a 10 percent reduction in 2021 and 30 percent reduction in 2022. Albeit the reduced subsidies, the numbers are suggesting that the Chinese EV market is maturing.
Europe
In the EU electric car sales increased by 70% in 2021 to 2.3 million. The surge was partially driven by new CO2 emission standards while purchase subsidies for EVs were extended in most major EU markets. The largest market in Europe in 2021 was Germany, where more than 1 in 3 cars sold in November and December were electric. The EU is also hoping to ban sales of internal-combustion engine vehicles by 2035.
Europe, China and the US account for two-thirds of the overall car market but also 90 percent of electric car sales. In other markets, electric cars account for less than 2 percent of overall sales and in large developing economies including Brazil, India and Indonesia the share is below 1 percent without significant increase due to the persistent price premiums and the lack of infrastructure in these countries.
Experts have argued that EVs are close to the tipping point of rapid mass adoption due to the plummeting cost of batteries. This has been passed in Norway where tax breaks mean that EVs are cheaper, and the market share of power-powered cars soared to 54 percent in 2020.
The problems
In the short-term, despite the rise in demand in recent years, the EV industry has not been left untouched by the war in Ukraine: Mark Paul of the New College of Florida told Wired that “there are not enough batteries and auto manufacturing capacity to meet the demand for EVs today.”
Charging infrastructure and energy usage
Bottlenecks begin to appear with the rise in demand for EVs: how will all electric cars be charged? According to an estimate by the IEA, by the end of this decade, 40 million public charging points will be needed - requiring an annual investment of $90 billion a year by 2030, a figure that will need to be increased by as much as five times for the net-zero goals to be met by 2050. This paired with inoperability, makes long-distance transportation a challenge for many, a fact that has been illustrated by range anxiety and the potential of unavailability of public charging. Home and workplace charging leaves Ev owners who live in flats or dwelling without the ability to plug in, making a sufficient and operable public network essential. There are three types of chargers: kerbside charging where cars might park overnight; destination charging which is becoming available in car parks in shopping centres; and fast charging which requires $100,000 per fast charger in comparison to anything between $2,000 and $10,000 for the former options.
Some have also argued that the industry’s structure poses a problem for the development of sufficient charging infrastructure. The need to coordinate with and get permission from several parties can explain the slow roll-out. There are:
firms that make the chargers,
operators, owners of points,
fee-collectors and site-owners such as businesses,
service providers who allow charging with apps or cards that provide access to charging points.
There are now three kinds of firms ruling the EV-charging business: vertically integrated car giants like Tesla with their Supercharger network; BMW, Ford and Hyundai are partners with Volsvagen in Ionity. There are also specialist charging businesses with several of them going public in 2021. While none are profitable, their market values are rising. A final category is energy firms who fear losing business at petrol stations. Shell bought Ubitricity - a European charging firm in February, and announced its plans to roll out 500,000 charging points by 2025.
Technology’s effect on greenhouse gas emissions
Despite the clear demand in the EV market, some commentators argue that it will take decades for the technology’s effect to be felt in emissions reductions. This is due to the long life-cycle of gasoline-powered vehicles already produced - and ones that will be produced. The fleet turnover may be slow as conventional gasoline-powered vehicles are becoming more reliable and are lasting longer on the road - the average vehicle operating in the US in 2021 is 12 years according to IHS Markit. Therefore, cutting emissions from transportation would require replacing all gasoline-powered vehicles with EVs charged by low-carbon power sources (solar, wind or nuclear).
If automakers stopped selling new gasoline-powered vehicles altogether by 2035, the target of going net-zero by 2050 for countries like the EU and the US would be attainable. However, if automakers phase out sales of new internal combustion engines - as General Motors have announced they hope to do by 2035 - consumers from lower income backgrounds who cannot afford newer, and often pricier electric cars will turn to cheaper, used models.
There are several solutions to this such as buying back and scrapping less efficient cars in use, expanding public transit. Another option that is getting momentum is focusing on electrifying and promoting ride-sharing programmes like Uber and Lyft according to a study led by Abdullah Alarfaj - a graduate student at Carnegie Mellon University. Finally, a powerful option is redesigning cities’ housing and transportation systems to reduce reliance on automobiles. This has been done in Paris since 1999, and in Heidelberg in Germany.
Lithium batteries and the geopolitics of EVs
Articles from sometime in early 2021, discussed the drastic cut in lithium battery costs in the last three decades, sparking hopes that EVs will come to cost the same as their combustion-engine counterparts. In the 1990s, the storage capacity necessary to power a house for a day cost around $75,000. Today, the same can be delivered for less than $2,000. Lithium is key to the energy transition as lithium-ion batteries are used to power EVs and store grid-scale electricity.
More recently, articles titled “Gone Ballistic: Lithium Price Rockets Nearly 500% in a Year Amid EV Rush” come to show the fragile economics of raw materials and the bottlenecks that an overambitious, and rushed transition can cause in the market. Between January 2021 and 2022 the price of lithium-rich raw material spodumene rose 478.3 percent according to Benchmark Mineral Intelligence.
At present, more than 55 percent of lithium production originated from Australia, and other suppliers include Chile, China and Argentina. In Europe, the Portuguese government is preparing to offer licences for lithium mining to international companies to exploit its white oil reserves. The recent US-China trade clash hinted at the growing trade protectionism, while the rush for a new mining boom threatens the natural environment of any location where lithium can be exploited. Thea Riofrancos - a political economist at Providence College said: “Everyone having an electric vehicle means an enormous amount of mining, refining and all the polluting activities that come with it.”
With it come conflicting interests: the EU’s bid for mining independence; some locals keen to invest in mining exploitation that could see higher returns than their current agriculture-based incomes; while homeowners in the area are told to find new homes. South America’s lithium triangle - a landscape straddling Chile, Argentina and Bolivia - poses severe health risks for residents including chemical contamination of their water sources, and the risk that the reserves of clean water may become contaminated.
Geopolitics of EV: A Brief Comment
There are complex private and public relations involved in the EV industry including state and non-state actors. This combined with the globalisation of trade, and the climate crisis is slowly preparing the global economy for a shift in the geopolitical power dynamics. Some analysts like Alex Capri, have argued that this has led to the rise of ‘techno-nationalism’: “a new-mercantilist mindset that links the technological capabilities of a state’s key actors to its national security, economic prosperity, and socio-political stability.” In the backdrop of strong trade barriers and resource nationalism, the rise in demand for EVs increases the risks of geopolitical clashes. First, as several German car manufacturers have argued, they are unlikely to stop producing internal combustion engines in the near future, as the second provides a significant source of employment and economic growth. Other countries that may lack the know-how in the manufacturing of EVs and batteries could impose high barriers - similar to those imposed by India in 2018 on photovoltaics in a bid to save their domestic economy when more than 80 percent of their PVs were imported from China. This also touches on the second potential source of geopolitical conflict: access to resources. The increased demand for raw materials including lithium, cobalt and nickel as well as other materials, have created a geostrategic opportunity for countries like China. This comes in contrast to the upcoming reduction in oil revenues made from the gasoline-powered car industry by 2040.
Concluding remarks
Although the electric car is not a new invention, with the first EV making its debut in 1890 thanks to William Morrison, demand for EVs has skyrocketed in recent years - a phenomenon reflected in the consistently increasing sales numbers. The market is definitely here to stay, with maturing signs fast approaching. However, it has not come to magically solve the climate crisis. Transportation accounts for roughly a fifth of global emissions. As with many previously emerging and groundbreaking technologies, the popularisation and wider accessibility of the electric car is coming to revolutionise our transportation markets. However, I am yet to be convinced with the radical role that this will come to play for the transition to net-zero as the slow and, may I argued, at times sloppy shift has led to the creation of bottlenecks, often inflation due the rise in the price of raw-materials, and a new sense of protectionism in a time when cooperation must prevail.