August 20, 2021
The next decade could accelerate the adoption of electric vehicles (EVs). “We are in for an exciting time when it comes to new technologies in the automotive industry,” Martin Briggs, an analyst at Bank of America, said. “You have to go back a hundred years before we had this kind of transition, ironically, then from electric cars to internal combustion cars, and now, of course, we will do the opposite.”
In August, President Biden announced a goal that electric vehicles would account for half of all US car sales by 2030. To represent the scale of the effort, the share of sales of new electric vehicles, including plug-in hybrids, has reached 2% in 2020.
With 29 percent of greenhouse gas emissions from the transportation sector, electric vehicles and fleets are at the heart of the Biden administration’s broader climate goal of cutting emissions to half their 2005 levels by 2030. For example, Walmart has set a goal of electrifying its entire fleet by 2040. Others like Amazon and UPS have taken similar steps, ordering tens of thousands of battery-powered electric commercial vehicles.
While recent EV start-ups continue to showcase the cars of the future, this isn’t the first time EVs have seen their heyday. The first prototype of an electric car was built almost 200 years ago in 1828, and by the turn of the century, electric cars had become popular in the United States, accounting for a third of all vehicles on the roads. However, in the 1920s, gasoline cars surpassed the proportion of electric cars on the road as improved highways allowed people to travel long distances, the invention of the electric starter eliminated the need to start cars, the discovery of crude oil in Texas lowered the cost of gas, and mass production led by Henry Ford lowered the cost. Although the oil crises of the late 1960s and 1970s rekindled interest in electric vehicles, as well as climate concerns in the 1990s, gasoline cars remained dominant throughout the 20th century.
So what separates the recent EV resurgence from previously stalled efforts? The difference, Briggs says, is government-set targets for aggressive electric vehicles, improved range and cost of vehicles, and more choices for consumers.
This time around, he explained, there are multiple options for electric vehicles, such as battery EVs or plug-in hybrids, and he expects that to continue. “We’re most likely to see diversity,” Briggs said. “You’ll see entry-level city cars, cheaper batteries, maybe 100 miles, 150 miles of range. Then you’ll have a midpoint, 200 miles, 300 miles premium cars can drive over 500 miles. But they certainly won’t be the cheapest on the market.
“But there’s one thing that could stop electric vehicles from coming out: supply constraints,” Briggs said, “especially when it comes to battery production. “Europe alone will need about a 30-fold increase in [battery] capacity to meet existing targets by 2025,” he said. “The US will not be far behind and will probably double this figure before the end of the decade.
So, to achieve this, where will those batteries come from? They will not be able to rely on today’s predominantly Asian supply chains, from which about 90% of EV batteries come today. They will have to shift to local supply chains. “But mining companies are already expanding capacity to get some of that in the short term,” Briggs continued. “A big roadblock from which we will have to get to the gigawatt-hour factory and even the terawatt-hour factories to achieve many goals before the end of the decade.”