European law makers must make good on the significant upswing in momentum among Europe-based car makers towards vehicle electrification by ensuring cities have proper infrastructure and incentives to change behaviour of motorists.
Car makers have earmarked €145 billion in electrification, but their success requires major support from national, regional, and civic governments to rollout charging points in homes, cities, and roads, and stimulate usage with tax breaks.
The number of electric car models on the European market will more than triple in the next three years, according to European clean transport campaign group Transport & Environment (T&E), citing research from analyst house IHS Markit. Car makers in the European Union (EU) will be offering 214 electric models in 2021, including 92 fully electric models and 118 plug-in hybrid models.
This compares with just 60 at the end of 2018. IHS reckons 22 per cent of vehicles produced in the EU in 2021 could have a plug, which would meet EU vehicle targets of 95g/km CO2 emissions in the timeframe.
Lucien Mathieu, transport and emobility analyst at T&E, said: “Europe is about to see a wave of new, longer range, and more affordable electric cars hit the market. That is good news but the job is not yet done. We need governments to help roll out EV charging at home and at work, and we need changes to car taxation to make electric cars even more attractive than polluting diesels, petrols or poor plug-in hybrid vehicles.”
Production plans for alternative drivetrains are almost non-existent, said T&E: only 9,000 fuel cell cars will be produced by 2025, compared to four million electric cars. The production of compressed natural gas cars will decrease, accounting for fewer than one per cent of vehicles produced in Europe by the mid-2020s.
IHS forecasts the biggest production centres for production of electric cars will be in Germany, France, Spain and Italy. Slovakia is set to produce the highest number of electric vehicles (EVs) per capita by 2025. Czech Republic and Hungary will also be significant production centres.
Meanwhile, UK forecasts are uncertain, as the shadow of a ‘no-deal’ Brexit looms large. The supply of EVs may be a trickle compared with other EU markets, and UK-based production could fall behind, warned T&E. Greg Archer, UK director at T&E, said: “If the UK leaves with no deal, cars sold in the UK won’t count towards meeting targets. Cars simply won’t be made available in large numbers in the UK, slowing progress in the shift to zero emissions cars here.”
The government consulted on proposals to introduce a UK scheme in 2018 but has not yet released the text of the proposed new UK rules, said T&E. With the new EU regulations due to start from January 1, 2020, there is little time to implement an equivalent UK scheme with parliamentary approval if the UK exits the EU on October 31
In total, 16 large-scale lithium-ion battery cell plants are confirmed or likely to come online in Europe by 2023. Confirmed plants will deliver up to 131 GWh of battery production capacity, according to data from Benchmark Mineral Intelligence – enough to cover the estimated 130 GWh that will be needed by EVs and stationary storage batteries across Europe in 2023.
The EU’s Joint Research Centre says battery manufacturing on this scale will create around 120,000 jobs directly and indirectly. But T&E said the EU will also need to ensure batteries sold in Europe have a low carbon footprint and are reused, recycled and sourced ethically.
Mathieu said: “This is a pivotal moment for Europe’s automotive industry. Carmakers are investing €145 billion in electrification, and battery making is finally coming to Europe. Success in this area is a top EU industrial priority. We need to send a clear signal to industry that there is no way back, and agree a phase-out of petrol and diesel car sales in cities, at national and EU level. The age of the combustion engine is coming to an end.”
Harry Merrison, investment manager at asset management group Kingswood, noted the shift in the market, with environmental, social and governance (ESG) funds holding younger companies.
Merrison said: “Less than one per cent of vehicles are fully electric, which represents a significant growth opportunity given the inevitability of the technology’s future monopoly. The announcement from T&E is significant. The future of driving is very much electric. We are witnessing the phasing out of internal combustion engines. The world is moving towards cleaner energy.”
He added: “New companies tend to be more ethically focused from the get-go and unencumbered with legacy issues. We firmly believe ESG integration and engagement, effectively implemented, can lead to better investment decisions, and ultimately enhanced returns.”
