Battery electric vehicles and climate change
Nonetheless, multi-billion dollar investments – often through OEM and battery manufacturer partnerships (Wayland, 2019) – have enabled a material shift in the customer proposition. Batteries now offer a power and capacity that allows for equivalent top speed and acceleration, and a much- reduced gap on range; size has also been reduced, helping vehicle weight. Similarly, manufacturing costs are lower and this, coupled with anticipated higher vehicle sales to offset the enormous upfront fixed capital costs of new car lines, means that BEVs can now be offered at lower price points and across manufacturers pricing structures and model line-up. Indeed, analysis of total cost of ownership suggests that in many markets and vehicle classes the combination of savings on fuel and taxation and liabilities results in average savings of more than $300 per year ( ‘ Factcheck: How electric vehicles help to tackle climate change ’ , 2020). This shift in proposition to match that of ICE on most dimensions can be seen in exhibit 2.5 ( ‘ List of electric cars currently available ’ , 2020 & ‘ What Car? ’ , December 2020). Global consumer surveys (e.g. Bastin, Bhattacharya, & Kumar, 2019) suggest that consumers are starting to recognize this too. Whilst attitudes across geographies vary (exhibit 2.7), 50% of consumers are now interested in owning a BEV (Bastin, Bhattacharya, & Kumar, 2019). Nearly 30% of consumers claim they would purchase a BEV as their next vehicle, rising to two-thirds if BEVs were at the same purchase price as ICE cars. Environmental concerns are now so prevalent that 16% of consumers would pay a 25% premium over ICE. Nonetheless, BEVs still represent only 2% of all car sales, suggesting significant barriers to overcome in converting interest and rational considerations to actual exhibited purchase behaviour, itself so often influenced by drivers that consumer surveys will frequently struggle to identify, and that consumers will struggle to admit to. My own consumer surveys would suggest overall ignorance on relative costs betweenBEV and ICE vehicles, and that while purchase price remains a concern, offsetting savings from fuel benefits and taxes are difficult to understand and incorporate into calculations (exhibit 2.8). Key among these are concerns about battery range and charging infrastructure. Here, consumer education is likely to be key: while consumers cite battery range as a concern, my own consumer analysis suggests ignorance on today’s BEV range (exhibit 2.9). While ranges are steadily increasing from 200 miles per charge, only 4% of time do people drive more than 200 miles in a day, with an average of less than six trips annually that would require recharging before completion (Bastin et al., 2019); nevertheless, more than 40% of consumers require higher levels of charging infrastructure. Indeed, nearly 50% of consumers will only consider buying a BEV if charging stations are as common as petrol stations. Driving adoption, therefore, will require more than the progress made in delivering a like for like proposition that meets consumers’ needs. Manufacturers need to feel the incentive to continue to rapidly drive down costs, encourage dealer engagement with consumers, and further educate the public on battery range and practicality; charging-infrastructure providers must find combination of private and public solutions to address a major deterrent to BEV purchases, particularly in denser, urban areas where home installation for charging is more challenging; and governments need to encourage the efforts of both, further regulate ICE vehicles to limit their future sales, and at the same time drive consumer awareness of climate risk. The combination is likely to drive further adoption as what has been deemed the SHIFT (White, Habib, &Hardisty, 2019) framework – which I have taken and then used to present my own interpretation of it as it applies to BEVs, in exhibit 2.10 – begins to take effect.
In short, consumer adoption of BEVs also depends, in an interconnected way, onmy three further rules under examination.
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