Electric vehicles could make up 16% of the global market share by 2020

*infographic from World Energy Council report

The World Energy Council has recently published a report that states that the market share for electric vehicles (EVs) will need to rise to 16% globally by 2020 in order for manufacturers to meet fuel economy standards.
At present, electric vehicles account for less than 1% of the global market share. In the EU, EVs would need to make up around 10% of the market share, which translates to around 1.4 million vehicles.

The US, EU and China all have a target for 30% improvements on emissions that cannot be met through vehicle design and improvements to the internal combustion engine alone. The fuel economy targets were first introduced in the 1970s following oil crises. The standards remained flat for two decades but now they will require continuous improvement of 5.7% annually. Present rates of improvement in the EU have been around 2.8% per annum, which means manufacturers would fall short of their target. In the EU this would result in fines of up to €30 billion. The gap in meeting the 2020 target is being dubbed the ‘EV Gap’.

Road transport currently accounts for a quarter of greenhouse gas emissions in the EU so there is potential to achieve significant overall reductions. It is important, however, to bear in mind that electric vehicles do not come without any associated emissions from their manufacture and operation. In fact, electric vehicles currently require more energy to produce that regular vehicles with an internal combustion engine.

Interestingly, the report highlights that regulations only penalise manufacturers for ‘tailpipe emissions’ and do not take into account the emissions associated with charging an electric vehicle. Electric vehicles can also be credited multiple times: 1.5 times in the EU and 2 times in the US and China.

It is understandable why the regulations do not account for associated charging emissions for electric vehicles; these would vary immensely from region to region, depending on where the vehicle is being used. Countries (including China) that are heavily dependent on coal are likely to see little difference initially to overall emissions when making the switch to electric vehicles. However, many more countries would see a marked improvement, particularly as investment in renewables continues to rise.

In the UK, renewables now account for a significant proportion of our total supply; renewables provided almost 15% of our electricity in 2013 and in the second quarter of 2015 renewables met 25% of our demand, overtaking coal. This figure will only increase as 7GW of coal generation is removed in 2016 and a further 12GW by 2025.

Infrastructure will play a crucial role in helping to promote the uptake of electric vehicles. We recently explored the incentives offered in Japan and Norway that have helped them to become global leaders in the electric vehicle market. In 2015 electric vehicles in Norway already accounted for 20% of the market share. Whether similar incentives in the UK would have the same effect remains to be seen.

The World Energy Council report does note that the required additional power for supplying this new fleet of electric vehicles would be 3.7TWh in the EU, 4.5TWh in the US and an impressive 26.2TWh in China where the grid supply is less efficient. They suggest that this could be a major investment opportunity for utilities providers and that emerging technologies like V2G (vehicle to grid) and TOU (time of use) could help to balance the supply of a more renewables-dependent grid.