Electric Cars: How Close Are We To The ‘Big Shift’ In Road Transport?

Electric cars seem to have been around for a long time, without ever really having been around in any meaningful way. That is to say, models have existed and the ‘electric car future’ has been part of the collective consciousness for years now.

The first mass market hybrid cars, like the Toyota Prius and Honda Insight, were launched in the late 1990s. Over 20 years ago now. Tesla’s all-electric models have been in the news for several years. And we regularly hear about the new electric cars being worked on by traditional car manufacturers. Electric vehicle (EV) charging points are now not an uncommon site around the UK. And, increasingly, they often have an electric car attached to them.

But despite the gradual drip, drip, drip of information, occasionally supported by physical evidence, that the future of road transport is all-electric, for most of us it’s still very much a theoretical future. How many of us genuinely know someone who owns an electric car? The statistics suggest not many. By the end of 2019, just 9% of the car’s registered for use on the UK’s roads were hybrid or full EVs. Only 1.6%, 38,000, of the 2.6 million new cars registered in the UK over 2019 were actual EVs.

Fully electric cars still represent a small fraction of the vehicles sold in the UK every year. And an even smaller fraction of the total fleet of cars on the country’s roads. But 2020 is being tipped as a breakthrough year for EVs. The year when momentum genuinely starts to gather towards a tipping point. A stride towards electric representing the standard for road transportation.

Why? What’s happening in 2020 that will herald in the era of the EV? Of course, the transition also won’t happen overnight. It will unfold over years. It will certainly be more than a decade before cars, trucks, lorries and buses with combustion engines become a minority on our roads. But experts say that transition gets seriously underway from now. Why will 2020 be a catalyst year and what still needs to happen before EVs become our new norm?

Why The Transition To EVs As The Road Transport Norm?

Before delving into the factors coming together to suggest the electric car market will start to really take-off in 2020, it makes sense to first address the question of why the transition from petrol and diesel vehicles is happening at all. We’ve been driving cars based on the combustion engine for decades now and car technology and the driving experience has continued to improve. So is there any real need for the biggest change in road transport technology since the combustion engine replaced horse-drawn carts? What’s the point?

There are two major groups of arguments in favour of an electric standard for road vehicles. The first is that EVs derive their power from rechargeable batteries so don’t require fossil-fuels burning combustion engines. That means driving the car itself produces no emissions. Of course, the real emissions impact of EVs relies on how the electricity used to charge their batteries is produced. As well as the environmental footprint left behind by their manufacture.

But it is generally accepted, especially as the contribution of renewable and low-emission power generation to the grid’s overall supply increases in developed economies, that the net emissions resulting from EVs is much lower than that of traditional combustion engine vehicles. And as the contribution of renewables to power supplies continues to increase, that will continue to decrease.

Emission levels from cars and other road vehicles, especially trucks and lorries, have a negative impact in two (related) ways. The most obvious result of combustion engine emissions is that they affect the quality of the air we breathe.  Air quality in urban areas, especially in busy city centres, is now a major concern and evidence is mounting around the harm it is causing to health.

On a more global level, the emissions resulting from transport, mainly the result of vehicles running on fossil fuel-powered combustion engines, are the single biggest contributor to overall levels of harmful emissions. As such, slashing these emission levels over the next couple of decades by transitioning to electric vehicles is seen as one of the most significant steps that can be taken towards averting the catastrophic climate change the scientific community consensus says will result if that doesn’t happen.


Source: European Parliament

The second group of reasons why many governments, especially the EU, are determined to stimulate the transition to an EV-dominated future are those based on geo-political and economic factors.

The fossil fuels that traditional road vehicles run on, petrol and diesel, are relatively expensive. That’s because it costs a lot to find the high quality crude oil they are made from, extract it from the ground, transport it, process it and then get it into petrol pumps all over the world.

And because large volumes of cheaper to reach oil are concentrated in particular locations, if anything disrupts the process in and around those locations, the world encounters oil supply problems. That’s why geo-political turmoil in the Middle East results in higher fuel costs around the world. And ultimately, the biggest single reason why the world’s powers have meddled so much in the region over the years and continue to do so. Its strategically hugely important because it produces so much of the oil, without which global transport, and so the world’s economy, would grind to a halt.

Transport not relying on oil-derived fuels would mean that geo-political instability in major oil producing regions would not represent such a huge risk to the global and local economies that don’t have their own oil. So the transition to EVs is also a national and regional security priority. Especially as electricity generation relies less and less on fossil fuels.

Another economic factor in favour of EVs is that the cost of producing electricity continues to fall as renewables and other generation technologies improve and energy storage and transfer technologies also, albeit more slowly, advance. The overhead of fuel costs is one of the greatest burdens on the world economy. Significantly reducing that overhead through a transition to vehicles charged on cost efficient electricity would be expected to be a huge boost for the global economy.

And finally, oil is a finite resource. It’s proving less finite than once feared as discovery and extraction technologies have improved over the years. But it is still finite. If we continue to rely of oil as much as we do today, regardless of when it will completely run out, it will become more expensive as cheaper-to-reach reserves run dry. And eventually it will run out. Better not wait until that point before developing transportation and other technologies that don’t rely on oil-derived fuels.

All of the above are reasons why many governments are prioritising the transition to EVs.

New Rules Speeding Up the EV Transition In Europe

That governmental motivation for an electric-charged road transport system has until now been incentivised relatively subtly – largely through tax breaks on the purchase of EVs. But the approach is about to change and in Europe the heavy artillery is now being brought out to turbo charge the transition.

Car makers are now bringing a broad range of new electric cars to market, many of them to be launched in 2020, not because they necessarily want to. The R&D cost burden has been huge, profit margins are slighter and will be for years to come and recent scandals such as the Volkswagen emissions readings manipulation case highlight it would be naïve to believe climate change mitigation altruism is much of a factor. But they have been forced into doing so by EU laws, accompanied by heavy fines, that come into force from this year.

The new EU rules, which the UK is also expected to mirror despite Brexit, mean that carmakers selling vehicles in the European Union should ensure their models do not exceed average emissions of 95 grams of carbon dioxide per kilometre travelled. That effectively means that the only way they can avoid large fines is to sell one zero-emission electric car for every large 4×4.

It is not expected that any traditional car maker will succeed in hitting the targets they are now bound to by EU law. The result will be fines adding up to hundreds of millions of euros for the larger companies. They will manage to sustain the payment of those fines in the short term but they will hit profits and prove unsustainable in the long term.

Car makers have been left with little choice but to launch EV models attractive enough on price and performance to convince buyers – the majority of whom are also not going to make the change purely based on the motivation of planet-saving altruism.

New Mass Market EV Models Will Light a Fire Under Electric Car Sales Figures

At the end of 2019, electric car buyers in the UK had a choice of 19 models on general sale. The cheapest option was electric Smart cars coming in at under £20,000. But with a range of less than 70 miles per charge. The most expensive, a top of the range Tesla model for around £80,000. Tesla’s Model S can cover up to 300 miles on a single charge.

But up to 22 new electric car models will be launched in the UK over the course of 2020 alone. And crucially, there will be a great deal more choice and competition in the sub-£20,000 and £20,000-£30,000 price ranges, where the large majority of mass market cars fall.

Fiat will launch an all-electric Fiat 500 and Volkswagen an electric Up!, its cheapest model, as well as an ‘e-Golf’. Skoda, Renault, Nissan and Vauxhall, Peugeot and Honda will all release new electric models and there will even be an electric Mini.

The mere fact that electric cars will start to make up a much larger percentage of showroom offerings should mean this year starts to see adoption accelerate.

What Still Needs To Happen Before Electric Cars Become The Norm?

But even if more drivers are transitioning to EVs, there are still three major factors that will define how quickly the new technology takes over from traditional combustion engine models. All three are related in some way to charging.

The first is car makers improving the range of vehicles, which is still largely limited to between 100 and 150 miles for models in the mass market price range. While most drivers do not do more than that in an average day, or journey before a natural break allows for a charge that doesn’t mean waiting around, range limitations can be expected to be a psychological barrier to adoption.

With a full charge, taking a battery from empty or almost empty to full, taking around 8 hours, that is a problem for longer trips. Even if they don’t occur particularly regularly. And it means EVs will not represent a practical solution for drivers who regularly cover long distances in a day. Before that corner of the market can be converted to electric, EV technology will have to improve in a way that increases ranges and reduces charge times.

Finally, countries and regions that target a transition to electric power as a road transport norm will have to oversee the mass roll-out of EV-charging infrastructure. Service stations will have to be converted to cater to charging electric vehicles and hundreds of thousands of charging points installed along roads and around town and cities.

The National Franchised Dealers Association has warned that the availability of public recharging infrastructure is key not just to drivers adopting electric cars but to manufacturers channelling their products to the UK, rather than towards European countries perceived to be more EV-friendly due to superior infrastructure.

To meet its targets, the UK will have to install around 25 million EV charging points, approximately one for every electric car expected to be on the roads, by 2050. That figure is a projection made by the consultancy Capital Economics. There are currently around 15,000 EV charging points available in the UK. Reaching 25 million means 2300 new points being installed every single day for the next 30 years.

That is a monumental undertaking. The good news is that most of those charging points will be installed in the homes of electric car buyers, who will receive the necessary kit with their purchase. But 2.6 million will still need to be installed in public places. Petrol stations will be adapted for EV charging, which will mean not only having charging points but also facilities and amenities for drivers to use while waiting on their vehicles charging.

Charging points can be expected to spring up at locations where drivers naturally leave there cars for long enough for at least a partial charge, such as at supermarkets, malls, cinemas, restaurant parking and so on.

Creating the infrastructure necessary to keep a fleet of 25 million EVs moving around the UK will be a challenge. But without it, a real transition from combustion engine vehicles running on petrol or diesel is impossible. The largest factor in how quickly the transition rolls out will be how effectively charging points are made available. That starts now.

Risk Warning:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Leave a Comment

four − 4 =