Subscribe

Six million electric vehicles on global roads

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 02 Oct 2019
The global EV market is expected to exceed $100 billion in revenue this year.
The global EV market is expected to exceed $100 billion in revenue this year.

With over six million electric vehicles (EV) on roads across the globe, the EV market is experiencing a “remarkable growth” trajectory.

This is according to Colin Kaepernick, head of advanced transport at research firm Bloomberg New Energy Finance, addressing delegates at the Smarter Mobility Africa 2019 Summit in Johannesburg yesterday.

Providing an outlook for the global electric vehicle market, Kaepernick pointed out EVs have rapidly gained traction in the last few years, with the vehicles expected to become mainstream in some markets within the next decade.

“There aren’t many things in the world that move from zero to six million units in a space of a few years, so this indicates remarkable growth. China, which is pushing really hard on EVs, is the biggest market, followed by Europe, North America, Japan and South Korea.

“The interesting thing is that this number also includes electric buses and trucks, an indication of how different economies have different mobile needs,” commented Kaepernick.

Motivated by a combination of low carbon emissions policies and building industrial ports, China sold 1.26 million EVs in 2018, which includes plug-in hybrids, according to the China Association of Automobile Manufacturers.

Global EV sales represent around $75 billion in revenue and this number is expected to exceed $100 billion this year, he added.

The Chinese government has spent nearly $60 billion in the last decade to create an ecosystem that supports EVs as it plans to completely ban combustion vehicles in future.

“EVs are becoming a big business globally and with heavyweight firms supporting the industry, money is starting to flow in the sector. While some regions are going to grow faster than others, there is a real industrial push going on, representing billions of dollars.”

Chasing profit

However, the big challenge facing automakers right now, according to Kaepernick, is for them to make as much profit on EVs as they do on combustion engine vehicles – which he believes is a long way from becoming a reality.

While some manufacturers are making small gains, most are not making any profit, with some even losing money on their EV offerings.

“Although the revenues may appear to be high, it’s very hard to make a profit, because profit is not only about the innovative material that goes into the EV but it also speaks to the production volumes and sales. So it becomes really hard to make a profit if you’re only selling 5 000 to 20 000 vehicles of any model annually.

“But the good news is that we are starting to see the first vehicles that can break the 100 000 sales-a-year mark, and hitting that profitability threshold. This is also influenced by the decreasing battery prices, government support and some companies upping their EV commitments.”

Companies that have introduced e-mobility strategies include Volkswagen – which is aiming for a quarter of its vehicles to be electric by 2025, and Daimler – which has committed to 20% of its offerings being EVs, in the same time frame.

“Some Chinese automakers are going much further, aiming for 100% of their vehicles to be electric by 2025. While these are really high targets, most of them are really trying. By next year, there will be a total of 400 different EV models globally, influenced by consumer demands.”

As automakers race to live up to their commitments, their success rate will be largely determined by the availability of adequate charging infrastructure across the globe, warned Kaepernick.

“We have observed that the responsibility of infrastructure lay-out lies on different players in different countries. In the US we are seeing car manufacturers and utilities companies taking control of building infrastructure, while in Europe it’s being pushed by oil and gas companies.

“In China it was initially the government which started building infrastructure but now the private sector is taking on the responsibility. So, in each part of the world we’re seeing a different mix of sectors taking charge. This speaks to a crucial need of a structured business model.”

Planned acceleration

Also speaking at the event, Mike Mabasa, CEO of National Association of Automobile Manufacturers of South Africa (NAAMSA), outlined the targets of the 2035 Automotive Master Plan, as laid out by the Department of Trade and Industry (DTI).

Mike Mabasa, CEO of National Association of Automobile Manufacturers of South Africa.
Mike Mabasa, CEO of National Association of Automobile Manufacturers of South Africa.

The plan aims to help the automotive sector to become a globally competitive and transformed industry. The six key objectives are: to achieve 1% of global vehicle production by 2035 (increase from current 600 000 units to almost 1.4 million units a year), increase local manufacturing of equipment from 39% to 60%, and double employment in the sector from current levels to about 240 000.

“We also need to transform the sector to respond to future demands in the digital world and increase the value-add through research and development to ensure growth, and finally, to achieve at least level four BEE status from 2021,” noted Mabasa.

NAAMSA is currently working on a proposal aimed at drawing government’s attention to help better prepare SA for the electrification of transport.

The proposal, to be submitted to the DTI at the end of the year, focuses on the development of a clear policy framework on the local rollout of EVs and hybrid vehicles, as well as guidelines on infrastructure provision throughout the country.

“The automotive industry will change faster in the next 10 years than it has in the last 50 years, and we need to consider what is important, as we grow the e-mobility discussion.

“Today, we are at a start of an evolution which forms a large part of the fourth industrial revolution (4IR) conversation. The 4IR is going to be driven systematically to help the automobile sector contribute to the country’s economy while fulfilling changing customer needs.

“The biggest question we have been grappling with is how do we prepare for this future, and ensure that we don’t fall behind global counterparts,” he concluded.

Share