Is There Really an EV Slowdown? Ep182: Colin McKerracher
Oct 23, 2024
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Colin McKerracher, Head of Clean Transport at BloombergNEF, dives into the complexities of the electric vehicle market, addressing perceptions of a slowdown in sales despite robust unit numbers. He discusses regional differences, the challenges posed by tariffs on battery manufacturing, and the rise of affordable EVs in Europe. The conversation explores future projections, with a potential 45% of global vehicle sales being electric by 2030, and touches on the electrification of heavy-duty transport, including innovative charging solutions.
Despite a slowdown in growth rates, overall electric vehicle sales continue to rise, particularly with significant regional variations observed.
European automakers are postponing EV sales due to regulatory pressures, which could reshape market dynamics and pricing strategies in the future.
Investment in charging infrastructure is crucial for sustaining EV adoption, as demonstrated by countries with robust charging networks supporting market growth.
Deep dives
EV Sales Growth Trends
The discussion highlights that while the growth rate of electric vehicle (EV) sales is slowing, overall unit sales continue to increase. This normalization was expected after a post-pandemic bump that saw explosive growth. Currently, EV sales are projected to grow by about 20%, consistent with earlier forecasts, even as regional dynamics reveal differences in EV adoption rates among markets. Specifically, markets like China are experiencing much quicker growth compared to Europe and North America.
European Market Dynamics
The European automotive market is currently experiencing a flattening in EV growth which ties to tightening CO2 regulations and automakers strategically postponing EV sales until after compliance deadlines. This regulatory landscape drives automakers to delay sales in years prior to stricter regulations, leading to a dip in reported sales figures. Nevertheless, it is anticipated that the market will bounce back as manufacturers adapt to the new regulations and consumer demand stabilizes. The conversation suggests that these dynamics may have long-term implications on pricing strategies and market share for European automakers.
Impact of Tariffs and Chinese Competition
Tariffs imposed on Chinese-made EVs aim to protect European automakers but may inadvertently harm them due to established competitors making significant gains in the market. The discussion underscores a strategic misstep if European manufacturers focus too heavily on maintaining current structures rather than innovating and scaling up production capabilities. As Chinese automakers like BYD expand into Europe, they may establish significant market share unless European companies reposition strategically. The conversation emphasizes a need for European automakers to be proactive amid rising competition from more competitively priced alternatives.
Charging Infrastructure Considerations
The critical role of charging infrastructure in driving EV adoption was emphasized, along with the need for significant investment to upgrade and expand these facilities. Evidence from countries with high EV adoption rates shows that well-planned charging networks lead to rapid market growth, thereby reinforcing the investment thesis. A focus on the convenience and accessibility of charging stations is necessary to address consumer concerns about range and charging delays. Furthermore, the emergence of more substantial charging hubs helps alleviate congestion and improves charging reliability.
Future of Clean Transportation Across Sectors
The discussion touched on the potential for clean transportation solutions across various sectors, including shipping and aviation, which are becoming increasingly relevant. Insights shared suggest that while significant progress has been made in passenger vehicles, there's much work ahead for commercial vehicles and long-haul trucking. Innovations like battery swapping and increased electrification for regional transport are on the rise, with the conversation stressing that different segments will adopt technologies at varying rates based on economic viability. The sentiment conveyed is one of optimism regarding the evolution of clean transportation as the industry seeks diverse solutions to keep pace with growing demands.
Is the shift to electric vehicles really slowing down? Are people losing interest in EVs, or is there more to the story? How will changes in the global automotive industry impact the net-zero transition? And If no one wants EVs, why do we need tariffs?
This week on Cleaning Up, host Michael Liebreich sits down with Colin McKerracher, Head of Clean Transport at BloombergNEF, to unpack the latest trends and dynamics in the electric vehicle market from cars to trucks to two wheelers. They dive deep into the regional differences, the strategies of European automakers, the impact of tariffs, as well as the latest forecasts and predictions in BloombergNEF's Electric Vehicle Outlook.
Leadership Circle:
Cleaning Up is supported by the Leadership Circle, and its founding members: Actis, EcoPragma Capital, EDP of Portugal, Eurelectric, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live
Links:
BloombergNEF's Electric Vehicle Outlook: https://about.bnef.com/electric-vehicle-outlook/
