While a small percentage of overall
global car sales, the growth in electric vehicle (EV) sales in the last six
years has been astounding, and some proponents and policymakers are intent on
this trend continuing as a way to combat air pollution and reduce GHG emissions
in line with Paris Agreement targets. In the case of China, some EU member
states and the U.S., another driver for these vehicles is supporting their
domestic auto industries and encouraging their growth and pursuit of new
In summary, the EV fleet is growing
but still only makes up 0.2% of the passenger car fleet. But this could change
quickly. One way it can change? Policy. Governments in both developed and
emerging economies appear to be rallying around electrification in passenger
cars, but also other transport modes such as buses, two- and three-wheelers and
Policies, decreasing battery
technology costs (which presumably drives down vehicle costs) and consumer
interest could accelerate EV uptake globally and many in the oil and investment
banking industries, as well as NGOs, expect that to happen with the market
taking off sometime in the 2030 timeframe (depending on the analysis). But it
could go in the other direction as well, especially if EV costs do not reach
parity with internal combustion engine vehicles (ICEVs) quickly enough. As a
general matter, I believe the key guideposts for members to watch are:
developments (both targets/mandates for EVs and/or charging infrastructure);
technology costs and whether they decline to a level that puts an EV in parity
with a conventional ICEV, which a number of analysts (including me) would put
at about US$75-100 kWh (see post Mar. 25, 2019);
growth and development;
consumer interest and acceptance, especially as the auto industry prepares to
offer many different EV model types for consumers to choose from in the next
few years in key markets such as China, North America and the EU.
This report focuses on national
policies being set or contemplated around the world to support EV uptake. A
previous post (see link above) focused on battery technology costs. Future
posts will focus individually on infrastructure and consumer reactions/interest
and market development in EVs globally. Countries are moving quickly to set EV
policies that tend to focus on:
targets for EVs;
types of fiscal policies for EV;
fuel economy standards;
or phasing out ICEVs (which may be coupled with national EV targets);
types of policies that are preferential toward EVs.
This report reviews existing EV policies that have been set, highlights new developments for some countries over the last year and reviews the status of car bans. Accompanying this report is a spreadsheet, adapted from UN data, that attempts to summarize EV policies around the world.
- In the last year, countries have moved quickly to set policies to encourage EVs for the passenger car fleet, but also for heavy-duty vehicles (mainly buses), two- and three-wheelers and even for e-rickshaws and tuk-tuks!
- More than 45 countries have set or are setting national targets for EVs the majority of which appear to enter into force around the 2030 timeframe.
- Countries are setting targets, not mandates, to send a clear signal to the auto industry.
- Developed economies, particularly in Europe, are linking CO2 to fiscal incentives. Some, such as France and Italy, employ “bonus-malus” schemes.
- Over 75 countries have set some kind of fiscal policy or policies to encourage EV uptake that might include: tax incentives for vehicle purchase, tax reductions/VAT exemptions, import duty reduction or elimination, subsidies and other related policies.
- 11 countries plan to ban ICEVs as another policy pathway toward encouraging EV uptake.
- What about the U.S., which is hardly mentioned in this report? My view is that the EV market in the U.S. will develop slowly, so slowly, that I project just 10% EVs in new LDV sales by 2040. Why? Because while the rest of the world is tracking toward decarbonization, the U.S., under the Trump Administration, is tracking toward deregulation. That will impact the market for decades to come.