A ludicrous piece in the US press this week began with an “assumptive” statement about EVs, that they are on the wane. This is a serious piece of “misdirection,” as nothing could be further from the truth.
The key statement was “Policy support for electric vehicles is waning in key markets around the world, potentially softening EV sales…” which is really wishful thinking from a petroleum addict. And sure enough the Rapidan Energy Group, put out a report which pushed back on forecasts for a peak in global oil demand.
You will hear this from time to time, but the day of the EV has come. Energy markets are one large set of interrelated markets, and there is now irresistible pressure towards it in the electricity industry, in climate change discussions, among governments, and finally among car companies. The only companies who will resist it to the death and try to avert disaster are the oil companies who want to suggest a model of their continued success to their shareholders.
In ten years’ time someone will own all the oil assets – but not those who hold them now, or at least they will only be a fraction of their entire holdings. But for the time being a healthy share price is vital of these companies in order that they can buy their way into the energy and renewables sector, with stock as much as cash. Hence the misdirection.
Rapidan’s argument is that it Decarbonization Policy Tracker found that the US and China, the world’s two largest EV markets are in the process of ratcheting back policy support for EVs. But are they? Really? A decarbonization policy tracker for a fossil fuel company? What else can it be for but to reassure oil companies that no harm will come to them?
At some point the incentives to buy EVs must be withdrawn, but that’s because business as usual takes over – people will accept a declining incentive and still feel attracted to the technology. Right now EVs are expensive, they will ne cheap. EVs cost a fraction to run and last twice as long. Total cost of ownership has already crossed in their favor. More change will come.
In March China decided to halve the $6,650 subsidies that it operates on EVs, and the result was an immediate fall in sales numbers. The game is that this fall is temporary, and that sales will slow rise from a lower base, until they surpass where they were in 2018.
After a slow May, with just 2% growth, June saw the Chinese plug-in EV market hit 147,000 registrations, up 72% from a year ago. Fully electric vehicles grew at 97%, and while the mainstream car market is down 8%. So the timing of the Chinese subsidy reduction may end up spot on and be far from “ratcheting back policy support for EVs.”
In the UK in October government subsidies fell from £4,500 to £3,500 and much the same has been happening all over Europe.
Meanwhile in the US in March the White House proposed to eliminate the tax credit which goes as high as $7,500 on each EV up to 200,000 vehicles sold.
This tax inventive will completely disappear for Tesla buyers in January 2020 and in April 2020 for GM. Luckily for the EV, Mr. Trump will be unable to kill the federal tax credit without cooperation from Congress, and he will not get it. Meanwhile his attempts to ease fuel-efficiency standards are being sidelined with legal and bureaucratic obstacles.
US EV sales were up 81% in 2018 and although they are still under 2% of all vehicle sales, other vehicles sales are falling, while EVs in Q1 and Q2 of 2019 are still up healthily.
So we’re not sure where the optimism is coming from among the petrol-heads. This is a President that leveraged fossil fuel money to get elected, has been pro-fossil fuel and anti renewables, and yet momentum continues in the other direction. Buying a president on a set of promises to be pro-fossil fuel and then boasting that the president is pro-fossil fuel, is not really an achievement.
Tesla has just come out with impressive sales of its EVs and in the month of June sold 37,818 plug-in EVs in the US up from last year’s 25,029.
Rapidan acknowledged that South Korea has also emerged as a major player in EVs, now the world’s fifth-largest EV market, with 7% and points to a federal point-of-sale scheme due in Canada. There is a strong chance that Japan’s policy which was pro-hydrogen fueled cars, may change also.
The Rapidan report also notes that several countries including Austria, Denmark, Portugal, Norway, Ireland, India, the Netherlands, Canada and Scotland will ban ICE vehicles in the 2030 to 2040 timeframe, they say they have not codified these goals in law, which it believes throws implementation into doubt. It can add the UK to those names and a few more besides, and there is every chance that the entire EU will adopt an EV only policy post 2040 in the coming two years. These are some of the most consistently robust vehicle markets in the world and the more EV they go, the less petroleum is sold. If Germany did not have a batch of car makers who are behind in the transition, it too would be on the list of those banning ICE vehicles. Once its car makers are clear on their plans, that too will happen.
The report says that societies tend to make sweeping aspirational goals for energy transitions only to abandon them as their costs and complexities are later recognized. Setting long term policy goals is a lot easier than meeting them. What are they basing that on, the shift from horses to cars? On no, that happened virtually overnight.