Progressive Governments are the Electric Vehicle’s Champions

In 1900 28% of cars produced in the US were powered by electricity .... out of 4192 vehicles. Currently electric cars account for less than 1% of global sales, but many agree that they are the future.

Recent developments in the electric vehicle (EV) industry are driven by two factors: progress in battery manufacturing, and pollution-related regulations implemented by governments worldwide in light of the Paris Agreement. Air quality has become a serious political issue (3 million people die prematurely from pollution each year) and electric cars in combination with renewable energy generation are the path to clean air. At least 14 countries have official electric vehicle sales targets in place: Norway, UK, France, Austria, China, India, Denmark, Germany, Ireland, Japan, Netherlands, Portugal, Korea and Spain. While the United States does not have a federal policy, at least eight states have set out goals.

Modeled after California’s program, China (the world’s largest car market) introduced a mandate that would force 8% of all new car sales to be zero-emission vehicles (ZEVs) by 2018, ramping up to 12% by 2020. Norway’s government has already made EVs more financially feasible by implementing gasoline fees, introducing free parking for EVs in municipal spots, investing in charging stations, lowering the road use tax and removing toll fees for EV owners - resulting in the highest EV ownership per capita in the world. Pushing even further, the Norwegian government aims to end sales of gasoline and diesel vehicles by 2025 with the goal of relying almost 100% on renewable energy. The Dutch parliament has passed a similar measure.

India expects to sell only EVs by 2030, while France and the United Kingdom plan to ban sales of new gasoline vehicles by 2040, with the goal of completely phasing out internal combustion engines by 2050. Pressure is growing on Germany to do the same. In 2016 Bundesrat, the federal council of all 16 German states, voted to ban combustion-engine cars by 2030 in an effort to meet the emission targets outlined in the Paris agreement. Chancellor Angela Merkel prefers not to set an effective date, but does in principle agree with the French and UK plans regarding diesel/gasoline car phase-out and believes it is “the right approach”.

Governments have different strategies to facilitate the transition. Since 2009, China has pushed EV adoption through subsidies and policy nudges. According to a report by Bloomberg New Energy Finance, from 2012 to today the Chinese government has introduced 20 different policy alterations to promote EVs, providing a $7,800 subsidy for every EV purchased, mandating EV quotas for carmakers, and offering incentives such as discounted battery charging rates for customers, exemption from parking charges, dedicated parking spots and demarcated low emission driving zones. It is abundantly clear that China not only wants cars built and sold in the country, but also expects automakers to increase the amount of EVs on its roads, all through strong government backing for both car and EV battery manufacturing.

India is following in China’s footsteps. India’s state-owned Energy Efficiency Services Ltd (EESL) has invited global bids to supply 10,000 electric sedans for government fleet use, taking a big step to achieve Minister of State Piyush Goyal’s plan of having only electric cars on Indian streets by 2030. Use of electric cars has been incentivised under India’s Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme (April 2015). Taxes on all-electric cars are 12% compared to 43% on luxury and hybrid vehicles. The National Electric Mobility Mission Plan seeks to have 400,000 electric vehicles on India's roads by 2020. Several Indian states are also in talks with manufacturers to introduce electric bus fleets for use in the public sector as part of India’s plan for reducing local dependence on costly and polluting fossil fuels.

The 2025, 2030 and 2040 target dates clearly signal the start of a transition, reflecting growing confidence in EVs. At the same time, major automotive manufacturers (while announcing multiple EV models for new markets) are trying to control the rate of EV adoption and have requested the Chinese government to lower its EV mandate. A similar stand-off has developed between the European auto industry and EU environmental regulators after the European Energy Commission proposed that automakers meet minimum sales quotas for electric cars (10-15% for 2025 and of 25-30% for 2030). Other special interest groups include the oil industry, concerned that global EV adoption could affect oil demand in the decades ahead. Caution is also suggested by a Wall Street Journal commentary, which points out the temporary nature of tax credits and subsidies offered to EV buyers and manufacturers and asserts that the success of electric vehicles may depend on other factors, including battery cost, the price of oil, and the overall efficiency of competing technologies.

Governmental commitment to promoting EVs is a necessary step toward lowering carbon emissions worldwide but it needs to be supported by comprehensive policies to address the economic realities of all stakeholders. Full adoption of EVs will require close interactions between governments and industry, along with efforts to educate and engage consumers.

Contributors are Elena V. Timofeeva, Carlo. U. Segre and John P. Katsoudas.