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7 September 2017

Let the Electric Vehicle Race Begin

The eventual adoption of electric vehicles (EVs) moves our world one step closer towards fuel efficiency, energy diversification, pollution reduction, and climate change mitigation. This topic has sparked a ton of debate on when EVs will be commercially viable and what needs to happen to get us there. Can this technology realistically be seen as a disruptive force to the oil industry within the next decade?

The growth of EVs has been astonishing over recent years. In 2015, 1.26 million electric cars were registered globally (0.4% of passenger cars), doubling from 2014 and a hundred times more than in 20101. To put that in perspective, there were only hundreds of EVs in 20051. Moreover in 2015, over 550,000 vehicles were sold worldwide with China overtaking the US as the largest market for electric cars1. Together, these two markets accounted for over half of the global new electric car registrations in 20151. Going forward however, several major impediments that are deterring EV market penetration must be resolved, including battery costs, ranges and charging facilities. According to ML research, by 2030 as battery costs reach parity and become cost competitive with passenger cars, EVs will account for roughly 10% of the global vehicle stock as scale is attained with most of the production coming from China1. This will benefit oil consumers (cheaper oil) and EV supply chain producers while hindering oil industrials similar to OPEC with reserves of over 80 years as oil demand peaks. That being said, demand for oil and oil consuming cars will still be present and stick around for longer than people might expect, albeit the increased prevalence of EVs.

For Thailand, the current environment is not yet favorable for the widespread adoption of EVs due to higher prices and insufficient EV related infrastructure available (currently only 20 charging stations in Bangkok and none in rural areas). However, the government is working towards pushing policies that will foster the growth of EV adoption and production in Thailand in the upcoming decades as mass production, technological progress and scale are achieved by global auto players. Yet, roughly only 0.5% of total passenger cars in Thailand will be EVs by that time2. This is considerably small given that there are currently 9 million passenger cars (ex. Motorcycles) in Thailand, according to the Department of Land Transport3. Bangkok will feel the impact first while provinces will hardly be affected due to the lack of supportive infrastructure and the limited development in EV driving ranges. Trucks will take even longer than passenger cars development wise as the battery capacity (synonymous with driving ranges) gap between trucks and EV trucks would still be quite large.  

The widespread adoption of EVs is a necessary step towards a global collective sustainability effort to mitigate climate change which can only be achieved with significant effort from the transport sector as it accounts for roughly a quarter (23%) of global energy-related GHG emissions4. With overseas regulations on emissions becoming stricter and governments pushing for action, automakers and electronic makers have been pouring resources into developing EVs as the next wave of environmental friendly vehicles. Major players are on the offense to position themselves as a global leader in EVs or must face the consequence of getting left behind. The next decade will witness exciting new developments into the world of EVs. So, let the race begin.


By: Chanitnun Nongsuwan September 7th 2017

1 BOAML

2 ICCT

3 Department of Land Transport

4 WEC