The Lowdown on Electric Vehicles
By Richard Huang
Gigaton Potential
Today, the transport sector comprises 22% (~7 gigatons p.a.) of global emissions. Within transport, passenger light-duty vehicles ("LDV") account for >50% of the sector's CO2 footprint. Despite a multi-decade turnover period for the existing global LDV fleet, passenger electric vehicles ("EVs") have the potential to eliminate 20 gigatons of CO2 emissions cumulatively from 2021-2050, according to Project Drawdown.
You Might Be Interested If...
You are excited about influencing the trajectory of a generational transition in mobility at an early stage. Electric vehicles are almost assuredly the next step, but how are we going to get there?
You want to sit at the crossroads of technology (AI, software/hardware) and traditional manufacturing in a product that touches your everyday life.
You enjoy thinking big picture! The development of new business models is key in disrupting a legacy, concentrated auto market that is dominated by few major players.
Electric Vehicle Overview and Outlook
While many different drive-train configurations and fancy add-ons exist, the concept of vehicle electrification is quite simple: replacing the fossil-fueled internal combustion engine ("ICE") with a battery-powered electric motor. EVs have zero tail-pipe emissions and significantly lower lifetime emissions impact versus traditional ICE vehicles.
Over the past decade, secular tailwinds in both technology (cost) and policy have supercharged the outlook for electric vehicle adoption. Analyst estimates of global EV sales (>$3 trillion addressable market) have repeatedly re-rated upwards in recent years, with forecasts now reaching 33% and ~80% sales penetration by 2030 and 2050 respectively. North America, Europe, and China are expected to drive growth through 2030, with developing economies following suit thereafter.
Key Players
🚗 Manufacturers: Assemble and market vehicles with electric drive-trains
Two major categories: 1) Major OEMs (e.g., GM, Ford, Tesla); and 2) Independents (e.g., Rivian, Fisker)
Wide range of functional roles: Software/hardware PM, operations & supply chain management, business development, branding and marketing, and more
🔧 Parts & Workshops: Create the distribution and maintenance network required to support the mass adoption of EVs
Major focus areas include parts distributors, service centers, and EV charging infrastructure
🛎️ Consumer services: Increase accessibility and reduce pain points of EV ownership
Typically a software or tech-enabled solution: Car management software, battery rental & replacement, and smart charging (i.e. ChargePoint) / vehicle-to-grid solutions
Opportunities for Innovation
It is important to keep in mind that electric vehicles are still in the early innings of the "S" shaped adoption curve, comprising ~4% of global LDV sales. Furthermore, fleet penetration lags significantly behind sales penetration as traditional ICE vehicles have robust secondary markets and useful lives approaching 20 years.
In short, it's going to be quite a while before we are all driving around in EVs, and there are key areas of innovation that need to be tackled along the way:
Cost of ownership: EVs are significantly more expensive than comparable ICE vehicles
Cost reductions primarily from battery R&D and scale manufacturing
Range anxiety: EV range is limited and variable with weather
Build-out of charging infrastructure supported by both public and private investment
Services to increase charging utilization and/or new technology to increase charging speeds
Battery recycling: The production of EV batteries is energy-intensive and can contain toxic heavy metals
Development of new supply chains and business models dedicated to the circular economy of EV batteries
Sources
https://about.bnef.com/electric-vehicle-outlook/
https://afdc.energy.gov/vehicles/electric_emissions.html https://www.iea.org/reports/global-ev-outlook-2021/trends-and-developments-in-electric-vehicle-marketshttps://www2.deloitte.com/us/en/insights/focus/future-of-mobility/electric-vehicle-trends-2030.html
https://techcrunch.com/2021/08/22/the-tough-calculus-of-emissions-and-the-future-of-evs/