Until eight years ago, auto makers saw electric cars as an expensive way to meet efficiency requirements. Then, Tesla introduced high-performance, high-priced electric cars and everything changed. Today, electric vehicles (EVs) are seen as both green and hot, utilitarian and cool. That, of course, has encouraged market growth and introduced new challenges for car and truck manufacturers, as well as for component manufacturers serving the auto industry.
False starts
History isn’t the best indicator of who will emerge from this battle victorious. The industry has a poor track record with electric cars. General Motors’ EV1 appeared on American roads in 1996, the same year the auto industry successfully lobbied against a mandate from the California Air Resources Board to make more electric vehicles. The model was cancelled in 2003, producing a trail of unhappy customers and the conspiratorial documentary ‘Who Killed the Electric Car?’ Chevrolet pulled the plug on the Volt, which never sold in significant numbers. Nissan’s Leaf remains in production but it has failed to achieve the level of commercial success envisioned by the company. More broadly, demand has been hampered by fears over the driving range of the cars, a lack of charging infrastructure and high sticker prices. Disinterest on the part of traditional carmakers cleared the way for the opening laps of the race to be won by Tesla, the company run by the techno-King Elon Musk. Tesla sold over 220,000 electric cars in 2018, according to LMC Automotive, roughly 70,000 more than its nearest competitor, Chinese state-owned BAIC Group. The global alliance of Renault, Nissan and Mitsubishi Motors sold roughly 130,000 units, while Volkswagen’s German rivals BMW and Daimler sold 33,000 and 14,400, respectively. At the bottom of the heap was Toyota, the world’s second largest carmaker, which has chosen to focus on hybrid cars and fuel cell technology. It sold only 1,000 electric vehicles units in 2018.
Electric vehicles might be a lucrative option against fossil fuel vehicles, but they are not free of environmental impact. Electric vehicles are increasingly finding stronger footprints across the world amidst several factors such as rising costs of petrol and diesel, lower operational costs for EVs, significantly lower maintenance costs, tightening emission norms, and growing awareness about vehicular emission impact on the environment.
Toyota Motor has threatened to stop manufacturing operations in the UK because of a government policy that mandates it to rapidly switch to fully electric vehicles, a Times of London report stated. The company has already made the city’s Transport Secretary Grant Shapps aware of its concerns about the transition phase, and banning of new gasoline and diesel cars from 2030. While the plan includes allowing hybrid vehicles until 2035, the requirements could mandate a minimum electric range rather than Toyota’s self-charging hybrids, the report stated. As per the UK’s Zero Emission Vehicle mandate, a rising percentage of automakers’ new sales are required to be zero emission models from 2024, the report stated. Those automakers that do not hit the target will need to pay a penalty or buy credits from competitors who surpass the threshold. The quotas and penalties for this requirement hasn’t yet been made public.
The chiefs of all three Japanese auto companies believe that a variety of technologies, in addition to EVs, will contribute to cleaner transport over the coming decades. However, their approach of maintaining a broad range of options has drawn criticism from those who believe that they will be left behind in the race to battery-powered cars.
More affordable EVs are crucial to the mass adoption of the emerging technologies. While EVs are growing in popularity, they’re largely priced for luxury buyers. The GM-Honda developed vehicles are expected to be priced below $30 000, however this is contrary to Tesla which have recently increased its model 3 prices citing shipping and supply chain challenges. The automakers also said they will discuss future “EV battery technology collaboration opportunities, to further drive down the cost of electrification, improve performance and drive sustainability for future vehicles. Both automakers are working on next-generation battery development, including solid-state batteries. Solid-state batteries can be lighter, with greater energy density, and provide more range at a lower cost than today’s EVs with lithium-ion batteries and the partnership will build on the successful technology collaboration to help achieve a dramatic expansion in the sales of electric vehicles.
After a rough start to 2022, Tesla shares are now up for the year as of Thursday’s 31st close. Tesla just reported first-quarter vehicle production and delivery numbers for 2022 at 310 048. Over the same period last year, Tesla delivered 184,800 electric vehicles and produced 180 338 cars. Tesla delivers record 310,048 vehicles globally in first quarter of 2022. The delivery of 310 048 vehicles in the quarter by Tesla was a slight increase from the previous quarter, and up 68% from a year earlier. The company sold a total of 295 324 Model 3 sedans and Model Y sport utility vehicles, while it delivered 14 724 Model S luxury sedans and Model X premium SUVs. However, the company produced 4 641 fewer cars than it delivered during the quarter citing “ongoing supply chain challenges and factory shutdowns. The company recently opened a new factory in Brandenburg, Germany, and had a ribbon-cutting ceremony on March 22. Tesla also plans to host a grand opening and “cyber rodeo” event on April 7, at another new vehicle assembly plant it’s building in Austin, Texas. Globally, Tesla’s operations during the quarter, which ended March 31, were weighed down by a Covid surge and new health restrictions in China, requiring temporary production halts at its Shanghai plant.
Maruti Suzuki, India’s largest carmaker has reported a 13 per cent hike in its sales in the last fiscal, with 1.65 million units sold. The automaker registered its first sales growth in two years. But the auto company warned that the supply situation of electronic components continues to be unpredictable. Maruti Suzuki expects the disruption to impact the production volume in the current financial year.
Tesla, along with the rest of the auto industry, has also been hurt by widespread parts shortages, and inflation. Critical components like semiconductors remain in short supply, and prices have increased for raw materials like nickel and aluminium after Russia launched an invasion of Ukraine in February. In the U.S., Tesla has been leaving customers waiting for months before filling their car orders. Tesla CEO Elon Musk warned in mid-March of inflationary pressures on the business, and hiked the prices of its cars in both the U.S. and China.
Going beyond the surface of the issue, it becomes clear that the EV industry is not all as carbon neutral as it is projected. The issues such as the source of electricity generation for these electric vehicles, extraction of rare earth minerals for the construction of batteries, reusing and recycling them should be addressed to make the electric vehicles truly carbon neutral and sustainable.
Here are four hurdles that we should focus to make EVs truly sustainable.
Source of electricity
India is majorly reliant on thermal power for its electricity. Thermal power is generated by burning coal, oil, liquid natural gas and other substances to rotate generators. Burning these substances creates a huge amount of environmental pollution, which blunts the benefits of electrification of the transport sector with its high carbon intensity. Coal accounts for more than 70 per cent of India’s electricity output. Increased demands for EVs mean higher demand for electricity, resulting in more coal burning, which could add more pollution to the environment, thus defeating the purpose of EVs. Hence, the focus should be on sustainable renewable energy sources, instead of conventional energy.
Recycling EV batteries
Recycling EV batteries is another hurdle in the way to making electric vehicles truly sustainable. The lithium-ion batteries come with human and environmental costs. Extracting raw materials like lithium and cobalt requires large quantities of energy and water. There have been issues of child labour in cobalt mines. With these concerns, recycling lithium-ion EV batteries is a method to reduce their environmental impact. Currently, a very minuscule amount of lithium-ion batteries in India are recycled, which should be increased substantially.
Public transport over personal vehicles
In 2021, India registered nearly 329,190 electric vehicles, recording a 169 per cent growth than 2020 sales of EVs, when the country registered 122,607 units. Two-wheelers and three-wheelers made up 90 per cent of the total EV sales last year. Shift to electric mobility is a promising scenario for automobile manufacturers who are focusing on electric vehicles. However, the best way forward for e-mobility could be to focus on electric public transportation than personal electric vehicles. The increasing number of personal vehicles, even with EVs could result in congestion, which would be reduced if the focus is on public transportation.
Alternative battery technology
Electric vehicles’ battery segment is dominated by lithium-ion cells, which have a deep environmental impact. However, sodium-ion batteries could be a viable solution with minimized environmental impact. Alternative cell chemistry like sodium-ion batteries could come up to 40 per cent cheaper than their lithium-ion counterparts. Other advantages include easier availability, significantly lower charging time and lower impact on the environment.
Established carmakers around the world are ripping up their business models in the hope of adapting to a new world in which electricity replaces gasoline and diesel. Factories are being overhauled to produce electric cars, and automakers are snapping up every battery they can find. The high cost of developing electric cars is forcing some companies to find partners and turning others into acquisition targets. The need to meet strict emissions standards in China, Europe means that executives are paying far more attention to the policies being put in place in Beijing or Brussels, than what rivals are building in Detroit or Wolfsburg. The German group, which also owns Porsche, Bugatti, Skoda, Lamborghini and SEAT, is rising to the challenge with a radical transformation that is unparalleled since World War II. The company is spending €30 billion ($34 billion) over the next five years to make an electric or hybrid version of every vehicle in its line-up, and it plans to launch 70 new electric models by 2028. By the end of 2030, it wants four of every 10 cars it sells to be electric, a mass market plays that hinge on the success of a new line of vehicles called the “ID.”
Volkswagen is spending billions of dollars to retrofit factories from Germany to China to produce cars based on its modular electric car production platform, or MEB. The company has also signalled that it will use some of the money it makes from selling fuel-powered cars to produce its own batteries and build charging networks. The initiatives are expensive. But the level of investment by Volkswagen and its competitors, coupled with the aggressive emissions targets set by regulators, show there’s no turning back. All of this leads to a new question: Can Tesla maintain its lead in the global race to the electric car?
The survival of some of the world’s most storied car brands hangs in the balance. According to LMC Automotives’ forecast, the huge amount of investment being deployed by Volkswagen will help it sell over 1.4 million electric cars a year by 2025 — more than any other carmaker and over three times the sales Tesla is expected to produce. The alliance of Renault, Nissan and Mitsubishi Motors is on track to rank second in 2025, selling nearly 590,000 electric vehicles that year. China’s Geely, which owns Volvo, will rank third. Tesla will be fourth with 413,000 vehicles, followed closely by Toyota. Daimler, Hyundai, General Motors and Ford are each forecast to sell between 330,000 and 400,000 cars in 2025. However, all these targets have already been beaten by Tesla deliveries togate.
