Has EV revolution stalled?

Despite slowdown in some markets, electric vehicles (EVs) are here to stay

Alok Tiwari

As the climate change rapidly becomes reality from mere theory, everyone is concerned about how to keep the damage minimal. To have any hope of limiting the global warming to 1.5 C, we need to almost completely phase out use of fossil fuels within the lifetime of most people living on earth right now. Scientists, policy makers, politicians, and even common people had pinned their hope largely on two technologies—renewable energy from solar and wind and Electric Vehicles (EVs) for transportation. Optimists saw in the emergence of two a silver bullet. Cars, a major source of greenhouse gas emissions worldwide, switch to electricity and most of the electricity comes from renewable sources. If only things were so simple.

While renewable power, despite its many limitations, is on track to be a huge part of global energy mix in near future, EV revolution appears to be sputtering. Critics of EVs, and there are many, are having a sort of “I told you so” moment right now as Europe and US report slower growth in EV adoption. This has led many major carmakers to scale down their plans for launch of new EV models. There is even talk of major shift to hybrid models which use electricity as well as petrol/diesel. This when governments, particularly in Europe, have worked overtime to address the range anxiety felt by EV buyers. They forced manufacturers to adopt common charging standards and have helped set up tens of thousands of charging stations.

But buyers worry about relative lack of service infrastructure. As EVs get older, their relatively lower resale value of EVs is also coming into play. This is because of limited life of batteries that may force second hand buyers to go for replacement. Also, despite all efforts, EV phenomenon has remained limited to passenger cars and two wheelers. Hardly anyone is even talking about electric lorries that transport cargo.

While these developments are true, it may still be premature to write the obituary of EVs. For one, what we are seeing right now is slowdown of growth, not a shrinkage of market. Automotive market being cyclical, that will happen. Indeed, some quarters may see degrowth as well. This is normal for most industries. Also, some slowdown is result of many governments withdrawing or reducing subsidies on EVs as cost of EVs has fallen. This has disappointed many potential buyers who may have put off decision or switched to conventional cars. If the EVs continue to be competitively priced the demand will revive.

Demand remains robust in markets like India and China, particularly latter, where manufacturers have produced exciting as well as cheaper models. Part of the slowdown is because the developed world has begun slapping duties on cheaper Chinese EVs fearing they may inundate the market and kill domestic industry. This is more of a geopolitical problem that will eventually get addressed, particularly as climate emergency becomes more acute. In much of developing world, electric two and three-wheelers continue to sell briskly. Since, they are never used for long distance travel, range is not an issue for them. But they too help reduce market for petrol. EVs have already begun to make an impact on crude oil prices. It would have been more pronounced had it not been for the Russia-Ukraine war and Israel’s action in Gaza and Lebanon.

To be sure, the road to full EV adoption is not smooth. Major challenges remain in much of the world. In a market like India, they are even more. Charging stations are almost non-existent outside of cities. Even if charging stations were to come up through government and carmakers’ efforts, the grid lacks reliability. Who is to say there will be no power outage when you reach one in the middle of your road trip and need to juice up the battery for next leg? So, it is not enough to merely be able to make and sell EVs, a range of issues need to be addressed.

But then consider the fact that EVs today are in the initial stages of their product life. Try to read about petrol driven cars in the first two decades of their existence. Do you think all the network of makers, dealers, fuel and service stations existed back in late 19^th and early 20^th century? Heck, much of the world did not even have proper roads for the cars then, much less other things. It was decades and many technological and business breakthroughs later that things that we take for granted today became mainstream. The internal combustion engine cars we see today may be same as one hundred years ago at basic level, but they have undergone thousands of improvements over the years. The functionality, safety, reliability we find today is a world away from early models.

Compared to that, things with EVs appear a lot better. It has benefited from learnings of last century. Yet, it is not as easy to drive an EV today as a petrol or diesel driven car. The best of them have a limited range and even if you find a fast charger everywhere you need one, it is not as easy as driving into a fuel station and topping up your tank. So yes, there is work to be done on that front and will be done. It is impossible to predict the future, but one thing is clear: there is no way humans can continue to burn fossil fuel the way they are doing now if they are to survive as a species.

It will be either regulation or technological breakthroughs or both that will bring the change. Of course, things may look different from what they do now. The batteries could be something other than lithium-ion ones. Heavy vehicles may have hydrogen fuel cell powered motors. There could be swappable batteries, or charging could become ultra-fast. What is certain is that EVs, or some version of it, are here to stay.

This column appeared in Lokmat Times on Oct 25, 2024