Electric Vehicles Are Already Changing the Rules of the Game on the Automotive Market

Published: 22.02.2018

Electric vehicles offer a real alternative to conventional automobiles, and their impact on the industry keeps growing every year

Electric Vehicles Are Already Changing the Rules of the Game on the Automotive Market

The current trends in EV development suggest that they will form the core of the transport industry in future. More and more people realise the advantages of these vehicles and would like to convert to them, while the rapid technological development and reduction of energy resources only augment the EVs' competitive edge, as compared to conventional vehicles.

Many media sources envision a vigorous and successful development of electric vehicles:

EV manufacturing is no longer unprofitable 
The Renault-Nissan-Mitsubishi Alliance, which launched its EV manufacturing in 2008, begins to earn profit in that area. The alliance head Carlos Ghosn notes: "We're probably the only one in the world who's starting to make money selling electric cars". Still, EV manufacturing remains lossmaking around the globe, both due high costs of components and high capital costs traditionally borne by automotive manufacturers before production of each new vehicle type begins. However, experts state that after conversion to the new technological paradigm is over, advanced plants will start earning stable profit in that area, and its development will become more attractive.

Electric vehicles – a real threat to oil demand
Fitch Ratings agency forecasts that EV sales will grow to 10 mln a year by 2025 and the total number of electric vehicles will exceed 1 bln by 2040. That situation will directly jeopardize oil demand on international markets. The agency emphasizes that even now any news concerning reduction in EV component costs and changes in buyer preferences has a substantial influence on the oil market.  It is the increase of demand for electric vehicles that will be the major catalyst of some structural changes on the oil market.  Therefore, the majority of large energy companies are already actively diversifying their activities.

About a half of city buses in the world will be electric by 2025
Bloomberg New Energy Finance (BNEF) portal estimates that by the mid-2020s  electric buses will account for about a half of public transport in the world. By 2025, their number will grow to 1.2 mln, which, in fact, is 3 times more than now. The world leader in this area will be China that has been actively stimulating the development of electric vehicles. BNEF experts have also estimated that in future electric buses will become more profitable in terms of operation than conventional buses, which will become the major incentive for their active introduction. Now, megalopolises around the world dynamically develop their electric bus systems, as it meets the basic principles of sustainable development of modern cities: it is economically profitable, it greatly improves the environment and it has a positive impact on human health.

China bolsters support for electric vehicles
Over the last few years, China took the lead in EV manufacturing. The Chinese Government actively stimulates the development of this industry.  The recent government programme substantially raised requirements to electric cars eligible for the subsidy system. The support is mainly aimed at production of the most efficient and technologically advanced vehicles primarily demonstrating an increased cruising range per charge. Now, only electric cars able to travel at least 150 km per charge (before, the threshold for preferences was 100 km) may be eligible for government support.  Besides, China plans to set quotas on new vehicles: in 2019, minimum 10% of new vehicles sold must be electric or hybrid, with zero (or next-to-zero) emission.

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