Electric Cars Are Ready For A Breakthrough: 8 Steps To Make It Possible

04/12/2016 05:54 pm ET Updated Apr 13, 2017
An electric car in charging on the street
An electric car in charging on the street

Within two days of Elon Musk's unveiling of the Tesla Model 3, pre-orders for the $35,000 sedans had exceeded 275,000. Electric cars, it is clear, are finally catching on - and as battery and charging technologies keep improving, and costs drop, demand will keep rising.

Yet globally, only about 0.04% of cars on the road in 2014 were electric vehicles (here we count only battery electric vehicles, not hybrids). EV sales are roughly doubling each year, but only 3% of cars sold in 2014 were electric. If current trends continue, the International Energy Agency estimates that 7% of cars sold and 2% of cars on the road in 2030 will be EVs, barely making a dent in the auto market.

That would be a huge missed opportunity. Transport now accounts for about 14% of global greenhouse gas emissions, and it is also a major source of air pollution. Coupled with a shift to clean electricity, a large-scale deployment of EVs could be transformative. In fact, it is hard to imagine how transport could become carbon-neutral without EVs.

In a new paper in the journal Applied Energy, we show how smart policy interventions could spur an EV breakthrough, so by 2030, 70% of cars sold, and about one-third of cars on the road, are electric. The key is to learn from EV pioneers such as Norway, where in March 2015, 26% of cars sold were EVs. We also need to adopt policies at all levels of governance that tackle the key barriers to EV growth:

1. Send a strong public policy signal

Globally, governments have already set policy targets that would put 6 million EVs on the road by 2020, two-thirds of what our breakthrough scenario envisions. But the actual measures and incentives adopted to date in many places, including the EU, are relatively weak. They do not send the message that widespread adoption of EVs is a priority.

Officials must help build consumer and producer confidence by spelling out the kind of transport system they want and how we'll get there. This includes stronger commitments to build out EV infrastructure. This is comes with legal, economic and political challenges, but it is feasible.

2. Reduce the extra cost of electric cars

Mid-size, lower-range EVs such as the Nissan Leaf and Volkswagen E-Golf cost around €10,000-20,000 more than their conventional counterparts. Technological advances are rapidly closing the gap, but it will remain a barrier for most consumers for several more years.

This means governments need, at least for the coming five years, to bring down the net cost of ownership through incentives, such as purchase subsidies, differentiated tax rates and tax breaks, waivers of congestion charges, and dedicated parking spaces. Denmark and Norway, for example, exempt EVs from the tax on new vehicle purchases. Sweden provides a direct subsidy at the point of purchase.

3. Help change norms and preferences

EV technologies will keep getting better, but for drivers used to cars that can run for an entire day with only brief stops for refuelling, the need to plug in and recharge can be off-putting. Achieving an EV breakthrough will probably require a change in habits and mindsets, so consumers are comfortable with electric cars' shorter range and appreciate the lower running costs that offset the higher upfront price. It could even involve a shift away from the norm of individual car ownership, as new transport options open up. Governments can help with this by providing information and - more important - by giving people opportunities to experience electric cars.

4. Electrify car fleets

One great way to familiarize people with electric vehicles is for governments to buy them and promote their use for other fleets, such as taxis, and car-sharing and delivery vehicles. In addition to boosting sales of electric cars, this gets fleet users familiar with them and promotes their adoption more generally.

5. Push car-makers to go electric

The auto industry is good at producing internal-combustion vehicles and has invested a lot of money in the process. Tesla has helped shake up this complacency, and some traditional car-makers are now serious about electric vehicles. The government can help this transition along.

The EU has already promoted production of electric cars by raising requirements for average fleet fuel economy. In the US, federal loans and other support have helped car-makers develop electric vehicles. Quota-based systems are great: California mandates that a set share of the cars sold by each company produce no emissions.

6. Build charging technology and facilities

The fear of running out of power is a huge barrier that keeps people from buying EVs. Long charging times also are a deterrent. Governments can help by promoting new technology and ensuring that new urban development anticipates widespread charging facilities in houses and apartment buildings, and at public parking spaces. Regulations must support charging facilities, rather than inhibiting them, as many do now. Governments also must participate in public-private partnerships to build facilities.

7. Support new business models

Electric vehicles can be part of new business models around how we own and use cars. This includes car-sharing, trading in electric cars for longer trips, and leasing agreements that lower upfront costs. Government can promote these models with financing, and research and development programmes.

8. Plough fertile soil

New technologies, including electric cars, start out in niche communities and then spread. It makes sense for government to promote electric vehicles where they are likeliest to find receptive consumers, such as affluent communities with charging facilities and a culture of early adoption. Partnerships among power companies, car-makers and municipalities can help in specific areas.

In California and Norway alike, clusters of EV ownership have developed, as early adopters spur neighbours to buy electric cars. These communities help push the technology forward (bringing down the cost), and over time, help to change public perceptions.

To achieve the breakthrough we envision by 2030, governments will need to take these steps within five to 10 years. And crucially, they need to simultaneously move away from fossil-fuelled electricity and towards renewables. Some countries, such as Sweden and Norway, already use mostly clean power, but the U.S. and many other nations still derive two-thirds of their electricity from fossil fuels.

Pioneers such as Norway have shown what is possible. It is time for the rest of us to take action to seize this opportunity.