The struggle for electric vehicles to gain legitimacy in a world dominated by supersized SUVs and overbearing big rigs is something of a David and Goliath story.
The underdog just landed a blow right between the eyes of America’s major car manufacturers.
In April, Tesla became the most valuable automaker in the US, passing General Motors in total market value. GM has since regained the lead by a slim margin, edging Tesla in market cap by a little more than a billion dollars.
The release of the Model 3 alone promises to nearly double the number of electric vehicles (including hybrids). That’s not quite as impressive as it first sounds considering there were more than 260 million vehicles in the US as of 2014, according to the Bureau of Transportation Statistics. In other words, EVs will still account for less than one percent of all vehicles.
Strong policy needed
There is potential for EVs to reach a market share of 30 percent or greater by 2030, but that will require radical shifts in environmental and regulatory policy, according to John Axsen, an associate professor at Simon Fraser University in British Columbia who studies green technology, consumer behavior and environmental policy.
“As long as gasoline vehicles are able to belch pollutants and greenhouse gas emissions ‘for free,’ then EVs will have a disadvantage,”
he says by email to Singularity Hub.
“Economists call this a market failure. So nearly all the good research out there shows that strong policy is responsible for any success we’ve seen so far, and that we’ll need more strong policy to see any real success going forward.”
There are very few places where such policies exist. For example, Norway has reached 25 percent market share for EVs because it has huge taxes on fossil fuels, huge taxes on conventional vehicles, and very substantial financial and non-financial incentives for EVs, according to Axsen.
Supply needs to meet demand
Another impediment to EVs reaching a tipping point is supply, according to Axsen. There are relatively few makes and models available, particularly in truck and van classes. “And then, many car dealerships are not carrying these EVs in their inventory, and research shows that many dealers in Canada and the US are not even trying to sell the EVs to customers,” he notes.
Elon Musk and Tesla, meanwhile, are not satisfied with just building the world’s most advanced EV compact cars and sedans. The company recently announced it would next tackle a mini-bus, pickup truck and even semi-truck. The latter would be a particularly disruptive technology, especially if Tesla outfits it with the company’s Autopilot system.
Phasing out fossil fuels
“Electric vehicle technology is getting better, and a few regions are showing the market potential,”
Axsen says, such as California, Norway and the Netherlands. Both European countries plan to phase out fossil fuel vehicles by 2025.
Despite such successes, Axsen emphasizes that without changes in policy, the EV market will likely continue to hover around one percent, perhaps hitting 10 percent by 2030. he adds.
“The strongest policies, which encourage automakers to sell a wide variety of EVs, can push market share as high as 30 to 45 percent by 2030,”
Read more: SingularityHub