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Three Challenges Facing the Electric Vehicle Industry

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Fransua Vytautas Razvadauskas Bio

In 2023, new electric vehicles (EV) as a share of total registrations are projected to reach a record 20% (only including battery electric and plug-in hybrid electric vehicles) worldwide, up from 16% a year earlier. Yet, as EV take-up grows, the industry is anticipated to face several growing pains: the lack of affordable EVs, lagging EV charging infrastructure, and insufficient grid capacity. Amid stricter laws and carbon emission standards set by governments, overcoming these key challenges will be vital to continue decarbonising the transport sector.

Most consumers shy away from EVs due to their high cost

Cost remains the leading prohibitive factor in why consumers turn down EVs.

Based on Euromonitor International’s 2023 Voice of the Consumer: Mobility Survey, 58% of respondents highlight that EVs remain too expensive

Source: Euromonitor International

According to the car comparison site, cars.com, a 2023 Hyundai Kona EV was, for example, 51% more expensive than the corresponding petrol model. This reduces the appeal of EVs, especially among more price-sensitive consumers in emerging and developing countries, where incomes tend to be significantly lower than in advanced economies.

Challenges Facing EV Industry chart 1.svgHowever, in recent years, automakers have sought to improve the supply of more affordable EVs to cater for the growing mass market worldwide. According to cars.com, several EV models, including the 2023 Nissan Leaf S and Chevrolet Bolt EV, were priced under USD30,000 in the US (as of July 2023). It follows increasing research and development into lowering the cost of EV batteries, which typically account for 30-40% of the total price of an EV. Byd, a Chinese battery and automotive firm, and CATL, a leading manufacturer of batteries, are experimenting with sodium-ion (albeit in a hybrid system with lithium-ion) batteries, which are estimated to be 20-40% cheaper than conventional lithium-ion batteries.

Lack of public EV charging stations incites “range anxiety”

According to Euromonitor International’s Voice of the Consumer: Mobility Survey 2023, poor charging infrastructure was the second most common reason why people refuse to buy an EV. This is a key factor instigating “range anxiety” – the fear of losing power in an EV before locating a charging station.

In several countries, such as Norway, Sweden and the UK, EV take-up has been strong. Nevertheless, this has not been matched with a rapid rollout of public EV charging stations. According to the EU’s 2014 Alternative Fuel Infrastructure Directive (AFID), the policy recommends for EU member states to follow a ratio of 10 EVs per charging station. However, many countries fell short of this recommendation in 2022, including Norway (31 EVs per charger), Germany (23), the UK (19) and Denmark (18).

Increasing the number of public EV charging stations will be paramount, as it directly caters for the growing urban population living in apartments where home charging solutions are more difficult to install.Challenges Facing EV Industry chart2.svg

The challenge of charging stations stems from the high costs and the small market share of EVs, which reduces the appeal of private investment in charging infrastructure. However, several companies are making strategic ventures, banking on the industry’s future potential. This includes the Italian energy company, Enel, which through its e-mobility division, Enel X Way, plans to deploy two million electric vehicle chargers in the US by 2030.

Major oil and gas company, Shell, plans to target an estimated 2.5 million charging points globally by 2030

Source: Shell Global

Grid capacity needs upgrading to accommodate EV growth

Less frequently discussed is the ability of the electric grid to support EV growth. Based on estimates by Euromonitor International, in 2022 EVs accounted for 0.3% of the total electricity demand in the US – a relatively small figure, as EVs accounted for just 1.1% of all vehicles in use in the US.

By 2040, the share of new electric passenger car registrations in the US is set to reach 79%

Source: Euromonitor International

The significant growth in new electric passenger car registrations will require significantly more electricity production and grid balancing, especially during peak demand.

Several solutions are emerging to overcome grid capacity challenges such as bi-directional charging. This involves reverting energy from an EV to the grid, home, business, appliances or another vehicle and can improve grid balancing during periods of peak demand. Smart grids are also being used to optimise energy consumption based on grid constraints, energy pricing and renewable energy availability.

As electrification intensifies, electricity production and transmission will require major investments from utility companies and governments to upgrade existing infrastructure. This is especially important in the delivery of fast chargers (with charging speeds of over 50KW), which require more sophisticated electrical equipment and technology.

Whilst challenges exist, the EV space can offer vast commercial opportunities in a global economy embracing the energy transition.


Learn more about e-mobility in our report, EV Readiness Index, to understand which markets are best prepared for the EV transition.

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WTM London

Euromonitor International 19 September 2023

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