Can a half-trillion dollar bet be wrong?
Will 50% of us be driving an electric vehicle in 2030’s?
Full Throttle celebrated its first anniversary in the past week (we toasted the year in the kitchen with a glass of wine). In that year, I’ve written a couple dozen pieces about electrification, autonomy, and automobile supply chains.
Those pieces have elicited hundreds of comments. Some readers see this as a political issue, others question the technology and the electrical grid system. That got me thinking about all the money being invested by companies and governments around the world for this transportation transformation. Are they wrong?
EV SPENDING
In the past year it seems that every couple weeks brought news of an auto company increasing, or speeding up, its spending to create more electric vehicles (EVs). I couldn’t keep up with the announcements, and lost track of how many billions of dollars are being earmarked for this effort.
Recently, in a letter to Congress calling for EV tax credits to be expanded, Ford, GM, Toyota, and Stellantis said, “Our four companies have pledged to invest over $170 billion through 2030 to bolster electrified vehicles’ development.” The companies pointed out that more than $20 billion is going to be invested in the, “near-term.”
That’s just four automakers that plan to compete on the price of an EV you might buy. This investment is happening in major economies around the world. I started wondering how much has been committed to the move to EVs.
I got my answer a week ago when the consulting firm Alix Partners released its annual Global Automotive Outlook. The numbers are getting bigger, faster.
HALF TRILLION
The report says a half trillion dollars, $526 billion to be exact, have been committed to fund the shift to battery-electric vehicles (BEVs) just through 2026. That investment commitment has nearly doubled in the past two years. According to Alix Partners, $100 billion of that investment in the next four years will be made in North America. China will invest just a bit less in the same time period.
The consulting firm points out that there are plenty of speed bumps ahead. The semiconductor shortage is expected to continue into 2024 and increases in raw material prices have not been fully added to the price of a vehicle.
EVS COMPONENT COSTS
The cost of raw materials to build an internal combustion engine (ICE) vehicle has doubled to more than $3,600. The materials for a BEV are more than twice that much, coming in at $8,200 per vehicle. The drivers for those EV costs are battery metals including cobalt, nickel, and lithium.
Alix Partners also raised a flag about charging infrastructure. The report says that an investment of $48 billion will be needed for charging stations in the US by 2030. As of today only $11 billion has been committed. More than half of that sum is expected to come from the US government. “Charging is emerging as a critical gap. Infrastructure remains in need of investment and higher utilization is needed before charging companies can be viable,” the research paper says.
The growing spending by countries and governments around the world seems to answer some of those readers’ concerns. There will be challenges with the grid, charging infrastructure, and costs. But the bet is only getting bigger that half the world will be driving an EV in the next decade.
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(Cover photo of GM's Factory Zero for EV production. Credit: GM )