The Automobile World is Increasingly Going Electric
As the world moves toward better eco-friendliness, automotive industry experts predict that electric cars could halt fossil fuel growth by 2020. Experts say that oil companies underestimating the growing electric vehicle market might be caught by surprise by a significant decrease in demand for fossil fuel products by the end of the decade.
Experts cite the falling costs of both electric vehicles and renewable technology—particularly solar panels—as the reason that a halt in worldwide growth in demand for fossil fuels is likely to happen.
Electric cars are ‘gamechangers’
The experts say that their prediction takes into account the latest cost reduction productions for the green technologies and countries pledging to cut emissions one after the other. Solar panels and electric cars are ‘gamechangers’ that could leave oil and coal growth stagnant. The current boom of the electrical vehicle market could displace 2 million barrels of oil per day by 2025. A similar drop in demand occurred before the oil price collapse experienced in 2014.
The displaced number of barrels could go up as high as 25 million per day by 2050. By that time, electric vehicles are expected to occupy over 65 percent of the automotive market. Under these assumed setups, demand for coal and oil could top off in 2020, while demand for gas will face significant reduction.
The market shift toward electric cars could spell global temperature increases to just within 2.4C and 2.7C above pre-industrial levels. More ambitious action by countries could even limit the increase to as low as 2.1C. However, emission reductions from other sectors such as heavy industry and heating buildings will be needed to meet international climate targets.
Effects in the global automotive industry
To date, the growing demand for electric cars helped the segment achieve a 4.2 percent market share in the UK, beating a previous high of 3.6 percent in November last year. On a side note, gas-powered cars also increased by 8.9 percent despite calls for higher taxes to curtail emissions.
Meanwhile, tighter emission laws in China and the rest of Europe will compel global carmakers to produce more electric vehicles.
An irreversible trend
Jacques Aschenbroich, chief executive of auto supplier Valeo (VLOF.PA), called the growth of the electric car market ‘an irreversible trend.’ Focusing on electric hybrid, connected, and self-driving cars, Valeo’s market share grew sales by 50 percent in five years.
Fueled by its pollution woes, China now aggressively pushes for the distribution of more electric vehicles in major cities. The country aims to fuel the push by combining tens of billions in investment and research funding with subsidies and regulations that discourage driving both gasoline and diesel cars in major business hubs.
In Europe, green car buyers enjoy tax breaks, subsidies, and other perks, while those who opt for fossil-fueled drivers face mounting penalties including driving and parking restrictions.
The electric car momentum may not have the same effect in North America, where cheap fuel continues to drive the demand for gas-guzzling SUVs and pickup trucks.