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As the World Economy Slows Down, What is Happening to The Electric Vehicle Revolution?

(Rick Sander, CEO, Tuesday, March 31, 2020)

I think we are all familiar with what is happening to the world economy due to COVID-19 (also known as the Coronavirus). But what is it specifically doing to the growing market for electric vehicles (EVs), especially given the recent (near-parallel) crash in oil prices? While there is likely to be a (probably significant) impact in the short term, no major vehicle manufacturers have backed away from their plans to field new electric vehicles in the near future.

To be certain, EVs are sensitive to the same economic pressures as the larger automotive market. Early data from BloombergNEF points to a 44% year-to-year drop in vehicle sales in China during January and February. This will likely mean that the China market for EVs will be flat or drop slightly in 2020 when compared to 2019. This impact will likely ripple through the EV ecosystem, including battery manufacturers. However, EV battery prices are still widely expected to continue to fall from the 2019 level of $156/kWh, with a reduction of one-third by 2023 to $101/kWh, and reaching a cost of $61/kWh by 2030. This would reduce the battery portion of an EV’s cost from roughly 31% today to 14.4% in 2030.

On the EV manufacturer front, things continue to move forward despite the COVID-19 outbreak. GM is retooling their Detroit-Hamtramck assembly plant to produce electric vehicles – the GMC Hummer EV pickup will be the first vehicle produced there, starting in late 2021. Volkswagen is also building their ID.1 entry-level electric car, with an expected price after incentives below $20,000. Volvo has renewed their commitment to moving all of their vehicles to electric, with a forecast that 50% of the vehicles they sell will be fully electric by 2025, and that all new vehicles that they introduce from 2019 onward will have electric motors. Many of these EVs will be used as fleet vehicles, where their ability to put power back onto the grid (known as “vehicle-to-grid” or V2G) will be an important way to reduce their overall energy cost.

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