As the switch to EVs accelerates, many governments have set electrification targets, and automakers are committing. But three big challenges remain. EVs are expected to gain popularity as environmental concerns heighten, vehicles become more affordable and battery technology improves. However, consumers continue to worry about the lack of services, range anxiety, and charging infrastructure.
Public Confidence
As EVs continue to improve and more models are offered to potential buyers, consumer confidence is increasing. It is boosted by reports from EV owners that they have never run out of battery power and are less expensive to operate than gasoline-powered cars. However, concerns still need to be addressed, particularly around the recharge duration, a significant departure from the rapid refueling experience with conventional vehicles. In some instances, the recharge time can be as long as 30 minutes or more, which is a big difference to consumers who are used to returning to the road quickly after refueling. This issue is also exacerbated by the need for charging stations, making it difficult to travel longer distances. The good news is that the number of charging stations is rapidly growing, and this will help reduce range anxiety as potential consumers become more comfortable with EVs. The growth of EVs will create jobs in various occupations, including those working on retooling vehicle manufacturing plants to produce more electric models and those installing public or private charging stations. However, some fields will experience lower levels of demand, for example, those involved in servicing and maintaining EVs. It is because EVs have fewer moving parts and require less routine servicing than gasoline-powered cars. Similar to conventional gasoline-powered vehicles, it can be updated with aftermarket parts to improve its operation, comfort, performance, and look. The installation of an electric vehicle upgrade kit can enhance comfort and handling.
Mining and Supply Chains
The transition from gasoline-powered vehicles is accelerating thanks partly to government mandates for EVs and state-level prohibitions on selling cars with internal combustion engines. But the change will be challenging, requiring a lot of new infrastructure to make the switch. It entails constructing widespread EV charging infrastructure and updating and enlarging the electrical system.
The battery that makes an EV run requires a lot of minerals, most of which come from overseas, with mining operations concentrated in countries. The downstream actors in the supply chain are working hard to alleviate the human rights violations and environmental degradation associated with the upstream segment of the chain. Companies are partnering to create localized battery materials parks that would cut out the intermediaries and give the EV manufacturers the raw materials they need to develop and produce batteries independently. But these projects take a long time to get up and running, so policymakers must support their efforts and provide incentives for other miner-backed companies to follow suit. It’s also imperative that the development of EVs keep pace with improvements in technology and battery chemistry. Currently, charging times for an EV are lengthy, but as battery tech advances, it’s expected to reduce that dramatically.
Charging Infrastructure
EVs require more electricity to drive than conventional vehicles, so they must be recharged more frequently. It has led to a new industry in which companies are developing charging networks. However, these still need to be more widespread to allow most drivers to avoid stopping for a fill-up on the way to their destination. Enough public chargers is one of the most important challenges to overcome for EV adoption, requiring substantial investment. A recent study by McKinsey found that achieving widespread adoption of electric cars will need around 4.3 million additional plugs—a number that represents about a fifth of the total global light-vehicle fleet—to support the expected growth in demand. It would require around $1.8 trillion of cumulative investment.
The availability of a robust network is also key for encouraging carmakers to commit to electrifying their entire lineups. As a result, many of the largest automakers plan to ramp up the share of their respective offerings powered by electric engines. However, a successful rollout will need to hit a “Goldilocks” number of charging stations: Too few and consumers may find owning an EV unattractive—even when offered a $10,000 purchase incentive for their first five years. And too many and the infrastructure could become financially unsustainable, slowing growth.
Battery Costs
For 100 years, the internal combustion engine (ICE) has dominated the world’s roads. Its main constituent, petroleum, is a complex mix of chemicals that can cause everything from lung disease to cancer in humans, and its waste products are known instant killers of sea life when spilled. Increasing interest in EVs has been driven by regulatory tailwinds, new EV-specific models, and battery innovations such as lithium-air and sodium nickel manganese cobalt (NMC). However, affordability remains an issue. Consumers need to be able to evaluate the total cost of ownership and decide whether a more sustainable alternative to gas vehicles is right for them. One way to reduce costs is by using cheaper components, such as simpler, less expensive electric motors and lighter body structures. Another is through increased economies of scale, which can lower production costs and unit prices. But, as EV adoption grows, so does the need for charging stations and power infrastructure. It has created a negative feedback loop, with falling car sales slowing the expansion of these networks and making EVs even more unattractive to consumers.
In addition, battery manufacturing is a highly capital-intensive process that requires substantial investment. Governments must work with industry players to create long-term, stable policies encouraging investments without putting pressure on the supply chain.
