Sales of electric cars seem to be slowing down in the United States and Europe, in contrast to the frenzy they are experiencing in the Chinese market. High prices, lack of infrastructure and low reliability are the main factors behind the apparent discouragement in the West. However, everything indicates that the electric car arrived on the planet to remain the main mobility alternative in the not too distant future.
After growing 35% in 2023, global sales of electric vehicles (EVs) could grow up to 21% in 2024, according to projections from the Global Energy Agency (IEA). The market dynamics so far this year show an interesting contrast between the boom in sales among Chinese buyers, and the slowdown among Europeans and Americans, who seem to be losing enthusiasm for EVs.
For experts, the Chinese market responds to significantly different factors than those operating in the West. “In China, the largest automotive market in the world, the government decided 15 or 20 years ago that it was not going to develop its automotive industry with the use of the combustion engine, but decided to immediately jump to the next step: mobility. electric," Axel Schmidt, former general director of the Automotive Industry at Accenture , and today, an advisor and investor on electric mobility issues, told AméricaEconomía.
Today, the EV penetration rate in China is 35-40%, which was the goal originally set for 2030. In contrast, this rate barely reaches 8% in the United States. Not only is the Chinese EV market the largest in the world, but—as Schmidt explained—China controls the value chain, even down to raw materials. Furthermore, thanks to state subsidies, buyers in that country can buy an EV even for less than US$10,000.
COSTS, INFRASTRUCTURE AND SKEPTICISM
But then, what explains why EVs are not taking off in the West?
For Schmidt, there are three key factors: acquisition price and operating cost, infrastructure, and reliability.
“Outside China, the price of an electric car is 30% more expensive than a combustion car. This is a key factor in all markets, but especially in emerging markets. Nobody in Brazil, India or Argentina can pay 30% more just to drive an electric car,” said Schmidt.
In the United States, in particular, the transaction cost of an EV is on average US$54,000, while a vehicle with a combustion engine has an average price of US$47,000, as Alan Amici, president and CEO of the Center, explained to AméricaEconomía for Automotive Research (CAR, an automotive industry think tank located in Michigan, United States). “Many consumers think that these prices are very high, even more so for an EV, while high interest rates also help to increase transaction costs,” Amici added.
The chances of EV prices falling in the near future are not good. Schmidt pointed out that the production scales necessary for this effect have not yet been reached. “Over time, prices will go down, but I don't expect quantum leaps, such as a 30 or 40% drop in the next two years, which would make EVs more affordable for people in emerging markets,” he said.
He also highlighted that the operating costs of EVs are high in Europe, where, according to Schmidt, charging the car on the street can cost twice as much as doing so at home. “Likewise, if you compare the cost of a charge at a station with that of gasoline, driving an electric car is not that cheap, at least here in Germany and the rest of Europe,” said the advisor and investor.
Experts agree that infrastructure constitutes the other great barrier to the massification of EVs and, therefore, to the loss of enthusiasm that this technology seems to suffer in the European and American markets.
“We see that the options offered by manufacturers to consumers in the EV market have grown rapidly in a short period of time, but what has lagged behind is the infrastructure for EVs, both in North America and Europe,” Amici said. , who added that consumers are adapting in some ways by charging their cars at home or at their convenience, “but once you get past this category of early or enthusiastic adapters, people start to experience anxiety about it.”
To this, Schmidt added the inconvenience for those who own homes without their own parking and must resort to night parking on public roads, which is very typical in large European and American cities. “When you can't charge the car at home or at work, you can't use it without major obstacles,” he points out.
And it is not that more EVs necessarily need to be sold for the infrastructure to begin to be built, according to Amici. Under the Joe Biden administration, the United States allocated US$7.5 billion to the national EV infrastructure program (NEVI), but it is progressing slower than expected. “People are not seeing charging stations en masse yet, and this applies to the United States, the rest of North America, Europe, and South America,” he added.
The delays are understandable for Amici. After all, only about five or 10 years ago the world began to practically develop the change from a transportation system based on internal combustion vehicles, which has been in force for more than 100 years. “It is a great task. “We need to develop batteries and service stations, all in five or seven years, and also do it in an economical and environmentally friendly way.”
Closely related to infrastructure deficiencies is the third obstacle to market development mentioned above by Schmidt: reliability. He calls it in particular the emotional factor: “People are afraid to stay on a highway because they run out of electrical charge. The range of an electric car is not the 800 to 900 kilometers of the combustion car, but 300 or 500 kilometers. Even if we haven't heard anyone get stuck on a street without a load, there is an emotional sense that even extends to the very sensation of absolute silence in an electric car compared to a combustion car," Schmidt explained.
Amici agrees that consumers have that concern, which even leads some to be skeptical of the EV. “(EV consumers) want to be sure that their travel is not a one-way street. "They want to be able to load up for a long trip and return," said CAR's president and CEO.
RAW MATERIALS AND ENVIRONMENTAL FACTOR
Added to the above are the concerns generated among some sectors by the dependence of American and European EV manufacturers on raw materials from third countries, as well as the environmental management that is given today to the extractive process of said inputs. and the future handling of the inevitable accumulation of used batteries.
Schmidt, for example, acknowledged that raw materials are limited and that their production is not completely clean, nor are working conditions acceptable in some of the supplier countries. However, the expert does not believe that these arguments should be overvalued. He believes that production techniques can improve their environmental impact and that regarding their availability, an oversupply may well occur that makes the EV production process cheaper. “Look what happened to oil after the crisis of the 70s. Today there is more oil than ever. Yes, we must remain vigilant about the issue, but I do not see it as a central concern,” he says.
Amici, for his part, recalled that particularly regarding lithium, there are initiatives in the United States to attract its production, as well as that of nickel and cobalt, to closer countries to thus reduce dependence on China. “The motivation exists to attract the productive chain to North America, but this takes time and that chain cannot be changed overnight,” he pointed out.
Regarding the future management of spent batteries, experts noted that the industry is already preparing for the challenge. Schmidt assured that every day there are more and more business models, not only for such management, but to reduce the cost of battery production itself. Amici assured that he sees interest growing every day in the future recycling of battery components (lithium, cobalt, for example, thus reducing dependence on imports), but also to reprogram the use of old batteries for other purposes. “You could think, for example, of reusing batteries in electric vehicles that require a low range of travel, or to cover the gap left by the supply of alternative energies such as solar panels or wind projects,” Amici added.
THE ELECTRIC CAR IS HERE TO STAY
Be that as it may, experts agree that the future of the planet's transportation lies in electric mobility.
On the one hand, as Amici explained, the automotive industry has been making large investments in the area, with a perspective of 20 to 24 years, thus reflecting its commitment to the development of EVs. “In North America (United States, Canada and Mexico) we have seen more than US$160 billion invested in the last four years in EVs and EV batteries,” he said, adding that this includes spending by large traditional manufacturers such as General Motors, Ford and Chrysler. “The long-term vision is that the driving strategy will be EVs. “It’s just that the transition is taking a little longer.”
Schmidt is equally radical. “Let me put it in these terms: there is no alternative in that the goal is electric mobility. “It is the most efficient and clean way to drive,” he emphasized, while also recognizing that the deadline to achieve the curve will be longer and even more so in emerging countries. In fact, in regions like Latin America the delay will be even longer if resource-constrained governments cannot do much to democratize EV ownership and use.
