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Would Covid19 Lead to Higher Electric Vehicle Adoption

By Mohit Oberoi, CFA - Published 3 months ago - Last Updated 3 months ago 0 Comment
Would Covid19 Lead to Higher Electric Vehicle Adoption
  • Covid19 has brought to the forefront the idea of sustainable living. Electric vehicles and renewable energy are among the ways to promote sustainable living.

  • But then, would we see a greater push towards renewables and electric vehicles after the Covid19 pandemic is over? Let’s explore

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Covid19

 Amid the Covid19 pandemic many are talking about sustainable living and caring for the planet. But then, would the sustainable living talk be limited to left leaning newspaper op-eds or would governments across the world wake up to the crisis. The initial results haven’t been encouraging. The Trump administration has relaxed the stringent emission standards set up under President Obama. To be sure, President Trump sees climate change as a hoax. Trump even poked fun at noted climate change activist Greta Thunberg. If we go a little far, Trump withdrew the US from Paris Climate Deal.

 

Would we see higher electric vehicle adoption post Covid19?

Electric vehicle sales have grown sharply over the last few years. However, they are still a tiny fraction of total vehicle sales. Electric vehicles (or EVs) are still a niche segment. For electric vehicles to be a serious contender to ICE (internal combustion engine) cars, we need price parity between electric cars and ICE cars. Many would argue about the lifecycle cost and say that EVs turn out to be cheaper over the lifecycle. However, the high initial purchase price is a deterrent for many. Also, while electric vehicle range has been rising, some buyers might still worry about range anxiety.

 

Government stimulus

Government support is currently crucial for the electric vehicle industry. From supportive policies to subsidies for buyers, governments across the world have been taking some measures to support the electric vehicle industry. For some countries, their support for EVs is also driven by the intent to bring down their oil import bill. Countries like China and India import a large part of their crude oil needs. But then China’s support for the electric vehicle industry has been mixed.

 

 Last year, China lowered subsidies for electric vehicles that resulted in a big slide in the country’s EV sales. However, the country has showered almost unprecedented love for US EV maker Tesla. Earlier this year, a Chinese municipal government signed a preliminary agreement with domestic EV maker NIO. The agreement is seen as a bailout for the cash-starved NIO.

 

Life after Covid19

Optimists would like to believe that governments would double down on their support for EVs in a post Covid world. In my view, governments would anyways have their hands tied for funds amid the massive stimulus package. Also, lower crude oil prices would have a bearing on their decision-making process. Not to mention, consumers would find ICE cars attractive due to low fuel prices. As for sustainable living and caring for the planet, it is not the top priority for most governments. The same holds true for a large percentage of population. 

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