Electric vehicles are becoming more common, but they’re still a small chunk of the automotive landscape. Even as automakers release more and better models, they’re not even close to as popular as combustion engines. A new report suggests electrics will be the car of choice in wealthy cities in the next 14 years.
According to the report by McKinsey & Co. and Bloomberg New Energy Finance, we will see electric cars becoming commonplace in wealthy cities like London and Singapore as soon as 2030. This isn’t because these people are more open or accepting of the technology, but because circumstances are changing to make electrics a more viable option.
There are more and more electrics rolling out, so people have more choices. No one likes to think they only have a handful of cars to choose from, so choice makes electrics more appealing. As the technology matures, it’s also becoming less expensive. This happens with smartphones, computers, and pretty much every technology. Electric vehicles are slowly crossing into new territory where they’re cheaper to produce and more efficient.
Lithium ion battery packs are a large part of the high cost of electrics, but prices fell 65 percent last year. That trend is expected to continue over the next ten years. They cost $1,000 per KWh back in 2010, $350 per KWh in 2015, and they are expected to cost less than $100 per KWh in the next decade.
At the same time that prices are coming down into a range that makes EVs affordable for more consumers, governments are enacting more stringent greenhouse gas emissions standards. Major cities are facing the biggest challenge in meeting these standards due to their density of traffic. Some cities, like Paris, already banned vehicles it considered heavy polluters. London places a surcharge on select vehicles, and Singapore is constantly in the news for its poor air quality and recommendations for residents to stay inside rather than breath polluted city air.
These wealthy cities want to clean up their acts and EVs are the perfect opportunity. Tax breaks, subsidies, and low-emissions zones are all designed to push consumers towards electrics. The Bloomberg report predicts this is going to work so well that close to 60 percent of cars on roads in these cities will be electric by 2030.
This is great for the environment and health of those living and working in the affected areas, but it’s a challenge for automakers. They’re introducing new electric vehicles on a regular basis, but combustion engines are still the majority of their business. In the next 14 years, they need to find a way to make a shift and incorporate even more electrics into their business models or risk seeing their share of the market fade in the face of electric dominance.