Until very recently, it seemed that the EV market was growing inexorably, with governments, OEMs and consumers all on board in the race towards sustainable mobility. But the momentum has stalled. We take a closer look at what can be done to get the transition back on track.
A few years ago, the mass rollout of electric vehicles appeared to signal the end of the road for the internal combustion engine. But as we outlined in the first article of this series, change has been slower than predicted.
Much is riding on electrification from a sustainability point of view. But in some quarters the viability of the EV is being questioned, with concerns growing around raw material supply and sustainability, and the impact on stretched national grids. These and other questions are eroding confidence and commitment right across the market.
So what must be done to tackle the hesitancy that seems to have overtaken both consumers and the industry?
OEMs need certainty and reassurance
OEMs don’t fully believe that all the stakeholders are providing the necessary support to power the electric revolution. The perception is that governments, regulators, other relevant authorities, and energy providers need to step up. Carmakers can see where issues lie, such as the perception of a widespread lack of charging points by potential EV buyers. According to the German Association of the Automotive Industry (VDA), in Germany there is a ratio of EVs to charging points of 21:1 (July 2023), whereas the EU Commission recommends a ratio of 10:1.
Some OEMs, like Tesla, have even begun building their own infrastructure in response to slow government support (though this is the exception, rather than the rule). In addition, cuts in subsidies have led vehicle manufacturers to feel that governments are no longer pushing for change.
Mercedes is the perfect example of this diminishing faith. They began by saying that their future roadmap was ‘electric only’, followed by the clause ‘if market conditions allow’. They then changed their slogan, subtly, to ‘electric first’. But now, they are extending their combustion engine production cycles as the market for EVs stutters.
Governments need to work together
The transition to electric vehicles will only work if led by governments. They need to take the lead both within their markets and as a unified force across national boundaries to build widespread, lasting confidence to jumpstart the mobility transition and make a real impact. Consumers and OEMs alike look to them for guidance.
In Europe, much greater investment is needed to mirror what’s happening in China, with giga factories and battery technology research. The EU’s decision to raise tariffs on Chinese EVs may have far-reaching consequences, whereas a more collaborative, cross-industry, investment-led approach to galvanizing the market might prove more effective.
Strategies and investment must be long-term, and consistent. Changes in leadership, with different parties having different opinions on the way forward, don’t help. For this reason, policy agreement and continuity is essential. Consumers need to know the electric revolution will not depend on one party staying in power.
The energy question must be resolved
A further question mark hangs over the renewable energy needed to support high numbers of EVs on the world’s roads. Some believe that many national grids will not be able to cope.
Clearly, EVs must be considered in the context of wider, sustainable energy strategies. And it could be that governments leverage electric mobility as a driver for increased renewable energy provision and grid expansion measures. It has even been suggested that EVs could function as battery storage for off-peak, sustainable energy generation, and for stabilizing/balancing the grid with bi-directional charging.
However this problem is solved, governments need to do more research and planning that will reassure the market about the long-term energy picture. This in turn will engage energy providers, who are crucial to the transition.
Infrastructure rollout needs high-power charging
The transition to electrification cannot succeed without the right infrastructure. At the moment, the changes needed are in the hands of individual governments and authorities, and in Europe, the EU.
Some nations have invested heavily to make EV ownership more attractive. The Netherlands in 2024 had 7.92 charging points per 1,000 people, compared to Spain with just 0.63. This illustrates the great variation across Europe in infrastructure provision, and can be attributed to a lack of resources and differing levels of confidence in the electric transition.
Sources: EAFO, worldometer.com
Other countries need to follow the Dutch lead. There is also an imperative to plan for electric trucks and vans. These larger vehicles need high-speed charging stations to meet the quick turnaround times demanded by today’s logistic operators, although it’s worth noting that in the commercial sector, hydrogen and other alternative fuels are already being piloted and may be seen as more viable options.
To cope with growing and forecast demand, a new infrastructure of charging points needs to be planned and executed across Europe and in other markets. If this doesn’t happen, nor will the EV revolution.
Common guidance is needed so that everyone is moving in the same direction. Businesses are crying out for it. They feel there is no clear plan for the EV revolution, and are instead being left to predict the future alone.
Incentive programs need to be better planned
Subsidies can trigger change, but not maintain it. They can help ensure EV sales continue until a tipping point is reached and EVs are seen as the norm. Unfortunately, some countries (for example Germany) that initially offered subsidies have simply stopped them. This has sent the wrong signal to consumers, and led to an immediate drop in sales.
At the same time, other countries (for example Denmark) have handled the situation better, by clearly stating that their subsidies are available for a limited time, and are beginning to reduce contributions or increase taxes in a pre-planned way. It seems clear that governments need to follow the lead set by their more successful counterparts and create incentive programs that are planned and organized transparently.
Did governments correctly anticipate the resultant drop in sales? It can be argued that subsidy reductions and tax increases were, on the whole, begun too early. European nations face a tricky decision about what to do next: proceed with current plans, or U-turn and maintain incentives for a longer period.
The education piece - marketing the mobility transition
As we outlined in the first article of this mini-series, our own research yielded some interesting insights into consumer attitudes towards EVs. Owners registered far less concern about vehicle range, and even the burden of recharging, than those who were yet to purchase one.
This tells us that the message of satisfied ownership is not getting through. The industry could be making a much more persuasive argument around the practical benefits of the technology, and at the same time debunking some of the myths and negative PR around EVs, for example the supposedly increased fire risk, and misinformation around cradle-to-grave sustainability.
A key question for OEMs is how they can get more potential buyers to try EVs in the first place. Try-before-you-buy schemes may be a useful approach.
Advancements in EV technology
Ongoing improvements in areas such as battery performance and range are, of course, essential to make EVs a more attractive proposition. But there is a problem. Buying an electric vehicle is a big investment, and consumers are worried that the vehicle they buy today will be upgraded and obsolete by the time it comes to selling or replacing it in three or four years. It’s a similar phenomenon to that seen in the mobile phone market.
This is perhaps the problem that is hardest to solve. It affects many industries. Part of the answer is that OEMs need to maintain pressure to deliver the magic threshold of 500km range, which is the point at which many consumers would consider range anxiety to be no longer an issue, and will likely spark greater confidence in going electric. It’s a widespread perception that although many new EVs now meet this threshold by manufacturer claim, real-world performance falls consistently short, especially over time.
Manufacturers could also offer more leasing or subscription models, which have proved popular so far especially amongst younger drivers.
The remedy to the depreciation problem may in fact lie with the aftermarket, which is yet to reach maturity. This will take greater support and investment from OEMs to ensure that used EVs can be more easily (and less expensively) serviced, and therefore hold their value for longer.
Working together for the electric dream
At the heart of the hesitancy in the electric vehicle market, particularly in Europe, is fragmented decision-making. The industry lacks a clear target picture – one that should be assembled by effective, centralized organizing bodies that could ensure common standards in design.
At the same time, a better job needs to be done of building the EV market around the consumer. It is not enough simply to say that EVs are more sustainable. More must be done to understand both the desires and the concerns of potential buyers.
We believe it is up to national governments and trans-national organizations such as the EU to take a stronger lead. Only then will the new era in mobility become a reality.
