EV Industry during the COVID-19 Outbreak: Business [Almost] as Usual

Social isolation and lockdown measures to combat the COVID-19 pandemic have caused significant disruption in the automotive industry. However, automakers' quarterly results showed increased Electric Vhecile (EV) sales compared to 2019, and major announcements show that companies operating in the EV industry are moving forward with their electrification plans despite the pandemic. In March 2020, GRIDSERVE announced that its electric vehicle charging forecourt, which is powered by zero-carbon solar energy and the United Kingdom’s first, is under construction and should open this summer. The forecourt, located in Essex, England, can charge 24 vehicles at once with superchargers that can deliver 350kW, and it is the first of a nationwide network plan of over 100 forecourts. Later in April, the Japanese petroleum company JXTG Nippon Oil & Energy Corporation announced that it has invested in Virta, a Finnish EV charging platform provider, as part of a plan to create a new mobility business. JXTG plans to utilize Virta's Vehicle-to-Grid (V2G) communication and smart charging technologies in its nationwide network of 13,000 stations in Japan. Moreover, despite the decline of 25.6% in new vehicle sales in Europe during 1Q 2020, EV sales increased by 7%. Lower new vehicle sales revenue will invariably force companies with lower liquidity to reduce Research and Development (R&D) expenditure. For instance, Audi recently abandoned plans to upgrade its Audi A8 sedan with Level 3 autonomy. However, technologies required by a mandate, such as electrification, should remain a priority in the likely scenario of investment rationalization.

Despite the pandemic, EV sales showed an impressive first quarter, mainly lead by high sales in January and February before major social distancing measures were implemented worldwide. For instance, BMW EV sales were up 13.9% in the first quarter of 2020 in comparison to the same period in 2019. Chevrolet saw a similar trend with Chevrolet Bolt sales, which were also up by 36.1% compared to last year. Lastly, Toyota Division sold 80.5% more total hybrid vehicles in 1Q 2020 than in the same period last year in the United States. Naturally, the EV industry will suffer from the supply chain disruption caused by the pandemic. However, signs of recovery in China, which was hit by the pandemic earlier and is slowly going back to normal activities, can be seen with optimism. BYD, a Chinese maker of EVs, had a 329% increase in sales in March 2020 in comparison to February, although still 60% lower Year-over-Year (YOY). According to PT Connected Services for Electric Vehicles, 27 million consumer Plug-In Electric Vehicles (PEV) and 1 million commercial PEVs will be sold by 2030.

Consumer EV sales presented steady global growth in the past years: 41% in 2018 and 35% in 2019, according to ABI Research. The increasing number of cities enforcing emission targets and the drop in battery prices will contribute to the industry consolidation within this decade. Several countries have already set aggressive goals to cease the sale of Internal Combustion Engine (ICE) new vehicles completely. Norway aims to ban the sale of new ICE vehicles by 2025; Ireland, Sweden, Germany, and India by 2030; Scotland by 2032; and Taiwan, Israel, and France by 2040. The Britsh Government has recently anticipated the ban on ICE vehicle sales from 2040 to 2035. Additionally, with an increasing number of cities in Europe enforcing emission rules, only EVs will be able to run in urban areas in the next years. Moreover, battery prices have come down to a point at which drivers do not have to wait for an extensive payback period to experience cost advantages. EVs are finally being sold at more competitive prices, with clear cost efficiency.

Lack of infrastructure and range anxiety are still the main factors hindering extensive EV adoption. To encourage EV sales, governing authorities should invest in smart charging infrastructure. Concurrently, Original Equipment Manufacturers (OEMs) must increase the range of connected services that establish communication between vehicles and charging stations, such as charging station locators, real-time availability, and eco-routing. Moreover, due to the collapse in wholesale gasoline prices, authorities and OEMs must adopt strategies to make EVs even more cost efficient. Increased purchase taxes for ICE new vehicles and the introduction of fees for polluting vehicles, combined with lower taxes for zero-emission cars, could counterbalance the effect of low fuel prices. Grid operators can work with utilities and other third-party companies to better comprehend how to manage electricity loads via smart charging, avoiding high prices due to overload peaks. V2G can provide substantial charging cost reductions. However, the benefits for passenger vehicle owners may not compensate for the investment in V2G-enabled vehicles and bidirectional chargers.