The transportation sector, which currently accounts for nearly a quarter of global greenhouse gas emissions, will be an essential player in the energy transition. The United States (U.S.), European Union (EU), and United Kingdom (UK), among others, recognize that meeting sustainability goals requires immense changes to the way we move people and goods. They are placing electric vehicles (EVs) squarely in the spotlight, providing both incentives and regulations designed to accelerate electrification.
These governments have made ample funding available to promote the manufacture and sale of EVs and the development of robust charging infrastructure. The U.S.’s Infrastructure Investment and Jobs Act, for example, offers US$7.5 billion for EV charging, US$10 billion for clean transportation, and over US$7 billion for EV battery components, critical minerals, and materials. The UK’s Office for Zero Emission Vehicles also offers a number of grants to support the development of public and domestic charging infrastructure, while the EU has allocated €292.5 million to green mobility projects.
Availability of these incentives, with approximately US$10 billion in EV-related investment globally each year from financial and strategic investors, creates considerable opportunities for those able to navigate this new and fast-changing terrain.
But careful navigation is needed. The road to widespread EV adoption isn’t without some curves. Here are some of the major issues impacting the transition:
Regulatory mandates: Vehicle Original Equipment Manufacturer (OEMs) face a complex and ever-shifting regulatory landscape intent on deploying electric vehicles to decarbonize the surface transportation sector.
- In the U.S., the three agencies regulating light duty vehicle emissions and fuel economy, the Environmental Protection Agency, the National Highway Traffic Safety Administration, and the California Air Resources Board, all have new or proposed rules governing EVs. Importantly, California’s new zero emission vehicle (ZEV) mandate (effective model year 2026) ramps up to 100 percent ZEV required for new vehicle sales by model year 2035, while the Biden administration is seeking to finalize historically stringent emissions and fuel economy standards beginning in model year 2027.
- The UK and the EU are planning to end the sale of new internal combustion engine (ICE) vehicles by a 2035 deadline (with some exceptions).
- In the UK, new proposed laws requiring a 99 percent reliability rate and real-time status updates for charging ports were proposed earlier this summer, supplementing the 2022 Electric Vehicle Infrastructure Strategy. Similarly, the EU has imposed strict requirements on the availability of charging ports, mandating their availability every 60 kilometers along main routes by 2026.
Rapid infrastructure development: The vast infrastructure necessary to support widescale EV charging does not yet exist. The U.S. Department of Energy estimated earlier this summer, for example, that the nation will need 28 million charging ports (including 182,000 publicly accessible fast chargers) by 2030 to support just a mid-adoption scenario. For reference, the U.S. currently has approximately 160,000 total ports (excluding residential chargers). In the UK, a £950m Rapid Charging Fund has been provided for the development of rapid charging infrastructure on motorways and the ‘A’ road network. Development of this charging infrastructure must keep pace with the increase in EV market share.
EV charging also requires significant energy at unpredictable times, posing load balancing challenges for outdated electrical grids. The roll-out of ‘Time-of-Use Tariffs’ for domestic U.S. energy users and vehicle-to-grid services will be critical to solving this issue, combined with additional investment in modernizing the transmission grid and deployment of utility-scale energy storage to allow for increasing reliance on intermittent renewable energy generation sources such as wind and solar.
Cultural shifts: While production of EVs has increased, consumer purchases of such vehicles have stagnated. Widespread adoption will require consumers to accept the value and tradeoffs of EVs, such as longer refueling times and investments in home charging infrastructure.
Supply chain expansion: The International Energy Agency estimates that the current generation of EVs require six times the amount of critical minerals used to build ICEs due to their electric components. These raw materials are currently in short supply, however, and subject to social and political complications due to the environmental and labor issues associated with modern mining practices, as well as national security concerns raised by the fact that most of these minerals are currently processed in China. New sources for these necessary materials, as well as continuing innovation in EV technology to reduce reliance on rare minerals will be needed to meet global production targets for EVs over the next decade.