How the coronavirus pandemic is driving electric vehicle sales up and carbon emissions down

The pandemic has forced cuts in transport-linked emissions and, by one estimate, US commuters are saving US$750 million a day by not driving to work. Electric vehicles may finally be on the road to a significant market share

David Dodwell

Published: 6:15am, 21 Sep 2020

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I like to think of myself as a global pioneer in the non-use of cars. Over my 35 years living in Hong Kong, I have militantly resisted the temptation to use a car, and occasionally it makes me feel a tad superior.

But, of course, I recognise that Hong Kong is not the rest of the world, and while it is reasonable and quite easy to subsist in this city without owning your own car, relying instead on taxis and the impeccable public transport, I know this is not true or realistic in most cities or countries worldwide.

So the past six months of coronavirus lockdowns have provided new and valuable insights into the likely future of transport. On balance, the wave of climate science is likely to provide the foundations for less-energy-intensive transport, but there are some unexpected and rather unwelcome effects, too.

There are two particularly unhelpful Covid-19 impacts. First, global oil prices have collapsed as recession has quelled demand for oil. This has reduced the incentive for vehicle-makers to invest in the shift to electric vehicles and battery power.

And, second, the social-distancing rules arising from the global pandemic have raised fears in many countries over the use of public transport, encouraging many to retreat to the comfort and safety of their own cars.

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But, most of the pandemic impacts have been helpful as we look ahead to a more energy-efficient future, with a gradual shift to electric-powered transport, and at least 17 countries having now committed to zero-emissions transport by 2050.

First, the pandemic has forced powerful – if short-term – cuts in transport-linked carbon dioxide emissions. Lockdowns and work-from-home policies have drastically cut emissions linked with commuting. Severe curbs on our social lives, as clubs, pubs, restaurants, cinemas and thousands of sports venues have been shuttered, have also reduced carbon dioxide emissions.

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As an example, the US Federal Highways Administration reported a 25 per cent fall in vehicle miles travelled in the second quarter, and expected an 11.4 per cent fall for 2020 as a whole. That amounts to around 260 billion fewer miles travelled in 2020 – an obviously huge reduction in carbon dioxide emissions from a dive in petrol consumption. JP Morgan reported gas-station credit card spending down 62 per cent in April – most of that on fuel.

US commuters are saving an estimated US$750 million a day by working from home, says Upwork. That is good for our bank balances and the environment, but bad news for tax revenues: with the US Department of Transportation reporting US$43.5 million lost every day in federal fuel taxes.

Of course, the lockdown recession is in its own right reducing our emissions, not least because of a powerful contraction in the global auto industry, which directly accounts for around 14 million jobs, and about 3 per cent of global GDP. Vehicle sales worldwide are expected to fall to around 70 million this year, from 90 million last year: with thousands of car dealerships folding, many families with reduced pay cheques and job insecurity at high levels, consumers are delaying big-ticket purchases like cars.

While fossil-fuel vehicle sales have shrunk sharply in most economies, the good news for those with environmental concerns is that electric vehicle sales have stayed firm. The European auto data company JATO has reported that petrol and diesel car registrations were down by almost one-third in June, while electric vehicle sales were up by two-thirds.

Impressive and encouraging though such news is, let’s remember that electric vehicle sales accounted for less than five per cent of all vehicle sales in Europe, so it is going to be quite a while before this growing demand for EVs makes a serious dent in overall demand for fossil-fuel vehicles.

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While there were just 17,000 electric vehicles on the world’s roads in 2010, the International Energy Agency reports that there are today about 7.2 million. They forecast this number to grow to between 140 million and 250 million by 2030. By then, not only will there be about 430 electric car models to choose from, but production costs will be down, and perhaps most important, improvements in battery technologies will transform the business.

Another uncomfortable fact is that the great majority of electric vehicles on the roads today are in China. The Chinese mainland accounts for 47 per cent of all electric cars, and an even larger share of electric buses, electric scooters and bikes (not to mention high-speed electric-powered trains).

The first-half contraction of car sales in China this year has for the first time lifted Europe above it in demand for new vehicles, but it may be many years before Europe’s drivers overtake China’s in their love of EVs. And, of course, as long as the US remains in President Donald Trump’s fossil-fuel-loving grip, America will continue to lag far behind. Tesla might continue to lead the EV world, but it will be on the back of sales in China, not the US.

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China also by far leads the world in public access to EV charging points, accounting for 82 per cent of publicly accessible fast chargers, according to the IEA.

The surge in demand for electric vehicles has, of course, been as much policy-driven as price- or efficiency-driven. Subsidies in Europe (in part from the recently announced €750 billion or US$860 billion pandemic recovery fund) have played a large part in diverting drivers from fossil fuels, but incentives are increasingly being focused on zero-emissions mandates and fuel economy standards, or shifting support to vehicles with higher battery efficiency and more miles on a single charge.

But, as sales volumes rise and production costs fall, so there is growing confidence that electric vehicles are at last on the high road towards significant market share, with the pandemic giving a helpful, timely shove in the right direction. If the IEA’s prediction of 250 million EVs on the world’s roads by 2030 proves accurate, that will amount to 30 per cent of all vehicles in operation.

Most significant, it should mean we are avoiding 700 million tonnes of carbon dioxide emissions as a result of vehicle electrification. At that point, even I might step off my high horse and drive again.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view

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