Will Europe Drive the Transition?
Net zero targets are a permanent and critical part of the international energy and transport landscape, and Europe is in the midst of change. As of November 2020, every 10th new passenger car sold in Europe was either a pure electric or plug-in hybrid. Europe is at a decisive turning point in achieving 30%–40% EV sales volumes by 2030. Companies are moving quickly to capture and secure a commercial advantage in new markets - one energy company, for example, is electrifying its entire 10,000-vehicle commercial fleet by 2026; battery manufacturers are announcing plans to bring low-carbon, lithium-ion battery production to Europe; and power system operators are pursuing value in the mass electrification of transport by harnessing smart-charging and vehicle-to-grid technologies.
Momentum is building. In its newly released Sustainable and Smart Mobility Strategy (SSMS), the European Commission sets ambitious milestones. It aims for at least 30 million low emission vehicles on Europe’s roads, 3 million charge points, 100 climate-neutral European cities and large-scale deployment of automated mobility by 2030.
Countries are getting wholeheartedly behind the vision. The UK has brought forward its ban on new internal-combustion engine (ICE) vehicles by 10 years. Norway aims to end the sale of diesel and petrol vehicles by 2025. Germany and France are taxing polluting vehicles heavily at the point of sale, while paying out bonuses to purchasers of electric vehicles (EVs). EY's latest thought leadership at When does reinventing the wheel make perfect sense? | EY - Global provides a full outline of the latest announcements and insights.
Watching the emerging regulatory and scale barriers in Europe provides the Asia Pacific region with the basis to consider our own trajectory and optimal blueprints.
Firstly, there is a need to agree common standards to incentivise infrastructure investment. Plug-in vehicles can become a success, but both hardware (connector and cables) and communication software standards are needed. Common standards for recharging solutions will further enhance the driver experience, removing the need for an assortment of cables and adaptors.
Secondly, watch for fleet transitions as companies prioritise this segment to secure the fastest overall impacts. Fleet accounts for 20% of total vehicles in Europe, but travels disproportionately greater distances and emits disproportionally more carbon dioxide (CO2). Learnings from fleet, and the value they deliver, are transferable to other segments in transition.
Thirdly, we need greater connectivity - digitisation will become an indispensable driver for the modernisation of the entire system, making it seamless and more efficient while further reducing emissions. Put simply, EVs are going nowhere without an interoperable charging network.
Achieving success in this new market will require a focus on both delivering and accelerating the transition, cutting costs of EV ownership and delivering a much-improved EV-user experience. For new entrants, this means understanding the most likely long term energy market scenarios, the revenue models, customer preferences and competitive advantage. These are of course only part of the equation; the real benefits will come from playing an active part in the development of the regulatory regime that underpins the models and surgically removing the barriers to value stacking.
Do you agree? Email us at contact@renniepartners.com.au and lets continue the conversation.