What is the future of Electric Vehicles in urban transportation?
The number of EVs on the road has risen, with almost 14 million new electric cars registered globally in 2023, increasing by 35%, bringing the total number to 40 million.
The growth of EV sales has been robust, with sales in the first quarter of 2024 surpassing those of the same period in 2023 by around 25% to reach more than 3 million. This growth is a testament to the increasing popularity and acceptance of EVs among consumers, and it bodes well for the future of the industry.
However, the number of public chargers has not kept pace, driving up frustration and scaring away potential EV buyers, claiming that there are still too few users to justify an extensive national network and potentially stifling further adoption.
The International Energy Agency (IEA) projects that 790 million external EVs will be needed by 2035 to reach net zero by the middle of the century. That implies sales growth of 27% every year, raising the question of how achievable this is given the fact that extensive chargers and the development of the new generation of batteries are still lacking, casting doubt on the industry’s future.
Market trends towards resolving the EV challenges
However, as with most upcoming industries, there is a slowdown before the real boom.
We have seen significant support from major investment management companies like BlackRock, which are backing efforts to build a high-speed net zero emissions charging network. This support is crucial, as it not only provides the necessary funding but also signals to the market the potential of the EV industry, even during a period of sales slowdown.
The Australian charging company Jolt, which has received backing from U.S. fund manager BlackRock, recently announced that it is rolling out on-street EV chargers in London as part of its plans to install 5,000 chargers in Britain over the next three to five years.
This expansion of charging infrastructure is crucial for the further adoption of EVs, as it addresses one of the key barriers to EV ownership – the lack of charging points.
For EV chargers, location plays a vital role in their profitability and viability.
While trying to place the chargers everywhere, the efforts need to be directed towards areas with the highest impact, such as hotels and shopping malls, where the speed of charging will play a vital role in the players’ success.
Coming to the main challenge for all automakers that have invested in EVs is how to produce these high-tech batteries economically in the numbers needed to build affordable electric cars.
Meanwhile, there are competing battery technologies for which manufacturing techniques are well established.
Recent advancements in battery technology are driving significant changes in the EV industry. Companies like Tesla and BYD are expanding the use of Lithium-Ion Phosphate (LFP) batteries, which are cheaper and safer than traditional options.
Meanwhile, CATL, which supplied 37 per cent of the world’s EV batteries last year, is targeting sodium-ion batteries and condensed-matter batteries that store about double the energy of conventional lithium-ion batteries. These advancements are crucial, as they address key concerns of EV adoption, such as cost.
As of March 2023, announcements on battery manufacturing capacity delivered by 2030 are more than sufficient to meet the demand implied by government pledges and would even be able to cover the market for electric vehicles in the Net Zero Emissions by 2050 Scenario.
We are seeing very positive steps towards improving the industry, which will be vital in meeting the net zero targets. This brings us to the following trend: ridesharing fleets.
Recent research on electric cars and ridesharing platforms indicates that integrating electric vehicles into ridesharing fleets can significantly reduce carbon emissions and operational costs. This integration also has the potential to promote broader adoption of sustainable transportation, as it provides a convenient and cost-effective way for individuals to experience and use EVs.
Uber is already integrating electric vehicles into its ridesharing fleet, aiming to have 100% of its rides in electric cars by 2030 in North America and Europe.
Sirec Energy, as a leading player in sustainable investments, recognizes the potential of the EV industry and plans to invest strategically in this space. The private equity fund aims to invest in the development of electric taxis and ridesharing platforms, which believes will play a significant role in the future of urban transportation.
Dionisis Alissandratos, Managing Director of Sirec Energy, commented:
We firmly believe that electric vehicle (EV) technology is crucial for decarbonization and achieving the goal of net-zero emissions. While EV technologies continuously improve in terms of commercial viability and efficiency, we believe the industry is currently at a turning point and holds great potential.
With a clear vision of the future, Sirec Energy is strategically investing in charging infrastructure, electric taxis, and ridesharing platforms. This strategic focus is not only a testament to our confidence in the industry’s growth but also our commitment to creating a cleaner and greener world.
About Sirec Energy Capital Partners
Sirec Energy is an independent Private Equity Firm, managing the European Sustainable Investment Fund (EUSIF) with €70m assets under management and a focus on investing in environmental sustainability and energy efficiency projects.
Since its establishment in 2019, the team has managed projects of more than €400m in energy efficiency and renewable energy production across seven European countries