Electric vehicles are staring down the barrel of historically low oil prices and a global economy that's ready to fall into recession, but what are the industry's chances of weathering the storm? BloombergNEF's Colin McKerracher weighs in.
Right now, the world is in a state of upheaval as it deals with the effects of the coronavirus pandemic, both physical and economic. Add to that the fact that we're seeing gasoline prices at their lowest level in over a decade, and things begin to look a little bleak for the widespread adoption of electric cars . But, according to Colin McKerracher, head of advanced transport for Bloomberg New Energy Finance, things may not be as grim as they look.
"If it wasn't for this, we would have been heading for a record year in EV sales," McKerracher said during an interview with CNET Editor-at-Large Brian Cooley. "We were expecting 2.4 or 2.5 million EVs sold this year, [but] that's all out the window now."
But how much of that has to do with the shockingly low price of gasoline right now? Are customers more likely to buy an EV than a conventionally powered internal combustion vehicle when prices at the pump soar, even though EVs often have a higher entry cost? Not so much, says McKerracher.
"I think the big thing holding the EV market back isn't operating costs; it's up-front costs that have really been holding the market back. What really matters is, when do the up-front costs start coming down? So what that means is that battery prices are more important than oil prices."
Okay, but what about COVID-19? It's true that the widespread shelter-in-place orders and the closure of nonessential businesses have put a serious dent in the sales figures for car companies of all stripes, and EVs seem more likely to take a harder hit than ICE-powered vehicles, purely because they tend to cost more to buy (especially as subsidies for buying them may dry up as government funding gets funneled elsewhere).
"It gets really expensive to subsidize the purchase of something beyond the first 2 or 3 percent of buyers, [and that's where] policy mechanisms start to take over and fill up the slack from where these direct purchase subsidies are tapering off."
Colin and Brian had a lot more to talk about, so make sure to check out the full interview for the rest of the story.
Now What is a video interview and panel series with industry leaders, celebrities and influencers covering the major changes and trends impacting business and how consumers connect in the "new normal" 2020 world and beyond. There will always be change in our world, there will always be technology helping us navigate that change, and we'll always discuss surprising twists, turns and potential solutions.