VIEWPOINT: Mark Stewart, partner and head of infrastructure & renewable energy at accountancy and business advice firm Johnston Carmichael, looks at the future of the electric vehicle market.
The advent of the electric vehicle (EV) revolution is upon us. Tesla’s recent launch of the Model 3 has brought affordable electric vehicles to the mass market, and many other car manufacturers plan to fully electrify their vehicles in the next few years, including BMW and Jaguar. This, teamed with governmental policy to significantly reduce carbon emissions and move away from the use of fossil fuels means the inevitable and rapid ascent of the EV is set to continue.
Facilitating the switch to EV will require major investment in infrastructure up and down the country. With the average electric car only able to travel a certain distance (100-200 miles) before it needs to recharge, plug-in charging units will be required at more frequent points than petrol stations. This raises questions on current and future electric storage facilities and battery technology, where advancements will most definitely need to be made to service the predicted increase of EVs on our roads.
The cost of upgrading UK infrastructure to support the electrification of the transport network will be in the billions and will come from a myriad of sources. It may be that a private finance solution along the lines of street lighting could pave the way for urban deployment with private and public sector collaboration to develop the infrastructure.
The question of cost and efficiency also comes into play. How will the power supply be priced and regulated? Will there be a benchmark, with maximum resale prices implemented? How will electricity supply and storage meet demand?
While there are plenty of questions, there are also plenty of opportunities. The commercial possibilities are varied and many; we’re likely to see EV and battery building plants and factories popping up all over the UK as demand increases. The growth of the EV market also heralds potential new opportunities for small scale producers such as farmers and communities to supply power.
Perhaps we will eventually see a move towards the full democratisation of the power market, where we as individuals and communities will be responsible for generating our own electricity supplies.
Despite recent reports that the ban on petrol and diesel cars by 2040 will cost trillions, the change should be embraced. Moving to EVs is an opportunity to encourage a new approach that would tackle some of our most persistent transport issues from congestion to CO2 emissions.
It is estimated that there are 38 million empty car seats on the UK’s roads during every rush hour and a report published in 2014 stated that traffic congestion will cost the UK economy more than £300 billion over the next 16 years.
With the sharing economy growing fast, greater adoption of car-pooling would not only reduce traffic but would also cut running costs for individuals and boost the wider economy through increased productivity. The growing availability of apps to assist with forward journey planning and booking, combined with more flexible working hours, have made car sharing an attainable, practical alternative.
So what are the next steps? One thing is clear – the policy makers have a lot to get on with.
And so do we. We are extremely busy developing financial models and commercial solutions for our clients who are exploring opportunities to combine existing renewable energy generation with storage and charging facilities.
Many believe that consumers in the future will not only want electricity as a fuel source, they will prefer and be willing to pay a premium for green power. It’s all about connecting the dots.