Progress Report: Re-gearing for the electric future
Nigel Topping, CEO of the We Mean Business coalition
Welcome to the January edition of the Progress Report, where we look at the rapid electrification of the transport sector, the huge progress from companies going 100% renewable and bold divestment moves from the New York pension fund.
Betting on exponential math
Back in 2016 – which seems like a lifetime ago when you consider the speed of developments in the EV sector – I made a bet:
“By December 31 2029 one of the world’s top ten car manufacturers in 2015 (Volkswagen, Toyota, Daimler, GM, Ford, Fiat Chrysler, Honda, Nissan, BMW, SAIC) will stop manufacturing cars powered by internal combustion engines.”
At the time that bet seemed ambitious. But now the idea that even one of these automakers might still be clinging on to outdated ICE technology at the close of the 2030s, and still be in business – seems ever more unlikely. Here’s a quick recap of where those top ten automakers of 2015 now stand in terms of EVs:
Volkswagen is leading the pack in terms of the traditional automakers, with plans to spend $40 billion by the end of 2022 building EV versions of its 300+ global models. It has also created a new e-mobility unit to help towards its goal of hitting 1 million VW EVs a year by 2025.
Daimler plans to spend in excess of $11.7 billion to introduce 10 pure electric and 40 hybrid models as it electrifies its full range by 2025. Ford is to invest $11 billion with the aim of having 40 hybrid and fully electric vehicle models by 2022.
Toyota aims to have an electric or hybrid option for all of its cars by 2025 and to be selling more than 5.5 million EVs by 2030. General Motors has outlined plans to introduce 20 new battery and fuel cell EVs by 2023, using a new dedicated, modular platform.
Honda is planning to release two pure-electric vehicles in 2018, one for the Chinese market and another for the rest of the world. The Renault-Nissan-Mitsubishi Alliance are hoping to build on the early success of the Zoe and Leaf by launching 12 new EVs by 2022. BMW plans to have 25 electrified models on sale by 2025, with 12 of those to be pure-electric.
Chinese automaker SAIC is targeting EV sales abroad via strategic partnerships with VW, GM and an Indian joint venture MG Motors. And trailing the pack, Fiat Chrysler is not unveiling plans for its all electric future, but is opting to use hybrids to meet tightening CO2 regulations.
To put this into perspective, those top ten automakers of 2015 – excluding SAIC – represent around 59% of the entire global market of nearly 90 million cars, according to CDP’s league table rankings.
Add to that the latest announcement from Peugeot owner PSA Group that all of its 40 models will have an electric option by 2025, plus aggressive plans from the likes of Volvo and BAIC, and market pioneers such as Tesla will have to work very hard to keep ahead.
Together, this huge flow of investment from virtually all the major automakers is set to deliver exponential growth to EV’s market share. As I may have mentioned before (#DoTheExponentialMath), if the EV market share doubles from its current 2% every two years, we’re on track for 100% EV switch by 2030 for cars and light vehicles. And of course I’d win that bet.
And it’s not just the automakers that are being transformed, the entire supply chain is having to recalibrate itself for the disruption that’s coming.
For example, the world’s biggest maker of spark plugs, Japan’s NGK Spark Plug Co, is re-gearing for the electric future by shifting its expertise in ceramics technology to developing solid-state batteries. While the UK’s Delphi Automotive has decided to split itself in two – Aptiv and Delphi Technologies – as it tries to adjust to the changing needs of the market.
Also in the EV rollout this month, Daimler has unveiled its first all-electric school bus for production in 2019 with a range of more than 100 miles. While Norway’s airline operator laid down the gauntlet for electrifying short-haul flights. Avinor said that all of Norway’s short-haul airliners should be entirely electric by 2040. And the world’s first fully electric container barge is due to set sail in Europe this summer.
Renewable revolution
Huge progress is being made in the shift to renewable energy. As The Climate Group’s RE100 Progress and Insights Report in partnership with CDP shows, more companies than ever are achieving their target of going 100% renewable.
By the end of 2016, 25 RE100 members had reached 100% renewable electricity, including Autodesk, Elopak, Interface, Marks and Spencer and Sky. During that year, Bank of America, Astra Zeneca and Coca Cola Enterprises grew their share of renewable electricity more than threefold. The report also finds that 88% of respondents cited the compelling economic case for renewable electricity as a major driver.
Together, the 122 companies in RE100 consume over 159 TWh of electricity per year – more than enough to power Malaysia. If RE100 were a country, it would rank as the world’s 24th biggest electricity user, just behind Egypt (160.5 TWh).
China opened its new solar-powered highway at the end of last year, highlighting that the future of solar is not confined to standard panels but has countless forms and applications.
While new cost analysis from the International Renewable Energy Agency shows that within two years all the renewable power technologies that are currently in use are expected to be cost competitive with fossil fuels.
And the New York pension fund announced plans to divest $5 billion from fossil fuels and is suing five major fossil fuel firms over their contribution to climate change. The London pension fund is also actively divesting from fossil fuel companies, with its investment falling from £130 million to £69 million in 2016-17.
Meanwhile, at the World Economic Forum in Davos, Anand Mahindra, Chairman of the Mahindra Group, set the tone for this pivotal year of climate action by challenging all companies to set a science-based target ahead of the Global Climate Action Summit in September.
More and more companies are already stepping up to align their business plans with the goals of the Paris Agreement. 339 have committed to cut their emissions through the Science-Based Targets initiative, while nearly 900 have declared to CDP their ambition to set targets within the next two years.