The low-down Hide
It’s a great time to be a car executive.
10% of global car sales last year were EVs. That’s quadruple 2019’s numbers.
Australia is pushing towards mandatory fuel efficiency standards to increase supply, improve affordability, and slash traffic emissions. EV startups like Jolt have major plans to install thousands of car charging stations across Australia after hitting its AUD $100 million investment.
Requiring 60% less fuel and 31% lower maintenance costs, electric cars are driving (sorry) the next round of innovation for the automotive industry.
And if you follow the teachings of the great economist Jeremy Rifkin, electric transit will be a pillar of the next industrial revolution, alongside green energy and the Internet of Things.
It sounds optimistic so far, but Australia has a long way to go.
The director of the Australian Institute Climate and Energy Program believes “Australians are being left behind simply because… we are still accepting gas-guzzling cars with no emissions standards. This is costing commuters money at the petrol pump and holding Australia back from reducing our emissions.”
If fuel efficiency standards were introduced in 2015, commuters could have saved AUD $5.9 billion in total costs.
Compared to the global 10% average, only 2% of cars sold in Australia this year were electric, primarily because of their expense.
Chicken and egg
There are 10 million EVs on the road compared to 1.4 billion cars powered by fuel and petrol.
Consumers often wait until technology is cheap and mature before buying, and investors won’t finance projects unless they have enough consumer demand.
Then there’s the convenience factor. Without readily available charging infrastructure, no one’s changing their comfortable fuel-up-and-go habits.
So how do we break the chicken-and-egg cycle?
Companies like Tesla have peaked consumer interest by introducing battery longevity lasting 300,000 to 500,000 miles. EVs can also travel as much as fuel or diesel-powered cars on a single charge and superchargers can add an additional 200 miles in 20 minutes or less.
Honda and General Motors are forming an alliance and pledged to produce affordable RVs with starting prices at USD $30,000. The secret ingredient is GM’s new Ultium battery tech, but production isn’t scheduled to begin until 2027.
Since changing public infrastructure to support plug-in vehicles is difficult, Honda plans to focus on hybrids in the meantime.
Norway increased EV purchases from 1% to 54% in 2020. By setting generous tax breaks, toll exceptions, and vehicle grants, the Norwegian government effectively killed the gas-operated automobile industry.
This doesn’t include plug-in hybrids, either. If it did, EV numbers would account for 74% of vehicle sales.
It can be done. But can Australia follow suit?
Hurdles to an EV future
While 6.7 million EVs were sold in 2021, major hurdles face corporations looking to mass produce EVs.
GM had to recall 141,000 Chevy Bolts after their batteries started exploding. The problem arose when GM started packing more and more energy into their EV batteries.
But GM, in partnership with LG, rectified the problem by installing five new battery modules to carry a higher energy capacity.
Even if society progresses toward an all-electric future, high-voltage car batteries remain in the early stages of development. While experimenting with battery chemistry, catastrophic defects can occur.
In 2020, a Tesla Model S caught fire in the San Francisco area and caused more than USD $1 million in damages.
But electric batteries aren’t the only issue, chip shortages continuously hurt the EV industry.
Asia-based TMSC and Samsung control over 80% of the microchip market. Due to this, EV manufacturers have a small pool of microchip companies to choose from and can also extend the lead time on semiconductors.
In December 2021, the lead time (the time between someone ordering a semiconductor and when it ships) increased to 25.8 weeks, six days longer than November.
In response, there’s a greater push to get more semiconductor factories in the US.
Making the switch
In Australia, EV-centric infrastructure is being rolled out with publicly accessible chargers which provide power for free.
ChargePoint, an EV plug-in charging network, expects to release fast charging stations across the Melbourne-Brisbane corridor over the next two to three years.
Australia was the world’s biggest lithium producer in 2019, with reserves hitting 6.3 million tonnes. Since lithium-ion batteries power electric cars, over 200 EV startups have taken off in Australia.
In 2020, Adelaide-based ACE EV raised AUD $5 million from the federal government to fund their rollout. Founder Greg McGarvie said government investment could help pivot Australia into an era of smart manufacturing: “That $5 million is a pivot and shows there is a change in sentiment here in Australia. It gives us a bit of encouragement. Someone else thinks what we are doing is worthwhile. We know it is because it is the future.”
But simply adding more EVs isn’t enough to electrify decades-old infrastructure.
US investment firm BlackRock plans to fund Aussie startup JOLT with over AUD $100 million in capital to install 5,000 EV charging stations.
JOLT’s public chargers have digital displays which showcase advertisements and open up a revenue stream. Customers are also given the first 7kWh of their EV’s charge for free before paying for the remainder. The whole process takes 15 minutes and adds 45km in range.
BlackRock says the need for EV infrastructure is enormous as the global transition to electrifying roads accelerates. Annual passenger EV sales are expected to increase from 3.1 million in 2020 to 14 million by 2025.
A startup opportunity
In Deloitte Doblin’s map of 10 types of innovation that make successful startups, process and product performance come in at 4th and 5th.
EVs exemplify process and product performance with fuel efficiency, affordability, predictability and handling. It’s the driving force behind increased customer interest in recent years.
New EV startups which prioritise macro trends leading the global market will succeed. A key piece of the puzzle is strong customer-centric advertisements. With 56% of Australians considering going electric with their next car purchase, even classic ad strategies like billboard advertising can have a positive impact.
JOLT integrates digital billboards into its charging stations. The ad network is located in high-traffic areas and includes 55- and 75-inch inbuilt panels around NSW and South Australia.
The company reports strong engagement with green energy businesses, retailers and entertainment clients interested in paving a safe, zero-emissions future for Australia.
JOLT co-founder Doug McNamee says he wants to deliver his message in the most sustainable, environmentally friendly way possible: “Our goal as a business is about making zero-emission mobility much more accessible. So delivering a service to people that is subsidised by advertising is sort of the core tenet of our business.”
The broad scale potential impact of EVs is enormous.
In over a year, one EV can save an average of 1.5 million grams of carbon dioxide. That’s the equivalent of four return flights from London to Barcelona.
Consulting firm EY states every EV sold in Australia in place of a conventional gas car will net more than AUD $10,000 over 10 years.
Electric Vehicle Council chief executive Behyad Jafari notes that even if a mere quarter of Australia’s cars were converted to EVs, the government would generate AUD $4.4 billion a year.With EVs representing close to 9% of the global car market, the need for major infrastructure overhauls is needed now more than ever. In many cases, our lives depend on it.