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News   November 10, 2022   by Swamini Kulkarni

How EVs will drastically change transportation in Canada

This country presents a unique opportunity for electrics

Ford Mach-E

The transportation industry has been going through a crucial period. From the advent of self-driving cars to the development of electric vehicles (EVs), the industry will witness major changes in the coming years.

It seems evident that EVs will become a norm and automakers will bet on developing long-lasting EV batteries and the necessary infrastructure for upcoming EV models.

A report from Allied Market Research shows that the global electric vehicle market is projected to reach more than US$823 billion by 2030— a compound annual growth rate of 18.2 per cent from 2021.

The surge in demand for low-emission, fuel-efficient, and high-performance vehicles along with strict government regulations about vehicle emissions are major factors fuelling the growth of the EV market. Several governments have encouraged and mandated converting to electrics. Major market players have targeted European and North American consumers.

It will be merely a matter of time before EVs become the prime mode of transportation.

Canada to witness EV transition

The global EV industry is evolving at a rapid pace. From policies, jurisdictional phaseouts of internal combustion engines, regulations, and original equipment manufacturers (OEM) to investments for developing infrastructure, the industry has gained momentum, fueling customer acceptance. Canada offers a unique opportunity for the EV market.

Canada has pledged to be a major contributor to achieving greenhouse gas emission targets. The adoption of EVs would play a major role in achieving this target. Canada had more than 25 million light-duty vehicles in 2019. Thus, the country needs to take firm steps to reduce greenhouse gas emissions from light-duty vehicles. This will demand the sunset and replacement of internal combustion engines and the adoption of EVs.

To move in this direction, the government of Canada has announced new vehicle sales goals by targeting adopting EVs and replacing the current fleet. By 2050, the government aims to completely replace the conventional fleet with electrics.

The biggest challenge is the total cost of ownership (TCO). Currently, the TCO of an EV is around 15–30 per cent higher than an internal combustion engine. This means the EV value proposition will appeal more to those who aim to reduce their environmental footprint and social reputation — and those who can afford it.

Moreover, early adopters of EVs will receive incentives from the government to offset the extra cost of an EV. However, in the coming years, TCO for EVs will lead to a sharp uptick in sales as well as adoption.

Market players to target European consumers

Electrification of the passenger car fleet in Europe is not a new strategy for automakers. It is estimated that over 500,000 new electric passenger cars were registered in 21 European countries in 2020. This number will only increase in the future.

National policies of European countries regarding passenger vehicles have changed. Governments have announced favourable initiatives, one-time subsidies, and fiscal incentives for EV purchases, which played a major role in the electrification of the passenger car fleet.

What’s more, several countries in Europe, as Canada has done, have announced deadlines for phasing out conventional fossil fuel and hybrid cars. Moreover, governments have enforced strict regulations on vehicle emissions. For the last two years, the world was suffering from the pandemic. Astoundingly, the pandemic became a catalyst in switching to EVs in Europe and has surpassed the U.S. and China in EV registrations.

Over the last couple of years, the leading EV companies have been making strategic investments in Europe.

For instance, Vinfast, a Vietnam car manufacturer launched two new EV models in Europe and North America. The company has already begun operations in Canada, the U.S. and other EU countries. In addition, it sold around 30,000 vehicles in 2020 including SUVs, sedans, e-scooters, and electric buses.

With this launch, the company plans to compete with the industry leaders such as Volkswagen and Tesla. Similarly, Great Wall Motor, a Chinese automaker announced to launch of EVs and plug-in hybrid SUVs in Europe by 2022. The company has made plans to expand its business in Europe with this launch.

Battery technology

The biggest concern about EVs is their range. People want their EV to not just handle their daily commute but road trips as well.

Thus, many leading companies have invested in battery-swapping technology. NIO, a Chinese automaker brought battery-swapping technology to Europe and launched an SUV with a 75kWh battery and a range of 234 miles, or 376 km. NIO has announced to cover Norway’s major cities and provide a power swap station.

Apart from them, industry leaders such as Volkswagen have invested more heavily in the European market than in the U.S. market. Volkswagen began electrification in 2019 with the launch of the ID.3 hatchback and has already begun delivery to customers in Germany.

Challenges in widespread adoption of EVs

The market players in the EV industry have promoted vehicles as eco-friendly in nature. However, not everyone is on board with this idea. The reason is range anxiety.

While major companies have invested in extending the range and developing technology to improve battery performance, people are still worried about how far they can travel before the vehicle’s batteries run out of charge. On the contrary, conventional fossil fuel cars have established infrastructure. Thus, in case of vehicles running low on gas have abundant gas stations and convenience at a gas station.

Electrics still need infrastructure and charging stations. While charging EVs overnight at home is the most convenient option as, on average, people drive around 40 miles — 64 km — per day. But the lack of awareness and familiarity makes people think about worst-case scenarios.

However, there is still potential for EVs to reshape the transportation sector. Transportation is one of the major contributors to carbon emissions. The adoption of EVs will drastically change the dynamics of private and public transportation. While there are still challenges yet to be overcome, they are potential opportunities for the EV market.

The charging time of an EV depends on the charger speed and capacity of the battery. This is a major opportunity for automakers. Market players have invested in developing the required infrastructure for EVs and installing charging stations on the road that charge vehicles within two hours. In the future, start-ups and major companies would offer public parking lots and shopping centers where customers can charge their EVs.

U.S. President Joe Biden announced a $900-million plan to install half a million charging stations during rh Detroit International Auto Show in September. This will surely help infrastructure concerns. Though in Canada, charging infrastructure is announced in fits and spurts.

Apart from this, the high cost of EVs is another concern restraining widespread adoption. While it’s a major challenge for market players to attract budget-conscious people, companies such as Nissan and Hyundai have launched EVs at $30,000 with a range of just shy of 200 miles, or 320 km. The price of EVs will drop in the coming years with the rise in prices of fossil fuels and tax concessions on EVs.

In the future, companies will focus on developing and improving EV batteries and establishing infrastructure for a public charger. While most consumers will not depend on public charging stations, private infrastructure development will develop slowly.

Along with battery swapping, ultra-fast chargers, and wireless charging solutions would drastically change the market and help develop trust among consumers. The EV market is surely greener and brighter. As battery technology improves, the cost of batteries will fall in the future, making vehicles more affordable and sustainable.

Swamini Kulkarni holds a bachelor’s degree in instrumentation and control engineering from Pune University and works as a content writer at Allied Market Research.

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