The EV year in review...
It’s not just consumers whose appetite has been growing for electrification, this year pretty much every major motoring manufacturer has outlined their own plans to electrify. Volvo, Jaguar Land Rover, Ford, General Motors, Daimler, Volkswagen, KIA, Fiat, Hyundai, Renault… EV commitments have been so demanded by investors, those who have lagged behind (such as Toyota) have had to quickly catch up.
The industry has broken the traditional boundaries for the automotive industry. We’ve seen outrageously large valuations for EV start-ups, such as Rivian, companies finding new ways to harness rare materials like lithium, manufacturers like Arrival who are totally rethinking the production line, to Tesla who have continued to change how individuals think about their cars. And it’s not just the cars, the whole EV sector has boomed in 2021.
Chargepoints are increasingly familiar to most people. From driveways, streetlamps to service stations; huge biblical sums have been thrust in to grow the sector. And to be fair to the government, they have so far put their money and time where their mouth is, allocating millions for grants and investment into the infrastructure. Even developments like the CMA’s review into Ecotricity’s legacy devices is enabling a motorway revolution from the likes of Gridserve.
However, 2021’s success hasn’t always been easy for the EV sector, there have been and remain big challenges. From global issues like the semiconductor shortages and the recent energy crisis, geopolitical moves by the EU, China and the US administrations. Likewise, at a local level in Britain, simple problems such as maintaining charging networks or the challenges for people living in flats. There are many obstacles going into 2022.
While Time Magazine and the Financial Times have both named Elon Musk as person of the year, both for leading the way on EVs and for his outer space efforts, I personally believe the success of 2021 belongs to all those working in the sector. There’s an energy within it that some critics call a bubble, but I think it is actually newfound optimism. Without 2021 and all this new energy, innovations and policies that have come with it, we might all still be looking down the barrel at ageing motoring institutions. Whereas now we have fresh players, reinvented businesses, and thousands of opportunities ahead to reach a cleaner transport system globally.
But what about next year? What is going to be the key challenges and opportunities to come along? Well, I’ve written up what I believe the top six will be.
Top six EV trends for 2022…
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Further energy squeezes
This year has put a significant spotlight on energy supplies and consumers at home have been feeling the impact. From staff problems leading to a petrol crisis and rising gas prices pushing almost 30 British suppliers into administration, both will mean most families end 2021 with hugely magnified bills. In fact, the problems in the sector have pushed the UK’s inflation rate to 5.1% - the highest it’s been in a decade.
This energy squeeze has had knock-on effects for the EV sector. In the last few months, charging networks hit by rising costs have had to bump their prices up, and those charging at home have also seen bills rise. As the year ends though, 2022 does look brighter. While energy supplies do look set to be put under the cosh for several months more, the impact of this is helping move people forward. At a high level, we’ve seen many families frustrated with super-high petrol costs switching to EVs, and at a government level, there’s been backing for heat pumps, as well as an investment push for energy creation at home using wind. Not to mention, at the end of this year there seems to be more appetite for battery storage. Plus, it’s also notable that a landmark vehicle-to-grid trial ended in 2021 with positive support from Ofgem. I’m certain the spotlight thrust on energy management by the recent crisis will lead to more innovation and growth in 2022. Especially if tensions with Russia and its gas supply continues to heat up!
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Continued production problems
Probably the biggest impact for the whole automotive sector in 2021 has been the global semiconductor shortage. It has led to huge production delays with many still having to wait until months for a car. The result of this has been the growing demand for second-hand cars and also businesses developing new ways to solve the issue. For some, they have been trying to use fewer chips in their vehicles, while others (such as Tesla) have attempted to manufacturer them in new ways. One thing is for certain, this problem isn’t disappearing in 2022. Likewise, given the growing appetite for EVs, it might even get worse before it gets better.
However, there is hope. Given the issues, many businesses and governments are now building up their own supply chains outside of Asia – which is where the vast, vast majority had been produced before. These new facilities take a long time to set up, but by the end of 2022, the sector will probably be in a far better position than it is now. Albeit, maybe analog clocks will become more popular in cars in between.
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More Clean Air Zones
As I wrote last week, 2021 has been a big year for clean air zones with London expanding its Ultra Low Emission Zone to cover much of the city – affecting millions of Londoners. Elsewhere, Bath, Birmingham and Portsmouth also launched their first clean air zones in 2021. Going into 2022, this list will only grow. Manchester and Bradford will launch clean air zones in 2022, plus it’s expected other cities may follow with schemes, such as Liverpool, Edinburgh, Glasgow, Bristol and many others. Let us not forget as well that 2022 will see the UK’s first zero emission zone get launched in Oxford.
As a result of the above, next year we can be sure to see surging interest (especially outside London) for EVs - particularly hybrids - and I’m sure new charging infrastructure to match.
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Big businesses forced to invest
I really hate this acronym however it’s increasingly important: ESG. If you’re not familiar, it stands for environment, social and governance. ESG is often used to describe a company’s (particularly a larger company) policy or activities around social and environmental factors. It’s very corporate. In previous years, as ESG has been rather niche, firms have been left to do what they think is best. However, given the heightened interest in recent years (COP, Greta, climate change etc.) it’s become very important. And going into 2022 that will become more so, as there’s a belief that in the not too distant future economies worldwide will start mandating the largest global companies to report and disclose what they are doing. In the UK, the government introduced draft regulations to this effect in October. – it would impact 1,300 big businesses.
What does this mean for EVs? Well, should we see this become mandatory for businesses in 2022, it will probably lead to a new surge of investment into the sector. For example, replacing fleets with EVs, building workplace chargers, solar panels, investing in climate startups, funding ebikes, moving into eco-offices etc.
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China growing in Europe
2022 will see the entrance of China’s homegrown EV makers enter Europe. The first will be the company NIO. They have already made one of their models ready to buy in Norway and it’s expected others will be available soon (both models and in different countries. Only in the last month NIO also signed a partnership agreement with Shell as it lines up European expansion. Elsewhere, Chinese EV start-up Xpeng has committed to exporting cars to Denmark, Sweden and the Netherlands in 2022. Likewise, BYD’s e-buses and even Ora Cat (a little hybrid from Great Wall Motors) are eying up greater expansions to the UK next year.
Given various geopolitical tensions between China and the West – especially at the moment as China seems set on taking back control of its business – it will be very interesting to see how China’s automotive expansions into Europe is accepted. In many ways, they could be key to supplying very affordable cheap EVs to people – though, at what cost.
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Operators under the spotlight
In 2021, over 150,000 EVs hit the roads. Meanwhile, in 2021 the UK only added an additional 6,000+ chargepoints up to October 2021 – meaning the number went from around 20,000 in January 2021 to 26,000 today*. Although it’s very likely the vast majority of EV buyers will have access to a home charger, it does feel like the installation of chargepoints is falling behind the number on the road (a point echoed recently by motoring lobby group SMMT). Additionally, as we have more EVs using these chargers, there’s an increasing need for connectors to be maintained properly.
As I have investigated and written about at numerous points in 2021, despite having large players like Shell and BP within it, the charging networks are not being regulated well. Organisations, such as the EV Association for England, have continued to call for chargepoints to be improved for consumers – who currently must faff around with thousands of apps only to find many devices broken.
Although it was welcome news to see last week that the Department for Transport will be introducing new rules in 2022 to mandate a minimum payment method – such as contactless payment – for new 7.1 kW and above chargepoints. Additionally, I suspect as pressure mounts on charging networks, we’ll increasingly see them become more publicly accountable. As the postbags of politicians and journalists fill up with complaints, the government may have to take stronger actions in 2022 and I wouldn’t be surprised if operators themselves were hauled in for public grillings. Though, this will ultimately be a good thing for drivers.
*New data for the last quarter of 2021 will be out in January 2022
