Global Megatrends

GLOBAL INVESTOR 2.09 Research — 37
Electric vehicles
While electric vehicles are drawing
in creas ing attention from the media,
a detailed analysis of the governmen -
tal drivers, the global energy chain and
technology de velopment is needed to
assess whether they are a meaningful
solution once im plemented on a large
scale.
Reto Hess, CFA
Research Analyst
reto.hess@credit-suisse.com
+41 44 332 87 20
Dr. Pierre-Yves Bolinger
Research Analyst
pierre-yves.bolinger@credit-suisse.com
+41 44 334 00 94
1
Today, only a small percentage of cars is powered
by electricity. However, the electrification of cars is
rapidly increasing, with a number of launches planned
in the coming years. The forecasts for the future
market share of electric vehicles (EVs) vary considerably,
mainly due to different opinions about the
improvement in battery technologies. For example,
Renault, which has a strong focus on EVs and intends
to make the first mass market zero-emission
auto, expects the EV market to reach three million
units by 2016 and 10% of cars sold by 2020, respectively,
while Bosch, a leading automotive supplier,
forecasts some 500,000 vehicles sold globally by
2015. However, the relative share of EVs remains
low under both forecasts.
Governments are generous with financial support
for domestic EV makers. China is aiming to
become the world’s largest producer of EVs, with
500,000 units by 2011. To reach this target, China
is currently promoting the use of energy-efficient
vehicles in 13 cities by providing a subsidy of CNY
60,000 (USD 8,800) to various public services and
taxi companies toward buying EVs. Furthermore, the
government is providing automotive companies with
CNY 10 billion (USD 1.5 billion) to develop new en-
“Governments are
willing to promote
EVs, mainly driven
by the aim of
diminishing and
even abolishing
oil import
dependency.”
Pierre-Yves Bolinger
gines. The US government recently granted USD 2.4
billion in funding support for next generation EVs and
a USD 8 billion loan (from a USD 25 billion program
to support advanced technologies) to various companies,
as well as providing an incentive to purchase
energy-efficient cars with a federal tax credit of up
to USD 7,500. In Europe, the European Investment
Bank has already granted credits of EUR 6.9 billion
(USD 9.8 billion) since December 2008, of which
EUR 3.9 billion (USD 5.6 billion) under the European
Clean Transportation Facility, which targets emissions
and energy reduction. Further, the purchase of
EVs is subsidized in some countries (e.g. the UK government
announced a GBP 5,000 (USD 8,200) subsidy
from 2011 onward).
Countries are also promoting the buildup of the
EV infrastructure. The first nationwide EV infrastructure
will most likely be built in Israel by 2011 (a country
with a stated goal of oil independency by 2020),
which is supported by the government (tax incentives).
Other initiatives include the buildup of EV
rental fleets (e.g. Paris is planning to run a fleet of
2,000 EVs and additional 2,000 EVs in two dozen
surrounding cities by 2010 including 1,400 stations)
and/or public fleets (e.g. London’s EV delivery plan
aiming to stimulate the market for EVs via incentives,
infrastructure investments and the delivery of 1,000
EVs to the public fleet).
All of these programs highlight the willingness of
governments to promote the electrification of vehicles.
These incentives are mainly driven by strategic
objectives to diminish and even abolish oil import
dependency. Ultimately, combined with renewable
energy technologies like hydro, biomass, wind and
solar, countries may be able to generate power domestically.
On a geopolitical view, we expect strong
competition between the different regions to lead
the key technology subsectors and thus avoid a shift
from energy to technology dependency.
Additional motivation for these subsidies comes
from climate change and pollution issues caused by
combustion engines. Emissions of nitride and sulfur
oxides, as well as fine particulate matter directly affect
human health, particularly in urban areas, with
cumulated annual health costs estimated at USD
450 billion for the EU, USA and China. While not
hazardous, carbon dioxide emitted by the transportation
sector represents a major source (20%) of the
greenhouse gases responsible for global warming.
More primary energy from nonfossil sources
While oil consumption and gas emissions are
eradicated when cars are powered without combustion
engines, the assessment of energy consumption
and pollution must also include the use of primary
energy. So-called “well-to-wheel” energy consumption,
which includes both “well-to-tank” and “tankto-wheel”
inputs, is a more accurate measure to >