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Electric Vehicles and the Future of Energy

Last year renewable energy soared to new heights as global investments in renewables
finally exceeded those into fossil fuels, reaching almost $286 billion, and up by 5% from
2
the previous year. Whilst this bodes well for the elimination of greenhouse gases (GHGs)
and the stabilisation of climate change, it has a number of shortcomings with regard to
the consistency of supply. New battery technology has the power to help stabilise the
demand and supply of renewable electricity by providing smoothing for the sometimes
intermittent renewable generation, and storing it to create firm blocks of power during
peak periods. In this way the EV batteries have even more important benefits than just
that of fuelling EVs – they have the potential to form the basis of a reliable, integrated
and sustainable power grid.
The viability of this sustainable energy system relies on the development of a
national ‘smart grid’, which is an electricity supply network that enables a two-way
communication between the utility and the household. This means that households can
act as both producers and consumers of electricity and that the tariffs can be adjusted
according to the relative demand and supply at the time. For example, a household
may choose to charge their electric vehicle during off-peak hours and pay a lower
premium, and then decide to supply some of this stored electricity to the grid during
peak hours when the rates received are high. This system creates a win-win situation
in which utilities can spread the load over a greater time period and households can
reduce their expenditure by using electricity at different times. The model is based on
‘distributed’ or ‘embedded’ electricity generation, which highlights the movement
away from a heavy dependence on centralised, base-load generating grids.

The Global Market for Electric Vehicles PROVINCIAL OUTLOOK NATIONAL OUTLOOK GLOBAL OUTLOOK GAP HOUSING INVESTOR NARRATIVE SPOT THE OPPORTUNITY PORTFOLIO INSIGHTS KHULISA NEWSLETTER ELECTRIC VEHICLES ENERGY SECURITY LOOKING AT GDP

Figure 9 below shows the evolution of the global electric car stock and its exponential
growth in the last five years. In 2015, the global threshold of 1 million electric cars on the
road was exceeded, closing at 1.26 million. Whilst it is still a relatively small market, it is
growing fast; and as supporting incentives, infrastructure and awareness are expanded
in other countries, this demand is set to keep increasing.
The majority of the growth has come from the US, which has strong incentives for EV
use. Depending on the state, one could be saving as much as $10 000 on each vehicle
bought. In 2015, China also entered the EV market with great force, ranking in as the
fastest growing EV market in the world. The government is encouraging green cars with
subsidies of up to $8 475 per vehicle, and requires foreign automakers to develop those
cars with Chinese joint-venture partners. Their growth is possibly also aided by their
proximity to Asian battery manufacturers such as Samsung, LG and Panasonic. Battery
manufacturing is possibly the single most important aspect of the EV, and is the key to
its competitive success in the future. China is also home to the greatest deployment of
e-scooters and electric buses.

2 McCrone, A., et al., Global Trends in Renewable Energy Investment 2016, Renewable Energy Investments:
Major Milestones Reached, New World Record Set, Frankfurt School-UNEP, in collaboration with the Centre for
Climate & Sustainable Energy Finance and Bloomberg New Energy Finance, 2016

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