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Figure 9 Evolution of the Global Electric Car Stock, 2010 – 2015

Source: Global EV Outlook 2016

Germany’s small share shown in Figure 9 above does not bode well for their status as
the automobile hub of the world. Although the German government was hesitant at
first, the enormous response to Tesla’s pre-order campaign for the Model 3 melted any
remaining doubts about the urgent need for action. The Germans have thus developed
an EV incentive scheme that gives a rebate of EUR4 000 for a battery-electric car and
EUR3 000 for a plug-in hybrid. In exchange, car makers agreed to pay half the costs
of the subsidies and step up investment in research and development of batteries and
other technology. This will only apply to cars costing less than EUR60 000 so as to ensure
it is not a subsidy for the rich. The support for EVs is similar to the policy stance Germany
took in the 1960s when they protected Airbus, the large jetliner manufacturing company,
to protect aviation jobs and prevent the US building a monopoly in the industry.

Whilst not yet on the charts for having a large stock of EVs, developing economies like
India and Brazil are also paying significant attention to expanding the demand for
and local production of EVs. Brazil has implemented tax cuts for locally produced EVs,
and slashed import duties on their required parts. Furthermore, they have significantly
reduced import duties on importing whole EVs in order to stimulate demand for these
vehicles and subsequently attract investment for local production. India has plans to
operate off of 100% electric transport by 2030. Incentives have been set out under
the government’s Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles
(FAME) programme launched in April 2015. Incentives of up to $457 will be on offer for
new electric scooters and motorcycles, and subsidies of up to $2 177 will be available
for new electric cars. This could see the cost of EVs dropping by as much as 15%.
The competition to the US is welcomed because more competitors will further drive
down the cost of EVs, making it a sustainable and viable technology that is accessible
to a much wider range of people than it currently is. This is not far from being a reality,
as the cost of the batteries (the most expensive component) drop and their energy
density improves. It is projected that EVs should reach purchasing price parity with
petrol-powered vehicles by 2022. With lower operational costs and declining initial
investments, prices are set to favour electric vehicles in the future and further increase
the demand for these vehicles.

30 QUARTERLY ECONOMIC BULLETIN 2016