When Volvo Cars revealed the fully electric Volvo C40 Recharge the other day, one of the most notable parts of the announcement was Volvo’s strong commitment to 100% fully electric vehicle sales by 2030 (and 50% by 2025). In fact, Volvo Cars CEO Håkan Samuelsson made such a strong statement that it warranted a whole extra article.
Here’s the wording on the big statement from the 70-year-old Swede: “I am totally convinced there will be no customers who really want to stay with a petrol engine.” Sounds like a CleanTechnica reader! That said, assuming he’s right, we’ve got a major issue to address and pontificate on. Let me start by putting the short summary and some backup comments in a bullet list:
- It’s widely presumed by experts in the field that there’s no way enough minerals will be mined in 2030 for the world to go 100% electric by then. There just isn’t enough battery mineral mine capacity in the pipeline.
- In fact, the forecasts range from about 25% to 50%. (Bloomberg NEF forecasts 28%, about 25 million vehicles.)
- Even Elon Musk recently said, “I think it probably, I think it’s probably — ten years — probably majority EV.” (And in September 2020 tweeted an expectation of 30+ million electric vehicle sales a year — for the market as a whole — in 7 years.)
So, for the market overall, there is not presumed to be anywhere close to 100% EV market share in 2030 (unless you want to conclude that battery mineral mining experts and Elon Musk are far too bearish).
Does that mean Mr. Samuelsson’s comments are ridiculous? Not at all! In fact, that makes his comments all the more fascinating. Let’s consider a few of the implications.
First of all, if the Volvo Cars CEO is correct, yet there isn’t production capacity for more than, say, 50 million electric cars per year in 2030, then there is a question as to where the demand for 50 million non-electric cars comes from. Even if more than 50 million EVs can’t be produced, will the “Osborne effect” kick in on a large scale and kill demand for 50 million non-electric cars per year?
Notably, if that’s the case, then assumptions about what percentage of sales are electric in 2030 get warped! Assumptions of 80 to 100 million automobile sales in 2030 when there’s production capacity for 40–50 million electric cars (bullish by industry standards) imply that there won’t be a significant EV Osborne effect at that stage. Mr. Samuelsson disagrees, and so do I. How will people think it makes sense to by 40–50 non-electric cars in 2030?
And just note that we’re having this discussion about the EV Osborne effect in 2021. Imagine how much more common and accepted it will be in 2025, 2027, 2030.
If you presume what Mr. Samuelsson presumes, yet use Bloomberg NEF’s estimate of 25 million EV sales in 2030, then things get really messy. Will 70%+ of the market decide to just buy a fossil fuel car instead due to limited EV production capacity? Well, that doesn’t jibe with what Mr. Samuelsson expects. “I am totally convinced there will be no customers who really want to stay with a petrol engine.” Will there be an even deeper, darker, more disruptive Osborne effect?
That whole discussion is clearly a messy one. If no one wants to buy a fossil fuel car in 2030, how are tens of millions going to be sold? If tens of millions of fossil fuel cars aren’t going to be sold, then, well, only 50% EV market share (let alone 25% or 30%) doesn’t seem to make much sense. We’ll see, and we’ll track the market as it changes, but note that these are the results from a few major markets just last month:
- Germany: 9.4% fully electric vehicle (BEV) market share, 20.7% plugin vehicle (PEV) market share.
- France: 6.4% fully electric vehicle (BEV) market share, 13.2% plugin vehicle (PEV) market share.
- Sweden: 6.1% fully electric vehicle (BEV) market share, 34.8% plugin vehicle (PEV) market share.
And, since we don’t yet have February numbers for another major market, check out its January results:
- UK: 6.9% fully electric vehicle (BEV) market share, 13.7% plugin vehicle (PEV) market share.
If the issue is battery supply constraints and we have the potential split in demand and supply noted above, what does that mean when it comes to battery contracts?
The first thing it means is what battery mineral experts keep saying to me: companies that have their supplies locked in will do much better. It seems that includes companies such as Tesla, Volvo, and Volkswagen. Companies that are less bold and aggressive in securing battery contracts are expected to have to pay more for batteries, and get fewer of them, thus leading to less competitive EVs and fewer sales.
Frankly, if you think that Mr. Samuelsson’s statement is anywhere close to reality but you also assume there won’t be production capacity for more than 25–50 million electric vehicles a year, I think that you have to assume that some automakers slow to the party won’t just arrive late — they’ll go bankrupt on the way there and never make it to the party.
The Market to 2030
The market won’t change overnight, and my notes above about EV sales in the UK, Germany, France, and Sweden already made a strong point about that. But what do the next 9 years mean for automakers like Volvo that see the industry shifting to 100% electricity by 2030 versus automakers I will not name that still seem unconvinced that EVs will be more than a niche segment of the market (and everyone in between)?
I think we’re going to see notably better electric offerings from the former camp, and much stronger marketing. Volvo itself already provided an interesting case on this in 2020. I must have seen one of its ads a bazillion times, more than any other EV ads by far, and it was a totally atypical ad. It featured a white car plugging into a white wall with an Apple-like white cord. It plugged into a normal 120V electricity outlet. That may seem like a strange ad — why not focus on the performance, fun, high tech? Well, I think that the vast majority of people don’t realize that an EV can actually be plugged into a normal electricity outlet, something that has major implications for cost as well as ease of ownership. Volvo is saying, “It’s easy. And you don’t need some fancy and expensive charging station.” Of course, many buyers do choose to get a home charging station, but it’s definitely not necessary and that’s something I’m convinced most consumers don’t know. However, many more consumers now do know that thanks to Volvo’s ads, and that will encourage more people to consider, ask about, and buy a Volvo electric vehicle.
Other electric vehicle leaders will find other ways to market and sell as many EVs as possible. Ford has put its iconic Mustang name (plus the cool “Mach-E” name) behind its flagship electric offering, and next it will electrify the world’s top selling vehicle, the Ford F-150. Volkswagen is heavily focusing its new models around the ID lineup and shared electric drivetrain platforms. It is rolling out competitors to its top selling vehicles. The ID.3 will most likely lead to the Golf’s retirement within a few years, for example.
What about the automakers that want to only sell the minimum number of EVs to not be fined, that want to stuff their electric offerings in the dark, dusty, cold back corner of the dealership uncharged? Well, good luck staying in business through 2030. At least, that seems to be what Håkan Samuelsson is saying.
This is who we have leading the market so far:
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