The third point in all this is will consumers accept, and buy, the vehicles that OEMs offer. The key issues in the EV market in this regard to date have been the purchase price for vehicles, and a concern around range and the availability of charging infrastructure. Price, is being resolved by three trends in the sector. The first is around an ongoing improvement in battery technology and increasing energy density (this is also helping with the range issue), the second is that EVs are now being developed on their own platforms rather than being an extension of an existing internal combustion engine vehicle range. This results in better quality vehicles, and crucially allows the cost benefits of a much simpler powertrain, with far fewer components, to be exploited. The crucial part in all this, however, is scale. Battery cell costs have fallen dramatically in recent years due to the huge expansion in production, and the same process is just beginning at the vehicle level.
The issues around range and charging are also in the process of being resolved. Sales weighted average BEV & PHEV ranges have doubled since 2012, from roughly 180km to nearly 400km, as average battery pack sizes have also doubled, from under 20 kWh to nearly 40kWh, as a result of better and cheaper battery technology. As it stands, however, charging infrastructure has failed to keep pace with the increase in the EV sales, particularly in Europe (See chart). This has not been a significance hindrance to the market yet, as much charging takes place at home, however as the market grows this will need to be addressed. This will require huge investments at the charging point level, we calculate in the region of USD500 billion globally over the next decade, but also at the grid level for energy generation, storage and transmission. The energy transition is happening, but it will require huge financial commitment from multiple stakeholders along the entire supply chain, but as with all challenges, this also presents huge opportunities.