EV Sales Increase but the Industry Faces a $6 Trillion Obstacle
Though electric vehicle (EV) sales are gradually increasing, EVs still face a few major hurdles when it comes to mainstream adoption. Besides needing cleaner battery production methods, the industry will also require a pricey infrastructure overhaul. Goldman Sachs Group Inc. estimates that this infrastructure will cost $6 trillion. This amount comprises 7.5-8 percent of the world’s gross domestic product, per Bloomberg.
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Current progress toward EV adoption
EV sales continue to increase, on a global level. In 2017, consumers bought more than 1 million EVs, which is 60 percent higher than EV sales in 2016. China represents half of electric passenger-car sales worldwide, thanks to consumer incentives and a strict green vehicle policy. The industry’s European market is also thriving. During the first half of 2018, Europe saw a 42-percent increase in plug-in sales compared to the first half of 2017. Additionally, EV sales continue to increase here in the U.S. During the first half of 2018, drivers registered more than 123,000 new EVs, a 35-percent increase compared to the first half of 2017. And earlier this year, a AAA study indicated that 20 percent of drivers were likely to pick an EV as their next vehicle.
Strategies to help smooth the transition
Manufacturers can help offset this estimated infrastructure cost by doing their part to lower the cost of EVs. Currently, only households with an income of $300K or more are the most likely to purchase an EV, according to a UBS survey. Only 41 percent of households with an income of $150-200K claimed that they will buy an EV for their next ride. The industry also needs to find a cheaper way to produce the materials and batteries that EV models require. Not only do automakers shell out money for tariffs, labor, and raw materials, but they also invest a significant amount in research and development.
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