Volkswagen sees the writing on the wall for combustion engines – and the huge opportunity in electric vehicles

12 December 2018

As 2018 comes to a close, our EV100 Campaign Manager James Beard reflects on the transport stories that made recent media headlines – and sets out his expectations for 2019.

It’s been a very exciting few days for electric vehicles (EVs). Hot on the heels of Volkswagen (VW) revealing its intention to phase out internal combustion engines (ICEs), five leading companies signed up to The Climate Group’s EV100 initiative to mainstream electric transport. 2018 marks a real gear change in corporate leadership on electric transport – will 2019 hold more of the same?

Over the last two years, just about every major carmaker has made noises about developing electric cars, but they have all stopped short of axing the combustion engine altogether – until now. The VW announcement came from Michael Jost, Head of Strategy, suggesting that this is a hard-headed business decision motivated by more than just CSR.

We already know that the world’s largest carmaker is putting its money where its mouth is. In 2017 VW pledged $70bn to EV development, largely focused on batteries. This has since been followed with investment earmarked for its heartland German production sites and a new partnership with Tesco to offer free EV charging at 600 UK stores.

"2018 marks a real gear change in corporate leadership on electric transport – will 2019 hold more of the same?"
James Beard, EV100 Campaign Manager, The Climate Group

On the basis of these new comments, VW now appears to see only a very limited role for hybrids and is mainly jumping straight to zero emission, fully electric vehicles. We don’t yet know how much longer it will continue to sell non-electric cars once its last new ICE platform hits the market in 2026, but – as Michael Jost noted – that depends more on demand than supply.

Will supply keep up with demand for EVs?

The demand side of electric transport is undergoing a profound transformation, sending an important market signal to manufacturers like VW to get on with the roll-out of EVs. 31 businesses have now signed up to EV100, which aims to make electric transport ‘the new normal’ by 2030.

More than 40,000 vehicles will be switched to EV by the five newest members, including BT Group with a current vehicle fleet of 34,000, and Schenker AG, which is aiming to electrify trucks as well as cars. And this is just the tip of the iceberg.

Our members have operations in more than 50 countries covered by their EV100 fleet or charging commitments. Bank of America, HP Inc and PG&E are all forging ahead despite challenging political winds issuing from the White House. There are also eight Asian companies in the club (AEON Mall, Askul, Baidu, BYPL, Delta Electronics, NTT, State Bank of India and Wipro), further reinforcing the region’s influence as a major driver of the EV revolution.

The energy sector is also notable for its leadership in this space. New members E.ON, Genesis Energy and Ontario Power Generation have joined peers BYPL, EDF Group, Mercury, PG&E and Vattenfall. Signing up to EV100 enables energy companies to signal their presence in the e-mobility marketplace – a crucial new growth area for these businesses.

"The question you need to be asking to ensure both environmental and economic sustainability is the same: what is your EV strategy?"
James Beard, EV100 Campaign Manager, The Climate Group

Policies and pledges

National governments are also sending vital signals, such as the national petrol/diesel phase out pledges made by more than a dozen countries. More recently, the ‘Driving Change Together Declaration’, published at COP24 by the Polish and British governments, acknowledges the role of EV100 in “bringing together global companies publicly committed to transition their fleets to electric vehicles and/or install electric vehicle charging at all relevant premises by 2030”. This declaration, signed by over 40 countries, follows a similar endorsement from the Indian Government in September.

States, regions and cities are also driving the agenda. At the Global Climate Action Summit, 12 states and regions signed up to The Climate Group and C40’s ZEV Challenge, which also saw 12 cities pledging to bring in zero emission zones by 2030.

Who’s next?

It’s a brave or foolish person who would bet against EVs, given the seemingly unstoppable momentum that we’ve seen in 2018.

Whether your business manufactures automobiles, operates company vehicles, or simply depends on staff and customers driving to your sites, the question you need to be asking to ensure both environmental and economic sustainability is the same: what is your EV strategy?

EV100 will continue to grow through 2019 and beyond. As it does, expect to see more carmakers following VW’s example and flipping their strategy, from propping up the dying ICE market to seizing the huge market opportunity in EVs.

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