China, Norway and Sweden lead the pack in terms of readiness for electric vehicles – EY study | EY
- China just ahead of newly joined Norway in the EY Electric Vehicle Country Readiness Index
- Control of production and infrastructure boom keep China at the top
- The US remains in seventh place, despite recent regulatory measures
China has retained the top position in terms of progress towards an electric vehicle (EV) future, according to the latest EY Electric Vehicle Country Readiness Index. The index looks at the readiness of the top 14 automotive markets for the arrival of electric cars based on supply, demand and regulation. New entrant to the index, Norway, is a close second to China due to huge demand and strong regulations. Sweden, Germany and Great Britain round out the top five respectively.
Battery manufacturing and supply chain control remain a key driver of China leading the way, accounting for 122 of 200 lithium gigafactories in the world. Backed by rising consumer demand (51% of Chinese consumer respondents expect to buy an EV as their next vehicle) and widespread charging infrastructure (by 2021, China had installed 41% of all DC fast chargers), China continues to be the largest EV market globally in absolute volumes. This despite the fact that there is an overall electricity supply deficit.
Norway, a new entrant to the index, has long been a pioneer when it comes to the use of electric cars. This is due to strong regulation in the form of tax benefits, as well as the introduction of electric cars and parking spaces, resulting in electric cars accounting for more than 70% of all new car registrations in 2021. Sweden’s strong energy ecosystem together with high consumer uptake (more than 40% in 2021, according to EY analysis) and strong manufacturing presence (41% of all cars produced in Sweden are expected to be electric models between 2022-26), means the country is ahead of Germany and the UK. But both Germany and the UK have a decidedly strong base of original equipment manufacturers (OEMs), local battery production and upcoming electric vehicle launches that deserve their status as “leaders” credited in the report.
Randy Miller, EY Global Advanced Manufacturing & Mobility Leader, says:
“Earlier this year, the 2022 EY Mobility Lens Consumer Index indicated for the first time that more than half of all consumers looking to buy a car want an electric car. We now know the demand is there, and now it’s up to OEMs and governments to catch up .China, Norway and the other leaders listed in the Country Readiness Index have shown that a strong mix of regulation to stimulate demand, combined with local battery production and the implementation of a robust infrastructure plan, are critical factors in helping countries successfully transition to electric cars.”
Regulation is key
Four of the top five countries overall in the EY Electric Vehicle Country Readiness Index are also in the top five countries in the regulatory pillar (China, Norway, UK and Germany). It is clear that there is a strong correlation between overall success and the strength of regulation.
Miller says: “If countries want to reduce their vehicle emissions and help meet climate goals through a transition to electric cars, then clearly regulation is absolutely key. There are some countries where we’ve seen regulatory action recently, most notably in the US , so it will be interesting to see if that affects supply and demand going forward. The challenge for each country is the tipping point where regulation is no longer needed and electric cars are established in the market. Obviously some think they are almost there because they remove incentives, but others has work to do to reach its electric car goals.”
USA stuck in low gear
Despite a robust OEM presence and strong support from US President Biden’s administration, the US remains in seventh place overall – the same position on the index as last year. However, this is mainly due to poor demand according to the report. Less than 4% of new car registrations in the US are electric cars and, as the EY Mobility Consumer Index shows, only 29% of US consumers want to buy an electric car as their next vehicle, the lowest of any country surveyed.
Miller says, “While more work clearly needs to be done to drive consumer demand in the U.S., I think the country is moving in the right direction for EVs. The federal government is putting about $10 billion into EV battery supply chains and charging infrastructure, and the manufacturing sector is gearing up seriously for electric car production, with 13 battery factories to be built across the country by 2025.”
Room for improvement
Although Italy has the highest percentage of respondents who want to buy an electric car (73%), Italy lags behind its European neighbors with 12Th place. This is largely due to a lack of infrastructure and an energy ecosystem that needs improvement.
Canada follows in 13Th position, despite a strong energy ecosystem and plans for battery factories to be built in the country. It is also lagging behind in demand, in part due to the high cost of electric cars in Canada.
In 14Th India faces some similar issues to Canada with charging infrastructure and affordability appearing as major barriers to progress. However, efforts are being made for regulation, with production-linked incentive programs looking to stimulate 50GWh of battery manufacturing.
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