LONDON -- As more countries in Europe and elsewhere throw their weight behind electric vehicles and hybrids, automakers have begun to rework their own production strategies, lest they miss out on a technological wave set to define the future of transportation.
Toyota Motor could begin making electric vehicles in China as soon as 2019 under a plan currently being considered. At present, the automaker's green-car operations focus primarily on gasoline-electric hybrids, including plug-in hybrids that users can charge at home, and hydrogen fuel cell vehicles. But the government in Beijing has different plans. Electric vehicles in China receive generous subsidies and tax incentives, as well preferential treatment when major cities hand out license plates.
The Japanese automaker already plans to phase out internal-combustion-engine vehicles almost entirely by 2050, and created an office to plan its electric-car strategy at the end of 2016. Now the company is boosting development efforts, drawing on battery technology honed while creating hybrids to hatch competitive electric offerings.
Rival Honda Motor, meanwhile, aims to have environmentally friendly cars including electric vehicles and hybrids make up two-thirds of sales by 2030. American makers have set similar targets for increasing green cars' presence.
End of an era
But it is European car companies that have led the pack so far in the shift to electric autos. Volvo Cars of Sweden announced in early July it would sell only electric or hybrid models starting in 2019, becoming the first major automaker to announce a specific plan for ditching conventional vehicles.
Certain governments have leaped on that trend as well. The U.K. said Wednesday it will ban the sale of new gasoline or diesel vehicles by 2040, and bar such autos from the roads entirely 10 years later. In addition, the country has earmarked roughly 3 billion pounds ($3.93 billion) to combat air pollution, including 255 million pounds to support regional governments' efforts to reduce greenhouse gas emissions and pollution. Vehicles that do not meet air quality standards will be banned from or fined for driving in certain heavily polluted areas.
The Netherlands and Norway have also made moves toward banning gasoline- and diesel-burning vehicles starting in 2025. And a German legislative body last fall passed a resolution to ban the sale of gas and diesel vehicles by 2030 that, while not legally binding, bolsters momentum toward more concrete efforts. That country's Volkswagen aims for electric vehicles to make up 20-25% of group sales in 2025.
India aims to sell only electric cars by 2030, the government said in April, and China has announced similar initiatives. Japan hopes to have technologies including electric vehicles and plug-in hybrids account for 50-70% of vehicle sales by 2030, though the country's large contingent of manufacturers producing parts for conventional cars could make ambitious policy changes a challenge.
More than 750,000 new partially or fully electric cars were sold around the world in 2016, bringing the total number on the road to more than 2 million, according to the International Energy Agency. That total could climb as high as 20 million vehicles in 2020 and 70 million vehicles in 2025, the group predicts.
For now, subsidies help buyers make up the difference between the cost of conventional vehicles and pricier alternatives. But manufacturers of batteries and other key components are hard at work making those parts cheaper and more effective, meaning electric cars could soon have their own economic advantages.
As the transition from gas to electric advances, the fuel sector will need to adjust. Transport, including passenger cars, accounted for 65% of global oil consumption in 2014, according to Japan's Ministry of Economy, Trade and Industry. But "in an extreme scenario where electric cars gained a [50%] market share [in Europe] over 10 years about a quarter of European gasoline demand could disappear," according to a report by Fitch Ratings.
Demand for electricity, on the other hand, will climb as greener vehicles take off. If all of Japan's passenger cars were replaced by electric vehicles, power consumption could increase 10%. Thus the government needs to secure power generation capacity in order to advance the shift toward electric cars.
The U.K., for its part, now generates more than 20% of its power from renewable sources such as wind. But increasing that figure further while meeting the country's large electricity needs will be a challenge, particularly as aging nuclear facilities that supply much of the U.K's power come up for replacement. Other countries must contend with similar considerations.