As recently as two years ago, the consensus among global forecasters and analysts was that the market for Pure Electric Vehicles (PEVs) would continue to grow very slowly and modestly. Estimates at the time pointed to at best a 10 per cent PEV sales penetration in 2030. Today, some forecasters are suggesting a rate of more than 80 per cent and recent developments indicate that they may be right. These are the reasons why:

Cost of batteries to decline even further

The average price of the lithium-ion battery packs used in EVs fell by 65 per cent between 2010 and 2015 and is continuing to decline. This development is driven by a number of factors, including scale, as well as improvements in battery chemistry and battery management systems. Current forecasts indicate that the cost will drop below USD100/kWh some time after 2020, possibly going as low as USD50-60/kWh in the longer term.

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Total cost of ownership

Total cost of ownership (TCO) is an industry term for what it costs a consumer to own a car. While the cost of PEV declines, stricter government regulations mean the cost of owning cars with Internal Combustion Engines (ICEs) is increasing. This implies that TCO parity on PEV versus ICE is getting closer. Countries in Western Europe, which have the highest taxation of cars and fuel, are predicted to reach TCO parity in 2022. TCO parity in China is expected in 2025 and in 2030 in the U.S. This means the potential for PEVs is gradually increasing. Another factor that determines TCO is mileage, with high mileage causing the relative economics of PEVs to improve, as the marginal cost is lower for PEVs than ICEs. Mechanically, PEVs are simpler and require less equipment and manpower for assembly.

Consumers could drive electric uptake

Government incentives are not the only thing that can adjust the course for customers. The customers themselves can also drive development. They may see PEVs as the better alternative when it comes to noise, servicing requirements and performance. Early adopters can influence the mass market and may cause a snowball effect. In September 2015, U.S. authorities accused a major vehicle manufacturer of cheating on its emissions. This, in turn, caused government regulations for ICE to speed up, while increasing OEM focus on PEV development and altering consumer mindset.

Surveys now show that consumers are demanding vehicles with fewer local emissions to a greater extent than mindset.

Electrification within High & Heavy

Electrification is not just for cars. In the global High & Heavy industry, all the major players are also starting to think electric. In this segment, there are two main categories: diesel-electric hybrid and fully electric. Diesel-electric drives have a combustion engine along with an electric generator that can store and re-use kinetic energy from the swing/loader. Meanwhile, fully electric drives run fully on electricity. The strength of the former lies in its ability to maintain performance and torque via the combustion engine, along with its fuel efficiency via re-use of energy. Fully electric equipment is preferred in enclosed areas, such as underground mines, where zero emissions offer a cleaner environment. While fully electric machines remain less common, they are gaining popularity as battery technology improves.

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More PEV models on the market

Although the lack of charging infrastructure remains a major concern for consumers, there are clear signs of improvement. In several countries, governments, carmakers and private companies are putting up the necessary cash. In the U.S., the number of charging points grew significantly to almost 40,000 in 2016, while in Europe, fossil-focused Shell and Total plan to install chargers at their petrol stations across the continent. The number of Battery EV models available on the market is expected to increase from 87 in 2015 to 174 in 2022. All major car manufacturers either plan to or already have put a PEV model on the road, while smaller players are starting to follow suit.

The future is electric

Leading car manufacturer Ford recently stated that it believes the number of EV models will exceed that of ICE-powered cars within the next 15 years. Another major player Volkswagen has said it will start a product offensive in 2020 in order to launch 30 new battery-powered models by 2025. It expects the cost of batteries to fall further, enabling value-brand Skoda to launch PEV models within the next five years. Meanwhile, Tesla, which only produces PEVs, intends to overtake BMW and Mercedes-Benz as the best-selling luxury car in the U.S. within a couple of years.

Its affordable new family car, which will start deliveries in the second half of 2017, is a game changer when it comes to PEV performance versus price, making it an interesting prospect for a wider consumer group.

In just a couple of years, electric vehicles have gone from being viewed as an obscure fad to the technology of the future. With battery prices falling and OEMs investing more money in PEV technology, the trend points to a near future in which consumers will be able to drive a silent, comfortable and affordable vehicle with low local pollution, without thinking about range anxiety. It’s going to be electric.