Revolutions ebb and flow and electric transport is no exception. The industry faces big challenges, namely the high cost of electric vehicles, the lack of charging infrastructure and a limited range of models to tempt consumers. While sales of electric passenger cars are growing rapidly in Europe – sales rose 45% in 2019 – market penetration remains low.
“We started from nowhere, but we are at the point where sales are increasing at a rate close to 50% every year,” says Stéphane Petti, EIB innovative transport specialist. “There is a clear pickup now.”
One way to tip the car market toward electric is to encourage leasing companies to make the switch. Leasing accounts for some 15% of new car sales in Europe. For that reason, the European Investment Bank is supporting ALD Automotive, the largest car leasing firm in Europe, with a €250 million investment to help pay for 15 000 new electric vehicles. ALD plans to increase its fleet of green vehicles from 118 000 in mid-2019 to 200 000 by the end of 2020.
For ALD, the move to green vehicles is risky. The business model of leasing companies is highly dependent on the resale or residual value of their cars after the leasing period, but the resale market for electric vehicles is young. “If I purchase a car at €40 000, how much am I going to sell it for? €25 000? €15 000?” Petti says. “If my estimate turns out to be wrong, I can go out of business quite fast.”
Solving the electric puzzle
The electric car market has developed slowly in Europe, compared to other markets, such as China. That lack of development (along with the lack of available infrastructure) has limited the number of electric models available. “For many years, every automaker was doing a small pet project and nothing was picking up speed,” says Aris Pofantis, lead engineer in the EIB’s Innovation and Competitiveness department. Automakers have now realised that in order to meet the carbon dioxide emissions regulations the efforts in electrification need to increase substantially. “Even those carmakers that weren’t so keen on electric are now starting to put a lot of money into it,” Pofantis says.
Petti expects 200 new car models to be released in the next two to three years. “This choice will further accelerate the take-up rate,” he says.
The last part of the electric puzzle, the charging infrastructure, may be the most daunting. The number of charging stations in the European Union has surged, but Europe will still need to radically expand if electric vehicles really take hold.
The European Investment Bank has signed several projects over the past two years with companies such as Allego, Greenway, BeCharge and Enel X to support the deployment of this infrastructure with a total of €200 million. Meeting the EU ambition of one million charging stations by 2025 would require close to €10 billion of investment, Petti says. While €10 billion sounds like a huge amount, it’s “very tiny” compared to the total cost of Europe’s transport infrastructure investment, he says.
Mobility as a service
New shared transport services are popping up every day, and most of them are electric. Even the bike is getting an electric boost. Fazua, a small German company, has developed an electric powertrain for bicycles contained in a single compact unit that weighs only 3.3 kilos. It allows racing bikes to remain sleek, while increasing their mobility. The Bank signed a €12 million loan to Fazua in 2019.
With all the options available to them – shared bikes, scooters, cars and even the pumped-up racing bike that are complementing public transport – younger generations are showing less interest in buying a car than their parents did. To them, a car is a service they pay for, not something they own. “It’s more of a convenience and a practical matter of how do I get myself from A to B,” says Aleksandar Mihajlovic, the EIB loan officer responsible for QEV. “The future is mobility as a service.”
You can read more about how electric transport helps build a decarbonised future.