Electric cars face a long road to net zero

As the industry assembles for the Geneva Motor Show it is time to review the progress of electric cars and the pace of the industry transition away from their successful petrol and diesel models. Each individual consumer will play an important role in deciding how quickly these changes come about.

| 13 min read

Governments aim to change the car stock to more electric

It is estimated that there are 1,500 million cars in the world. Just 18 million of them are battery-electric vehicles, or 1.2%. Governments and the car industry want to take us through a big transition from petrol and diesel vehicles to electric ones as part of the ambitious plans to get the world to net zero carbon dioxide emissions by 2050. The Geneva Motor show displays a number of battery cars that the industry would like people to buy, though more still opt to purchase a conventional petrol car than choose a battery one.

It is true that sales of new battery cars are fast growing on a small base. In 2022 10 million electric cars were sold, 15% of the world total sales of 67.2m. There should be further gains in market share this year as more cars overall are sold in total. If we rely on the gradual build-up in new electric car purchase to change the stock it is going to take many years. Most people buying their first car or switching cars buy second-hand, where 99% of the potential stock is still non electric. As the number of new electric cars rises so the volume of second hand electric cars for sale will increase, helping this imbalance. Most manufacturers are fully committed to designing and producing new electric cars, but some are finding it tough to sell enough of them. Governments are using policy levers to try to increase the proportion of electric cars sold.

Government policies to boost electric cars

China has given consumers substantial financial incentives to buy electric cars and is using moral pressure and regulation to make it more difficult to buy a petrol or diesel alternative. As a result China has the biggest fleet of electric cars. Germany is trying purchase incentive, the Unweltbonus, to boost its sales. Norway used VAT exemption and no road tax for many years to give electric cars a big send off. Various governments have used higher taxes on fossil fuels and on conventional vehicles to try to tip the balance. Some are planning partial or complete bans on new fossil fuel vehicle purchases in due course as electric cars become more common.

The buyers of new electric cars tend to be better off people. The cars are relatively expensive. Rich people often buy an electric car as a runabout for urban driving and shorter journeys but may have a petrol or diesel car as well for longer runs. Company fleet buyers may be more inclined to buy electric as they have ESG targets to hit. Some governments give tax incentives to companies to do this. Senior government and large company personnel are under pressure to buy electric as they are telling others to do so. People on lower incomes cannot afford a new electric car and have to pay the higher user taxes on running a petrol or diesel. This is difficult for governments. They find their policies to promote electric cars help the rich and harm the poor which runs against their normal wish to redistribute income the other way. They also discover that policies to make using a petrol or diesel car or van dearer and more difficult are unpopular. This imposes limits on how far they can go with policies hostile to conventional vehicles. The EU has decided to delay the complete ban on new petrol and diesel vehicles to 2035. Hauliers protests in Europe were a feature when fuel prices rose.

What is stopping more people buying electric?

Initial purchase price is clearly a problem for many. Industry could help by bringing out lower priced vehicles for the market. Governments could subsidise purchase more. It is likely prices will come down for some vehicles as Chinese competition intensifies in advanced country markets. China has gained a very strong position in electric car and battery production, based on the creation of a large home market to get economies of scale. They have also contracted or acquired much of the world’s supply of critical raw materials for batteries. Advanced countries will have to decide if they want strong price competition from China or whether they will impose tariffs, taxes and other barriers to entry.

Some people have considerable range anxiety. Many electric cars have relatively short ranges on a given charge. Range can reduce quickly if a driver encounters traffic jams, of he or she travels faster, if it starts to rain and the driver needs to use wipers and the heater. Range anxiety is increased by the shortage of reliable fast recharging points and by worries that any given recharging point could have long delays for access to the chargers.

True green enthusiasts who live in cities are unlikely to buy an electric car, preferring walking, cycling and public transport. Sceptics of the global warming movement, as with the Trump voters in the USA, would not wish to buy an electric car which they see as a political statement. They want to see the extraction of more cheaper oil and gas and like their ICE vehicles.

Some people have concerns about battery life and wish to see the experience of more electric vehicles over more years before spending a lot on buying one.

Some are worried about the cost of repairs if the car is involved in a collision. Repairs are dearer and more complex if the battery is in any way damaged, and the battery forms part of a much wider chassis and base to the car. They are also worried that insurance costs will be higher.

Many of these issues can be overcome by better product development, by the rollout of more infrastructure and by market competition lowering costs.

What is the impact of electric cars on world CO2?

Most governments and campaigners see electric cars as important to get to net zero. They do however have to take into account the actual impact of these vehicles on total CO2 emissions. The cars will only be net zero in use if they can be recharged all the time from renewable energy. Many country systems still deliver substantial electrical power from gas and coal power stations which does not help. Grid and cable capacity to get power to people’s homes will need major expansion if electric car sales take off.

The manufacture of a new electric vehicle generates a lot of CO2, in the mines for the raw materials, in the smelting and transforming of the metals and in the assembly. Scrapping an old diesel car generates CO2 when putting it to waste. It means the driver needs to do a lot of miles in the vehicle before there are overall CO2 gains compared to running the older diesel for a bit longer.

What are the other ways to cut CO2 in road transport?

Governments are backing other technologies as well as battery vehicles to cut CO2. Some think the answer is hydrogen. Some recommend the development of synthetic fuels that can be used in existing internal combustion engines. There are three big ideas

  1. Green hydrogen. Hydrogen can be mass-produced from water by splitting the hydrogen from the oxygen using renewable electricity. Hydrogen is then a net zero fuel. It can be used to direct drive an internal combustion engine vehicle, or used to run a hydrogen fuel cell to power an electric engine.
  2. Bio fuels. Plant material and types of waste can be used to produce a bio fuel. Whilst burning it in an engine will produce CO 2 , the original plant growth will have absorbed CO 2 which can be netted off the CO 2 produced.
  3. Synthetic fuels. Green hydrogen can be combined with CO 2 collected from industrial processes or extracted from air to form methanol, which can be refined into a usable liquid fuel. Burning the fuel will simply release the CO 2 originally harvested so it is deemed to be net zero.

Some countries are already adding limited amounts of bioethanol to petrol and aim to increase the percentages as it becomes available. This process could be taken further. There are limits on how much farmland can be allocated to growing crops for fuels, given the need for food.

The aviation industry does not see battery electric as a viable way for long haul planes so it is developing Sustainable aviation fuel. There are various routes to this.

Small quantities of expensive low and no carbon liquid fuels are available for use in existing racing cars and older vehicles without engine adaptation. Some think this could be scaled up and costs lowered.

The rollout of hydrogen

The European Union has recently passed its Alternative fuels infrastructure regulation. This requires member states to secure the installation of hydrogen refuelling stations in all urban areas and at 200 km intervals on main roads. The EU thinks hydrogen will be necessary for heavy trucks where batteries pose big issues of weight and pulling power. California has some hydrogen points already and is planning more.

Toyota sells new hydrogen cars for normal use, with its Mirai. Hyundai has the Nexo. Sales of these are very limited so far, mainly owing to the scarcity of refuelling stations. They are net zero assuming the hydrogen is made using renewable electricity, and can be refuelled quickly like a petrol vehicle once the driver has found somewhere with the fuel.

Several countries and various cities have acquired hydrogen powered buses. Toyota’s Caetano bus system for example provides a hydrogen fuel cell for the new bus. Cologne and Frankfurt in Germany, Madrid and Barcelona in Spain, Strasbourg in France are examples of places buying some hydrogen buses. The bus operates out of a depot which can be a hydrogen fuel store for refuelling.

JCB has developed a direct drive hydrogen engine for its heavy plant. They take the view that batteries cannot offer enough working time on site, posing problems for recharging. They wish to move to green hydrogen which can be sent to the sites where plant is operating.

What are leading companies experiencing?

Tesla has been a crucial pioneer of all electric vehicles for the top end of the market. It has suffered a rebuff recently with the decision of Hertz car rentals to sell 30% of their electric fleet owing to difficulties in renting them out to sufficient people. Hertz had been an early adopted and supporter of Tesla. Tesla is having to lower some prices and margins to find more sales.

Toyota, the world’s largest car manufacturer has drawn attention to the way parts of the world will not make the same rapid progress to all battery cars as Europe plans. The company expects future sales to include a wide range of hybrids as well as battery driven vehicles. Green campaigners have been disappointed with its forecasts for EV sales.

The German industry has persuaded the EU to exclude from the ban on sales of non battery cars after 2035 the sale of vehicles running on hydrogen or synthetic fuels. Some in the German industry wish to extend their investments in alternative fuels as a possible way forward for their products. Porsche, for example, is developing the production of synthetic fuel in Chile.


Governments will do more to promote electric cars, and manufacturers will work away to develop cheaper and more popular products. China and Europe will continue to lead this movement. Both will roll out hydrogen networks as well, as they see these as important for trucks and for some buses. As the hydrogen network improves so more may want a hydrogen powered car.

There will be plenty of investment opportunities in those companies that do judge the public mood right and develop the good products. We are still at an early stage in the transition. There remain doubts and opportunities with a range of technologies that could help cut carbon dioxide. Chinese competition and some continuing consumer resistance can make life difficult for some manufacturers. Existing car manufacturers face the need to write off and cut back their existing diesel and petrol car capacity at the same time as spending more on trying to design electric products that people want to buy.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Electric cars face a long road to net zero

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