Electric Cars: Did the Pandemic Accelerate Consumer Adoption?

Electric Cars: Did the Pandemic Accelerate Consumer Adoption?

Jun 21, 2022
Posted by Colin Morton, Senior Director, Consumer Lubricants

When the pandemic hit in late 2019, personal mobility ground to a standstill. Passenger car sales plummeted, production slowed, and the market forecast looked grim. At least it did for vehicles with internal combustion engines (ICE). On the contrary, electric vehicle (EV) sales skyrocketed, especially in Europe (EU).

According to the European Automobile Manufacturers' Association (ACEA), electrically chargeable vehicles (EVs) accounted for 3% of new EU passenger car registrations in 2019. However, battery electric (BEVs) and plug-in hybrid vehicles (PHEVs) now account for almost one in five new registrations (18% share in 2021; 18.9% in Q1 2022). 

That's quite a lift. And the rapid uptick has left many asking: Is the pandemic alone responsible for the sudden demand? Or is something else driving the market? 

Many Interconnected Factors at Play

Though the pandemic coincides with a significant lift in sales, a range of interconnected political, economic, societal, and technological factors are driving the present and future adoption of electrification in the passenger car market. And those factors present a range of complexities that may have implications in the short and long term.

For example, some may wonder if the hot pace of EV sales will continue to accelerate given factors such as rising fuel costs and an intensifying focus on cutting emissions. Others may believe that the cost barriers associated with EV sales and lacking infrastructure could stunt growth in the short term.

The truth is that all these factors are up for consideration as we move towards an electrified future.

Below, we break down our view of the key drivers.

Policy Debates are Ongoing

Climate and air quality goals are driving policymakers towards vehicle electrification. Notably, several high-income countries have pledged to achieve net-zero greenhouse gas (GHG) emissions by 2050, with Europe leading the way. In fact, the EU is revising its CO2 targets for new passenger cars and vans. And in June 2022, the European Parliament signaled its desire to end the sale of new ICE-containing cars and vans by 2035.

Still, more negotiations lay ahead. Even if policymakers legislate an ICE ban, it will be subject to review in the coming decade. Policymakers will likely also deliberate on whether sufficient charging infrastructure exists, battery manufacturing and recycling capacity have developed, and the impact on jobs is manageable.  

For example, rare earth metals and many other critical materials needed in EVs are currently found/processed in China. Will the EU want to risk reliance on China, especially considering current issues surrounding dependence on Russian gas? 

Economics Can Be Deceiving

Vehicle prices have surged amid semi-conductor shortages hampering vehicle production. Moreover, the Covid pandemic and the Russia invasion of Ukraine have caused global fuel costs to soar. If taking those facts at face value, it's easy to infer that they could alone drive the continued acceleration of EV sales. But that's not necessarily true. 

Consumers consistently cite high EV purchase prices and charging infrastructure as barriers to EV adoption. Might these concerns stunt the current pace of sales? They haven't thus far, but it's possible, particularly as consumers grapple with the potential of a looming global recession.

Further, though EV sales have spiked, they still account for a minority of new sales in the total passenger car market. The implications of that reality for lubricant makers: Fuel-efficient, higher performance engine oils should still be valued more. An ageing vehicle parc affects lubricant, too.

Societal Views on Environmental Impacts May Change

From a societal perspective, environmental awareness and related concerns are rising in many countries. That drives consumer interest in the benefits of an electrified future. But there's also a general disconnect between consumer beliefs about EVs and the reality of their true environmental impact.

Consumers tend to focus on the lower global warming potential (GWP) associated with EVs. But they give little thought to non-GWP impacts (e.g., EVs tend to have toxic chemistry). In other words, consumers don't generally recognize the full impact of EVs on the environment because they're not yet looking at them from a cradle-to-grave perspective. 

Will that change? And, if consumer awareness of non-GWP impact improves, what impact(s) will that have on the pace of EV adoption? 

Technological Advancements Could Overcome Barriers 

For all the talk about adoption barriers, ongoing policy debates, and the potential for shifting societal views, it's important to note that EV quality is still improving. Mileage per charge is getting longer. OEMs and oil companies are partnering to address fluid and infrastructure challenges. 

It's fair to say that the advancements in this space could address and overcome many perceived impediments to adoption. But "when" that happens remains to be seen. 

Our View

The future of the passenger car market looks increasingly electric, with the forecast for battery electric vehicle production increasing considerably after the COVID-19 pandemic. But how quickly the shift from minority to majority battery electric adoption occurs is still challenging to predict. It depends on a myriad of interconnected factors across policy, regulatory, economics, societal, and technological - many of these are still evolving. The perspective looks different for regions around the world, with China and Europe leading the adoption.

For more information on electrification, please contact your Lubrizol representative or visit Lubrizol 360.


Photo by Jp Valery on Unsplash

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