The day after the November 8th U.S. presidential election, the stock prices for electric car maker Tesla plunged 5 percent. Solar and wind stocks also fell, while the share prices for coal and oil companies surged. Peabody Energy, for example, the world’s largest private sector coal producer, saw its stock skyrocket by more than 40 percent on speculation that the Trump administration could breathe new life into the dying sector.
The energy industry, in other words, could be substantially altered by a change in government policy, with clean energy in danger of being left behind while fossil fuels rebound. But the solar and wind industries have made enormous strides in bringing costs down, which will probably insulate them from a more antagonistic White House. Scrapping government support might slow growth rates, but the clean energy train has likely left the station.
But the market for electric vehicles is much smaller and less mature than solar and wind. EVs still depend on generous federal tax credits and, even then, sales have been slow in a world of cheap gasoline. Automakers are still confident in the longer-term – a carbon constrained world and volatile crude oil prices almost certainly means that EVs have a bright future. But the short-term could be rocky.
Automakers are set to roll out some 19 new EV models over the next few years, adding choice, supply and momentum to the EV industry. GM will release its all-electric Bolt in the coming weeks, a mass market vehicle with a 238-mile range and a sticker price around $37k. Tesla will follow that up with its Model 3 next year, a 215-mile EV that will be slightly cheaper. Then there are the plug-in hybrids that have a combination of electric and gasoline, which gives motorists greater peace of mind in regards to recharging. The Chevy Volt will have an all-electric range of over 50 miles before gasoline kicks in, and costs roughly $33k-$34k. The cheaper alternative, Toyota’s new Prius Prime, will have a shorter range of 25 miles, but will cost just $27k. All of these cars will benefit from federal tax credits that run as high as $7,500.
Sales remain at low levels – EVs will capture less than 1 percent of the global car market this year. But sales in the U.S. are up 26 percent in the first 10 months of 2016 compared to the same period a year earlier. And U.S. EV sales could rise fourfold by 2020 to 320,000 annually, according to the WSJ.
But the industry does have some headwinds. Lithium-ion battery costs have declined by 65 percent since 2010, which have helped automakers close the gap on sale prices with convention vehicles. Also, the range of EVs have extended, as the figures mentioned above associated with new models indicate. More EV models will satisfy a range of consumer needs.
Moreover, refueling infrastructure, one of the most critical pieces of the puzzle, continues to improve as well. The number of EV refueling stations have surged by 89 percent over the last three years.
The Obama administration recently announced a new effort to expand the refueling infrastructure even further. The White House said on November 3 that it would launch a new plan to build out a national network of recharging stations, establishing 48 national EV charging corridors along existing highways. They would install signs every 50 miles or so along these corridors, alerting drivers to recharging stations, similar to the way that current highway signs point to gasoline stations.
There are some 150,000 retail gasoline stations in the U.S.; while EV recharging stations lag, there are an estimated 16,000 EV stations across the country, a figure that is rising quickly. Meanwhile, 24 state and local governments have committed to expand their government vehicle fleets with EVs.
It is unclear if this program can survive in the Trump era. In fact, even the $7,500 federal tax credit could become a target by the new oil-friendly administration. An unnamed member of Trump’s transition team told UtilityDive that Trump’s team will probably let the tax credit survive. The fact that the provision expires for automakers once each surpasses 200,000 EVs sold could actually help the tax credit from getting axed – since it will expire on its own at some point in the next two or three years, the Trump administration may not feel urgency in killing it. But, like so much with the new government, much remains to be seen.
By Nick Cunningham of Oilprice.com
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