The global push towards electrification of transportation

The global push towards electrification of transportation is being accelerated by the implementation of various regulatory interventions. Such interventions are not only providing consumers with more confidence but are also giving automakers and investors clarity regarding the direction of travel.
In Europe, regulatory interventions are being rolled out in the build-up towards 2035, which is when bans on the sale of new internal combustion engine (ICE) vehicles are set to take effect in many jurisdictions. Among the interventions are the Alternative Fuels Infrastructure Regulation (AFIR), which ensures that the switch to low- or zero-carbon road travel is supported by adequate charging infrastructure; the Renewable Energy Directive, which requires 32% of energy consumed in Europe by 2030 to be renewable; the Energy Performance of Buildings Directive (EPBD), which aims to improve energy efficiency in buildings and reduce carbon production, and includes provisions for EV charging in buildings and the “right to plug”; and CO2 emission performance standards that set mandatory reduction targets for cars, vans, and HDVs.

In the US, California leads the way with a ban on sales of new ICE vehicles by 2035. The state already has 16% of new vehicles sold as zero-emission vehicles (ZEVs) or PHEVs. Six states have adopted California’s Advanced Clean Trucks (ACT) rule, which requires manufacturers of Class 2b-8 vehicles to sell zero-emissions vehicles as an increasing percentage of their annual sales from 2024 to 2035. Furthermore, the IRA and Bipartisan Infrastructure Law incentivize EV sales, and more packages are anticipated this year, including US$80bn to support the EV battery supply chain.

Canada, the United Kingdom, India, Germany, China, Japan, and South Korea are also implementing various regulatory interventions to drive EV adoption. For instance, Canada has announced CA$1.7bn for ZEV incentives as part of the ERP and a federal budget to include an investment of CA$2bn for accelerating production and processing of critical minerals required for EV battery supply chain. The UK aims to ban ICE sales, targets 300k public charging stations by 2030, invest up to £1bn in developing a high-value end-to-end electrified automotive supply chain, and provide funding of ~£500mn during 2021–24 for mass-scale EV battery production and £1.3bn for charging infrastructure. The US plans for BEV/PHEV/FCEVs to make up 50% of US sales by 2030, replace its fleet of ~650K vehicles with EVs, invest US$7.5bn in both public charging infrastructure and electric buses, and build a national network of 500,000 EV chargers across 35 states. Meanwhile, China targets 20% of vehicle sales to be ZEVs by 2025, plans to build charging stations for 20mn EVs by 2025, and has various initiatives aimed at promoting EV adoption.

In conclusion, the role of regulation in driving EV adoption cannot be overemphasized. The global push towards electrification of transportation is being accelerated by various regulatory interventions, which are providing consumers, automakers, and investors with clarity and confidence. As more countries set ambitious targets and roll out supportive interventions, the adoption of electric vehicles is set to increase rapidly in the coming years.

Source: Six essentials for mainstream EV adoption | EY & eurelectric

Map showcasing the national regulations in major car markets regarding the phase out of ICE sales
Source: Six essentials for mainstream EV adoption | EY & eurelectric
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