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E-mobility: the road ahead

Since several years now we have been witnessing a profound change in the automotive industry with the exponential growth of the e-mobility market. At the end of last year, the electric mobility sector was booming with more than two million electric vehicles (EVs) sold around the world.

When the COVID-19 pandemic hit the global economy, it triggered decreasing consumer purchasing power and disrupted supply chains leading to an overall economic slowdown which caused havoc in the auto industry and rapid declines in sales. By September, demand for new commercial vehicles declined by 28.2 per cent across the European Union, with double-digit percentage drops recorded by each of the 27 EU markets.

While the diesel and petrol segments clearly took the biggest hit from the crisis, there is one specific part of the sector that avoided the carnage and showed surprising resilience to the pandemic: electric vehicles.

Europe, the fastest-growing market for electric vehicles

“The passenger vehicle market in Europe has been seriously affected by the COVID pandemic, as the latest data suggest,” Zoltán Vígh, Executive Director of the JAK Hungarian E-Mobility Cluster tells CEENERGYNEWS pointing out that the sales of conventional cars with petrol or diesel engines took a dramatic hit as sales decreased by more than half in the first two quarters of the year. In contrast, electric cars performed very well.

Despite the shrinking in general, the market share of alternatively powered vehicles is getting bigger and bigger in absolute terms. According to the latest figures, in the second quarter of 2020, this market share increased to 7.2 per cent of total car sales in the EU27, compared to a 2.4 per cent share during the same period last year.

Mr Vígh explains that this year from April to June registrations of electrically-chargeable vehicles rose by 53.3 per cent, to 129,344 new cars across the EU. This time, sales were almost equally divided between plug‐in hybrids (PHEV) and battery electric vehicles (BEV).

Source: European Automobile Manufacturers Association (ACEA)

Data suggest that Europe is currently the fastest-growing e-mobility market in the world. The only bottleneck is the sluggish automotive output, warns Mr Vígh.

In its analysis of the post-COVID e-mobility market, consulting firm Mckinsey also noted that while the overall number of EV sales has declined in Europe, the market share for EVs has risen. According to the report the EV market is likely to see strong growth in Europe partly due to the increased subsidies and incentives introduced in the framework of green recovery.

The e-mobility champion of the CEE region

While Hungary’s electric vehicle share of 1.9 per cent in 2019 was below the European average, it was the highest among the countries in the region. In line with the European trends, the Hungarian market also expanded in the first half of the year: with almost 2,000 new EVs sold, translating to record growth of 53 per cent.

New electric vehicle sales and electric shares of new passenger car sales in EU and EFTA member
countries, 2019.
Source: International Council on Clean Transportation

According to Mr Vígh, the key to this relative success has been a coherent set of measures, coupled with a surprisingly high degree of consumer confidence. The recently released quarterly report of the Cluster suggests that if Hungary stays on this track, the country is well placed to reach its target of 22,000 electric vehicles with green number plates by the end of 2020, as envisioned in the national e-mobility strategy.

Mr Vígh recalls that the outlook of e-mobility wasn’t always so bright.

“Only five years ago, when the Cluster was launched as a stakeholder collaboration platform, many people was doubting that electromobility will work, but now we speak about the clean and smart sectoral integration of the energy and the mobility industries,” he says.

Electric cars are parts of the emerging energy-mobility ecosystem, together with smart grids, renewable electricity generation, and energy storage based on batteries or hydrogen. So, in this complex sense, Hungary can keep its early advantage, as a test market for e-mobility products (cars) and services (chargers).

Mr Vígh highlights that Hungary has the largest rolling stock of EVs in the CEE region and local demand is strong. However, the supply of new electric cars is limited, which explains why many Hungarians have no other option but to buy second-hand EVs in another EU Member State.

Although Hungary is in the forefront of the CEE region’s e-mobility segment the market is evolving rapidly and other countries might catch up soon.

“Early this year we witnessed the mass market entry of the new electric Skoda models in the Czech Republic, or the booms in EV-sales in Poland and Slovakia,” tells Mr Vígh adding that the Cluster works closely together with its Czech, Polish and Slovak counterparts to share experience and best practices, with the aim of shaping a common approach to transport electrification.

Like many other European countries, Hungary also introduced government incentives, in the form of purchase-price subsidies for EVs to accelerate green recovery. In spring the government launched a 5 billion HUF (14 million euros) support scheme to incentivise the uptake of the EV market.

“The Hungarian support system has been vital to strengthen social confidence in this new technology,” says Mr Vígh. “We are glad that the government intends to continue the popular program of financial subsidies for battery electric vehicles and – as it has been announced recently – even for light electric vehicles, like e-bikes and pedelecs.”

However, he underlines that some of the support measures need reassessment such as free parking with green number plates in inner-city Budapest as thousands of EVs roam the central districts every day. Instead, he suggests incentivising the use of clean energy for EV charging or deploying energy storage units for households with EVs. According to Mr Vígh, these incentives could equally boost domestic innovation in smart energy systems in the long run.

Hungarian oil and gas company taps into e-mobility

The region of Budapest, Hungary’s capital and largest city, accounted for over 60 per cent of the country’s electric vehicle registrations and had the highest electric registration share at 2.3 per cent. The largest car-sharing service in Budapest, MOL Limo is operated by MOL Group, Hungary’s biggest integrated oil and gas company, who already started to embrace the emerging e-mobility segment and adapt to the changing market dynamics by transforming its business operations.

Source: MOL Group

MOL already has 150 EVs in its car-sharing fleet and added two new electric models this year. Tamás Czikora, Head of Mobility at MOL Group tells CEENRGYNEWS that MOL aims to continuously expand the zero-emission fleet within its car-sharing service but these ambitions have to meet the expectations of the costumers and the supply on the market.

“The aim of car-sharing is to provide an alternative instead of owning a car in the widest range of situations, which includes longer journeys, adequate driving ranges in all situations, travelling for 4-5 people in a car or transporting larger objects on an affordable price,” Mr Czikora explains. As the available electric models on the market fell short of some or more of these dimensions MOL couldn’t realise faster growth of EVs in its fleet.

Our goal is unchanged and we constantly aim to increase further the share of zero-emission vehicles but we need to set the pace to the realities of the market, the new model introductions, range and price developments, capacities and delivery time needs on the manufacturers’ side.

The availability of the charging infrastructure is a key enabler of the uptake of e-mobility. By the end of 2020, MOL will operate close to 200 charges in the CEE region, half of it in Hungary to enable mobility around the countries in the region with electric vehicles. Mr Czikora underlines that this number is expected to grow dynamically in the future.

MOL expects the share of EVs in new car sales to increase substantially in the coming years as the supply of the manufacturers will increasingly be able to meet the ever-growing demand for EVs, which will be supported by the developing charging infrastructure.

As the price of electric vehicles is decreasing steadily towards cost parity with fossil fuel-powered vehicles and the model selection and availability are also improving, the growth will be even more dynamic. Reaching cost parity would definitely be an inflection point in the growth and it is already expected to be reached in selected segments around the middle of this decade.

On the road towards decarbonisation

At the end of September, the European Commission proposed to increase the EU emission cut target to 55 per cent by 2030. Under this framework, European automakers would need to embrace tougher pollution standards, which will affect the e-mobility market as well.

According to Zoltán Vígh, the Commission’s new measures are encouraging but expectations must meet the reality, which suggests that in the next couple of decades, we will have to live together with internal combustion engines in many vehicles using liquefied natural gas (LNG) or compressed natural gas (CNG). However, Mr Vígh points out that innovative new technologies can turn these engines into parts of a new ecosystem.

We frequently debated this topic before the coronavirus, and in our vision electrification and different technologies of energy storage will form an absolutely new energy system, where innovation will be crucial.

According to Mr Vígh, it is next to impossible to foretell the exact time of major changes and the process will rather resemble a constant shift that will deliver gradual and tangible results.

“These results will be common achievements of the main industries: energy, mobility and info-communication,” he concludes. “Given the amazing change that we have witnessed since 2014 when our Cluster was formed, I am optimistic.”

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