I’ve warned in several blogs that a downturn in EV sales would impact other companies reliant on EV uptake as a crucial element of their own climate commitments. Seems that is exactly what is happening. Bloomberg reported on this recently:
“A slowdown in EV adoption has potentially huge implications for the energy transition. It also has ramifications for the many financial institutions that have pledged to decarbonize the loans and investments they make. For lenders such as Bank of America Corp., HSBC Holdings Plc and JPMorgan Chase & Co. that have committed to reduce emissions associated with their financing activities in high-carbon sectors, the auto industry seemed to have a relatively clear path. Unlike certain hard-to-abate industries where getting to net zero relies on scaling up nascent technologies, a widely held assumption was that government incentives and consumer demand for EVs could be counted upon for a smooth transition.”
At the moment, the downward trend in sales is translating into slowed or delayed manufacturing. Tesla, GM and Ford all announced pullbacks in their short-term EV manufacturing plans. CNN wrote that Nissan is “postponing a push to build new electric vehicles at its Canton, Mississippi, factory as sales of EVs are now growing more slowly than many industry experts had expected.”
Banks are not the only collateral damage. Other companies relying on rapid mass adoption of EVs as part of their climate plans also face missing goals rooted in EV uptake. Transition scenario plans might also need modifications to reflect (at a minimum) delays in widespread EV uptake. BloombergNEF’s latest scenario analyses for 2024-2050 show a heavy reliance on EV demand:
Source: BloombergNEF New Energy Outlook 2024.
This isn’t necessarily fatalistic, as experts generally feel that “the EV trend is unstoppable in the medium term,” “the underlying fundamentals for manufacturing EVs are looking good,” and “the current trend actually is going faster than net zero.” The current concern is more related to when EV uptake and benefits will meet expectations, rather than if that will happen. Interim climate targets and goals may be missed, but many are optimistic about the end game.
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