The electric vehicle (EV) revolution was ramping up in 2019 and 2020 was the year when the tide was supposed to turn in favour of EVs over ICE, or internal combustion engines.

That’s all changed now thanks to the coronavirus pandemic, but one analytics agency believes it’s a blip on an otherwise straightforward upwards trajectory.

The bad news is immediate

The immediate downturn has already begun.

Bloomberg New Energy Finance (BNEF) said in March the COVID19 pandemic could send solar sales back the 1980s, and EV sales in Asia have crashed.

EV sales dropped by 44 per cent in China compared to the year before, 18 per cent in South Korea, slightly more than 10 per cent in Japan and around 7 per cent in India.

EVs are particularly exposed to buyer risk because the supply chain is so new and they remain largely a premium consumer purchase, potentially pushing fledgling electric vehicle makers to the wall.

Furthermore, oil prices have since crashed, as explained here.

The long term should be healthy

Although electrification is here to stay, the fact that markets are so rattled and governments from Italy to the US are taking drastic measures to contain the pandemic is bad news for industries that were looking to tip the scales in favour of electric this year, says energy and metals researcher Roskill.

But Roskill analysts believe that while rock bottom oil prices, which are stubbornly below $US30 a barrel, are likely to suppress sales of the more expensive EVs worldwide, long-term demand remains intact.

It says countries adopting stringent transport emissions regulations that ultimately push EV sales are major oil importers: Europe, Japan, India, South Korea, and the largest importer of them all, China.

A short-term bump in ICE vehicle sales and even low long-term oil prices won’t change the view of these countries on oil dependency and the risk to their economies and health systems, Roskill says.

“Governments in China and in the European Union implemented measures to accelerate the electrification of transport regardless of oil prices,” says Jose Lazuen, senior automotive practice analyst at Roskill.

Concerns over pollution in large cities and its impact on citizens’ health have been more prominent, and oil price swings are unlikely to change that.

“Long-term, the vision of these governments is to diminish exposure to oil markets as much as they can,” Lazuen said. “Whether that will happen in the next 10 or 50 years, we don’t know.”

Electric cars cost 50 per cent to 70 per cent more than conventional vehicles, but prices are forecast to decline in the coming years as lithium-ion battery technology evolves and manufacturers ramp up production.

At the current pace, Roskill estimates that the cost of electric vehicles will start to match that of ICE cars beginning in 2023, which is a timeline that has remained steady among a range of analysts for about five years.