Electric Vehicles Will Create a $2 Trillion E-Mobility Market by 2040

Electric vehicles (EVs) will overtake conventional vehicles by 2040 and will create a $2 trillion e-mobility opportunity for utility companies, according to research released today by Accenture.

The global consultancy reached this conclusion after surveying 6,000 consumers in the United States and Europe, combined with scenario modeling undertaken by the authors of the study. Accenture’s report is part of ongoing research trends that suggest EVs are not only here to stay, but will scale up in adoption fast.

The potential for utilities builds on trends that favor continued growth of the global electric vehicle market. Though the up-front cost of an EV still typically exceeds that of cars powered by the internal combustion engine (ICE), battery costs have decreased by 80 percent over the past six years—from US$750 per kilowatt-hour (kWh) in 2010, Accenture points out. Today, price parity with ICE cars continues to narrow.

In addition, the long-term running costs of EVs are lower than fossil fuel-powered vehicles, such that an electric car with a 60 kWh battery achieves an overall lower total cost of ownership significantly before 40,000 miles rolls around (compared with a diesel vehicle), according to the study.

These favorable trends with respect to cost, combined with more consumer choices, will enhance EV adoption. Whereas there are around 50 EV models to choose from in the combined European Union and U.S. markets today, Accenture projects there will be 400 EV models available globally as soon as 2025, with over 10 million EVs on the road by then.

Positive though these trends are, it’s not all plain sailing for these cars. Despite the growth in the EV market, there are still pain points with owning an electric car. Accenture points out that range remains an issue for many consumers, as well as charging time. On top of this, EV charging continues to primarily rely on the ability to charge at home—which is problematic for many urban dwellers without a garage, or in areas without a comprehensively built-out public charging infrastructure.

These negatives mean that 39 percent of owners of conventionally-powered cars say they would never buy an electric vehicle.

The market potential, therefore, requires that impediments to EV ownership are further reduced, and companies that allow for EV ownership to become as easy as possible will bend the adoption curve upward, Accenture predicts.

Unlocking this $2 trillion market potential requires creating an ecosystem which is largely absent today. Accordingly, Accenture identifies four pillars such an ecosystem would need to encompass:

1. Commodity sales: In simple terms, the selling of kWhs within the EV market (in other words, rolling out time-of-use tariffs to EV owners) is one component of this market shift, but is overall a low-margin part of the equation. Since selling power only achieves somewhere in the range of a 3 to 5 percent margin, this is just the starting point as utilities find ways in which they can convince consumers to adopt EVs.

2. Charging stations: This is an important area of needed investment. Accenture estimates $150 billion needs to be spent to build out a requisite infrastructure for EVs, but identifies that utilities should be motivated to invest because of the competition. Already, oil and gas companies are getting in on the action by building charging stations in places which leverage their existing distributed retail network: their gas stations!

3. E-mobility services: This is a very important yet, so far, untapped opportunity. Successful utilities will address challenges such as charging station installation and maintenance, mobile apps for remote charging, integrated home energy management and financing services, Accenture predicts. Consumers have an appetite for enhanced services, the consultancy found, saying half of consumers expect to buy a home charging station as part of a packaged deal.

4. Grid flexibility: Tapping into the EV market potentially affords utilities the ability to enhance their networks’ efficiency. Whereas 53 percent of consumers plan to charge between the hours of 5 p.m. to 10 p.m., utilities would be able to devise market-based congestion management strategies to allow them to balance power supply and demand seamlessly. Done correctly, utilities would be able to harness their existing capacity more efficiently without needing to strengthen their physical networks.

Putting all of this together is where Accenture says the opportunity lies:

Commodity + Services + Flexibility = $2 trillion of integrated value

Utility companies are uniquely positioned to integrate this bundle. They already understand the energy markets, along with all the rules and regulations that go with them. In addition, they already have strong customer relationships—including the valuable consumer data that are included with those relationships.

And where utility companies potentially have the edge over oil and gas companies, which increasingly form the competition in the e-mobility marketplace, is with respect to aligning with the values and beliefs of their customers.

For example, 73 percent of EV buyers say they have gone electric for environmental reasons, so utilities can continue to bias their energy generation from renewable sources to align their brands with consumers’ efforts to reduce emissions and their overall environmental impact.

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