Understanding the Electric Vehicle Landscape to 2020 - IEA
Understanding the Electric Vehicle Landscape to 2020 - IEA
Understanding the Electric Vehicle Landscape to 2020 - IEA
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Global EV Outlook CHALLENGES & OPPORTUNITIES<br />
27<br />
FINANCE<br />
The immediate challenge of high purchase prices exposes<br />
<strong>the</strong> need for different EV financing options than are widely<br />
available at present. Should cost reductions in batteries and<br />
vehicle systems not materialise quickly enough, attractive<br />
financing mechanisms may be needed <strong>to</strong> maintain sales<br />
growth, particularly as government purchase subsidies are<br />
phased out. <strong>Vehicle</strong> leasing is one potential pathway, and<br />
<strong>the</strong>re is some evidence that competitive lease rates have<br />
already helped <strong>to</strong> bolster EV sales. 20<br />
OPPORTUNITY<br />
Attractive vehicle financing can buoy sales, particularly<br />
as government purchase subsidies are phased out.<br />
However, leasing options may remain limited in emerging<br />
economies that do not yet have an established vehicle<br />
financing market, in which case <strong>the</strong>re may be a need <strong>to</strong><br />
identify o<strong>the</strong>r methods for financing EV purchases.<br />
(In China, for example, only 10% of <strong>to</strong>tal car buyers currently<br />
choose financing. 21 ) Such options include leasing only<br />
<strong>the</strong> battery while purchasing <strong>the</strong> rest of <strong>the</strong> vehicle, or<br />
providing some guaranteed residual value for <strong>the</strong> vehicle<br />
or <strong>the</strong> battery at <strong>the</strong> end of its use. Renault offers battery<br />
leasing for its Zoe and Twizy models, as does Daimler for<br />
its Smart Fortwo. These models charge a monthly fee of<br />
about USD 100 <strong>to</strong> lease <strong>the</strong> battery and often come with<br />
replacement guarantees. 22<br />
SUSTAINABLE INFRASTRUCTURE FINANCING<br />
Perhaps <strong>the</strong> most urgent need in all EV markets is in<br />
financing charging infrastructure. When <strong>the</strong> mass-market<br />
introduction of electric vehicles began two years ago <strong>the</strong>re<br />
was much debate about a so-called “chicken and egg”<br />
dilemma facing <strong>the</strong> nascent market: should EVSE be<br />
deployed first in order <strong>to</strong> spur EV sales, or does vehicle<br />
uptake need <strong>to</strong> occur before charging infrastructure takes<br />
shape? In 2013, <strong>the</strong> question is largely irrelevant. The reality<br />
is that EVs and EVSE are being deployed simultaneously<br />
in a mostly market-driven manner, with governments at<br />
<strong>the</strong> national, regional, and local levels contributing <strong>to</strong><br />
infrastructure investment. EVI member governments<br />
alone have collectively made about USD 800 million in<br />
infrastructure spending already.<br />
OPPORTUNITY<br />
Identify and employ sustainable business models<br />
<strong>to</strong> best match charging infrastructure supply<br />
and demand, especially in public locations.<br />
IDENTIFYING BUSINESS MODELS<br />
The most salient issue going forward is <strong>to</strong> identify and<br />
employ sustainable business models <strong>to</strong> best match supply<br />
and demand for charging infrastructure, especially in public<br />
locations. That is, how will private EVSE investment increase<br />
as early government support declines? A number of financing<br />
schemes exist in <strong>the</strong> deployment of non-residential charging<br />
infrastructure. Pricing and operating models often depend<br />
on <strong>the</strong> ultimate owner of <strong>the</strong> EVSE and <strong>the</strong> cost recovery<br />
mechanisms available. Public and semi-public EVSE can be<br />
deployed by property owners, who pay <strong>the</strong> capital costs of<br />
purchasing and installing EVSE, <strong>the</strong>n levy fees for its use —<br />
ei<strong>the</strong>r by electricity consumed or by <strong>the</strong> length of time spent<br />
charging. Many retailers, restaurants, and o<strong>the</strong>r private<br />
businesses deploy publicly-accessible EVSE in such a<br />
manner, typically receiving payment directly at <strong>the</strong> charging<br />
station via credit card. In some instances, <strong>the</strong>se businesses<br />
may offer free charging as a way of attracting cus<strong>to</strong>mers.