Closing the emissions gap

Welcome to the Hyperdrive daily briefing, decoding the revolution reshaping the auto world, from EVs to self-driving cars and beyond. You ca <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly9zbGkuYmxvb21iZXJnLmNvbS9jbGljaz9zPTgyNzc2OSZsaT0yODA0OTI4NyZtPTI1ZjVkOWM5YzJhMWY5YmZhMWE0MWQ1ZjkyZGRjMTBmJnA9MjgwNjE3MDAmc3RwZT1kZWZh…> View in browser <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL25ld3NsZXR0ZXJzLzIwMjItMDYtMTQvZml2ZS1zdGVwcy10by1nZXQtcm9hZC10cmFuc3BvcnQtb24tdHJhY2stZm9yLW5ldC16ZXJv…> [image: Bloomberg] <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9oeXBlcmRyaXZl/603c96198fc8ea5686247226B64bcae62> <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly9zbGkuYmxvb21iZXJnLmNvbS9jbGljaz9zPTgyNzc3MyZsaT0yODA0OTI4NyZtPTI1ZjVkOWM5YzJhMWY5YmZhMWE0MWQ1ZjkyZGRjMTBmJnA9MjgwNjE3MDAmc3RwZT1kZWZh…>
*Welcome to the Hyperdrive daily briefing, decoding the revolution reshaping the auto world, from EVs to self-driving cars and beyond. You can read today’s newsletter on the web here <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMjItMDYtMTQvZml2ZS1zdGVwcy10by1nZXQtcm9hZC10cmFuc3BvcnQtb24tdHJhY2stZm9yLW5ldC16ZXJvLWVt…>.* News Briefs
– Tesla had ‘very tough’ quarter, Elon Musk says in memo <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMjItMDYtMTMvbXVzay13YXJucy1vZi10ZXNsYS1zLXZlcnktdG91Z2gtcXVhcnRlci1pbi1lbXBsb3llZS1tZXNz…> to staff. – Geely buys <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMjItMDYtMTQvY2hpbmEtcy1nZWVseS10YWtlcy1vdmVyLWFsaWJhYmEtYmFja2VkLXNtYXJ0cGhvbmUtbWFrZXI_…> Alibaba-backed Chinese smartphone maker Meizu. – Stellantis withdraws from Europe’s biggest auto lobby.
<link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly9zbGkuYmxvb21iZXJnLmNvbS9jbGljaz9zPTgzMDYyNyZsaT0yODA0OTI4NyZtPTI1ZjVkOWM5YzJhMWY5YmZhMWE0MWQ1ZjkyZGRjMTBmJnA9MjgwNjE3MDAmc3RwZT1kZWZh…>
<link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly9zbGkuYmxvb21iZXJnLmNvbS9jbGljaz9zPTgzMDYyNyZsaT0yODA0OTI4NyZtPTI1ZjVkOWM5YzJhMWY5YmZhMWE0MWQ1ZjkyZGRjMTBmJnA9MjgwNjE3MDAmc3RwZT1kZWZh…> <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly9zbGkuYmxvb21iZXJnLmNvbS9jbGljaz9zPTgzMDYzMSZsaT0yODA0OTI4NyZtPTI1ZjVkOWM5YzJhMWY5YmZhMWE0MWQ1ZjkyZGRjMTBmJnA9MjgwNjE3MDAmc3RwZT1kZWZh…>
<link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly9zbGkuYmxvb21iZXJnLmNvbS9jbGljaz9zPTgzMDYzMSZsaT0yODA0OTI4NyZtPTI1ZjVkOWM5YzJhMWY5YmZhMWE0MWQ1ZjkyZGRjMTBmJnA9MjgwNjE3MDAmc3RwZT1kZWZh…> Working toward net zero
The latest car sales data from China shows a steady acceleration in electric-vehicle adoption. Shipments of passenger EVs more than doubled last month compared to the same period last year. Around a quarter of sales in China so far in 2022 are either fully electric or plug-in hybrids. That rate can probably hold up, leading to some 5.7 million plug-in vehicle sales this year.
Covering topics related to EVs feels like there’s a constant drumbeat of good news like this. So far, the numbers tend to only go in one direction, and that’s up. But here’s a downer to balance things out: despite the recent faster EV adoption, road transport is still nowhere near on track to reach carbon neutrality, or “net zero,” by 2050.
BloombergNEF’s latest Electric Vehicle Outlook shows EV adoption continuing to accelerate in the years ahead, with the fleet rising from 17 million at the end of last year to 228 million by 2030 and over 700 million by 2040. Even with all that growth, CO2 emissions from road transport still come in at 4.4 gigatons in 2050 in BNEF’s Economic Transition Scenario, which assumes no new policies are implemented. That is down from 6.3 gigatons today — a remarkable achievement given rising global population and wealth — but still a long way from reaching net zero.
So, what will it take to get road transport on track for net zero? Here are five steps:
1. *Get moving on zero-emission heavy trucks.* BNEF’s outlook grades each segment of road transport on how close it is to reaching net zero by 2050. Buses and two/three wheelers, for example, are almost on track <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMjItMDYtMDcvZWxlY3RyaWMtdmVoaWNsZS1vdXRsb29rLWlzLWV2ZW4tYnJpZ2h0ZXItaWYtdGhlLXdvcmxkLWJp…>. Passenger cars and light commercial vehicles are on a positive trajectory, but still need some additional policy support, especially in emerging economies. Heavy trucks are nowhere near net zero and are set to account for a growing share of road transport emissions. Urgent action is needed to get the market for zero-emission trucks moving. The most important factor will be more stringent truck emissions policies and potentially quotas like California has introduced in its Advanced Clean Trucks <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93dzIuYXJiLmNhLmdvdi9vdXItd29yay9wcm9ncmFtcy9hZHZhbmNlZC1jbGVhbi10cnVja3M/603c96198fc8ea5686247226B2c705fdb> regulation. A big push is also needed on megawatt-scale charging infrastructure, and potentially hydrogen refueling stations for some difficult-to-electrify long-haul routes. 2. *Close the EV adoption gap between wealthy and emerging economies.* The current trajectory suggests a two-tiered global auto market is emerging and that the benefits of electrification could accrue very unevenly. New-vehicle sales in wealthy countries are set to go mostly electric in the next decade, while those in emerging economies lag far behind. Air quality in cities is already markedly worse in poorer nations, and this issue will complicate further if the EV adoption gap isn’t addressed. Cost-competitive EVs will make this much easier, but it still takes time to build adoption, and turning over the fleet is a slow process. BNEF’s outlook shows emerging economies accounting for 59% of global combustion-vehicle sales by 2040, up from 29% today. Governments in wealthy countries should look for ways to support EV adoption in emerging nations and help jumpstart the market, otherwise the transition will not be an equitable one. 3.
*It’s time to build.* There are two big areas that require substantial investment as the EV market scales: Charging infrastructure and battery supply chains. Both will need to see major development to prevent them from holding back EV adoption in the decades ahead. Governments should look to streamline permitting processes where possible, while industry participants should commit to supply-chain transparency to ensure consumers are confident in what they’re buying. 4.
*Look beyond the drivetrain.* As I wrote last week <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMjItMDYtMDcvZWxlY3RyaWMtdmVoaWNsZS1vdXRsb29rLWlzLWV2ZW4tYnJpZ2h0ZXItaWYtdGhlLXdvcmxkLWJp…>, even a modest 10% reduction in distance traveled via car globally by 2050 yields major benefits and makes the journey to net zero much easier. Investments in public transport and better infrastructure to support cycling and walking can all play a role. This will help improve local air quality and drive down CO2 emissions while also reducing strain on the battery supply chain. Still, it’s important to recognize that even with those measures, the world will need a lot of EVs to achieve net zero by mid-century. The case of the Netherlands is illustrative here. The country is densely populated, wealthy, flat, temperate and invests heavily in cycling. Even there, bicycles account for only about 8% of distance traveled (though their share of trips is much higher at 25%), while cars cover 69%. Countries should continue to push for all of the changes above – including EVs – because every one of them will be needed to achieve climate targets. 5.
*Concurrent decarbonization of the power sector*. EVs have lower lifetime CO2 emissions than comparable internal combustion vehicles today but realizing the full benefit will require concurrent decarbonization of the electricity system. In BNEF’s analysis, transport emissions will drop by another gigaton in 2050 if all those EVs are powered by renewables. Fortunately, the transition to a low-carbon power system is already well underway.
There you have it, five steps to close the gap. Let’s get going. <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly9zbGkuYmxvb21iZXJnLmNvbS9jbGljaz9zPTgyNzc3NyZsaT0yODA0OTI4NyZtPTI1ZjVkOWM5YzJhMWY5YmZhMWE0MWQ1ZjkyZGRjMTBmJnA9MjgwNjE3MDAmc3RwZT1kZWZh…> Before You Go Photographer: Chris Ratcliffe/Bloomberg *Photographer: Chris Ratcliffe/Bloomberg*
Go-Ahead Group, the biggest operator of London’s commuter trains and iconic double-decker buses, accepted <link.mail.bloombergbusiness.com/click/28049287.12413/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMjItMDYtMTMvb3B0cnVzdC1pcy1zYWlkLWluLXRhbGtzLXRvLWJ1eS11ay10cmFuc3BvcnQtb3BlcmF0b3ItZ28t…> a £648 million ($790 million) takeover bid from an investor group backed by Australian rival Kinetic. The Kinetic consortium is offering 1,450 pence in cash for each Go-Ahead share, and investors will receive a special dividend of 50 pence per share in place of a final dividend for this financial year. Go-Ahead runs nearly a quarter of London’s buses, including some of the city’s zero-emission fleet. The company also operates Govia Thameslink, the UK’s biggest railway company, which is in charge of commuter-train services into London as well as the Gatwick Express line to one of the capital’s airports.
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