Pivoting to an Electrified Future - The Auto Industry Amps Up@weight>
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Whitepaper Excerpt | April 2021
The automotive industry is pivoting toward an electrified future driven by the Paris COP-21 agreement and the intensification of green policy initiatives by country governments. The timetable for industry change is now led by legislation rather than the consumer with OEMs announcing aggressive target dates for zero tailpipe emissions.
The world has undergone two significant dislocations in recent
years. As of February 2021, 194 states and the European Union have
signed the Paris Climate agreement (COP-21), which effectively sets
the legislative framework for the decarbonization of the global
economy. Policies targeting emissions from transportation, which
amount to about one-third of overall greenhouse gas (GHG) emissions
in the EU or the US, are becoming a central plank in governmental
policy. In addition, as governments grapple with huge adjustments
in their fiscal balances after the COVID-19 pandemic, an even
greater relative focus has been placed on supporting low-carbon
growth strategies. The COVID-19 crisis has arguably accelerated the
promotion of electrified vehicles as part of an overall
green-friendly solution. Rather than resisting this trend, OEMs are
now actively embracing it, with many planning to go completely
electric. Therefore, S&P Global analysts have significantly
increased the forecasts for global electrification. The year 2027
emerges as a tipping point after which rates of electric vehicle
(EV) sales will rise sharply. By 2030, one in four new passenger
car sales will be fully electric-with rates much higher by 2040.
This article seeks to outline the key drivers of this new
accelerated trend and their impact on the industry's propulsion
choices. This high-level assessment of the forecast will be
incorporated into each of the S&P Global forecast product sets in
the upcoming months.
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- Legislative forces become irresistible
- COVID-19, the unlikely electrification accelerator
- The economic stars of EV adoption are aligning-2027 is a key tipping point
- OEMs adopt the EV narrative en-masse
- Outlook for EV adoption is revised up significantly