SUVs Move Center Stage in EV Drive

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The transition to electric vehicles (EVs) is now moving well beyond sedans, posing deeper risks for future oil consumption. SUVs and pickup trucks -- a top-selling segment worldwide -- are quickly becoming the main targets for electrification by global automakers and policymakers. "It seems to be the front end of a tidal wave coming up,” says Kevin Riddell, a senior manager at consultancy LMC Automotive outside Detroit. "We’re finally getting to a point where we want to sell electric vehicles at scale. If you really want to start selling volume, SUVs and pickup trucks are where you have to start putting out new entrants. That's where the growth has been over the last decade or more." Global Trend Sedans, which are easier to electrify because of their smaller hauling needs, were naturally the first focus of electrification. Battery technology has steadily improved in the last decade and many automakers are now rolling out electric SUVs and pickups. Volkswagen, for example, started selling its new ID.4 compact SUV around the world over the last two months, and Ford has an electric version of its F-150 pickup truck coming later this year (NE Mar.11'21). General Motors and Tesla have similar offers in the pipeline, and US start-up Rivian has electric SUVs and pickups as the core of its business model (NE Mar.21'19). These models are perceived as critical to future EV growth in the US, where SUVs and pickups represent roughly three-quarters of new light vehicle sales, and the same goes for China, India and Europe, where the same segment has also seen consistent growth. Much is at stake: Oil consumption from SUVs reached 5.5 million barrels per day in 2020, and the global, energy-related greenhouse gas emissions from SUVs jumped 0.5% in 2020, even as overall emissions fell by around 7%, according to the International Energy Agency. Over the past 10 years, emissions from SUVs have nearly tripled due to their runaway popularity and current SUV emission levels are comparable to those of the entire global maritime sector. Typically, SUVs use roughly 20% more energy than a medium-sized car for the same distance traveled. Policy Pushes Making further progress on costs will also be important, with the high price tag of electric SUVs and pickups likely to exclude many potential buyers. In the US, President Joe Biden hopes to help address this through a major jobs and infrastructure package that would expand federal tax credits for consumers purchasing EVs. This could extend the period in which the credits are available and end a 200,000 vehicle ceiling on the claimable credits per manufacturer -- a ceiling already breached by GM and Tesla. The Biden administration has also proposed funding for a whopping 500,000 new charging stations across the US. "That’s really going to take a lot of anxiety away for things like daily travel, in addition to being able to go on vacation with electric cars,” says Riddell, who also cautions that it's an expensive initiative for Congress to approve. In other countries, such as France, policymakers have sought to constrain the rise of SUVs through a weight-based tax on vehicles. Heavier Haulers Decarbonization of even heavier sectors like cargo trucks, ships and airplanes is likewise gaining more attention, especially with e-commerce on the rise (NE Apr.9'20). For cargo trucks, the Biden administration is likely to pursue fuel efficiency standards for manufacturers, which could boost commercial interest in battery-electric, fuel-cell electric and natural gas-powered models. A rule drawn up during former President Barack Obama's presidency, which was never fully enforced, could be one way to go. The 2010 proposal envisaged a 10% reduction in carbon dioxide emissions and fuel consumption of new heavy trucks over 2014-18 as a way to encourage alternative fuels and fast-track efficiency gains.

Coal, Oil Demand, Security Risk , Retail Marketing, Upstream Technology, Biofuels (incl. SAF), Electric Vehicles, Corporate Strategy , Electricity Prices, Fiscal Terms
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