The Rise of Electric Vehicles: Exploring the Challenges and Opportunities
Introduction
In today’s rapidly evolving world, the transition to cleaner energy sources is a pressing issue. One area that deserves attention in this transition is the impact on the workforce. As the largest auto workers union in the United States begins its first coordinated strike against major automakers, it highlights the potential for work disruption in the shift towards electric vehicles (EVs). This article delves into the challenges and opportunities surrounding the exponential growth of EVs, as well as the climate risks faced by Asian clothing manufacturers.
Can electric vehicle sales sustain “clear exponential growth”?
Electric vehicles are taking over the global economy, with a clear pattern of exponential growth in sales. The Rocky Mountain Institute (RMI) suggests that if this growth continues and challenges like charging stations are addressed, EV sales could account for 62 to 86 percent of global car sales by 2030. This finding is supported by the International Energy Agency, which forecasts that nearly one in five cars sold worldwide this year will be an electric vehicle. By 2022, electric vehicles are projected to account for 18% of global auto sales, compared to just 4% in 2020.
However, it is important to approach these projections with caution. China, the world’s largest auto market, has been subsidizing electric vehicles, but these subsidies are now being phased out. Infrastructure challenges, such as the slow connection of new vehicle chargers to electricity grids and a shortage of charging stations, pose threats to the exponential growth of the EV market. Additionally, supply chain concerns, such as rising battery costs and geopolitical conflicts, need to be considered.
Despite these challenges, there is hope for the future. For example, researchers at the University of Exeter found that electric vehicle sales in Norway increased to 79% in 2022 from 18% in 2015, thanks to subsidies that made EVs cheaper than conventional cars. In California, electric vehicle sales now account for a quarter of the auto market. Government subsidies in the United States are also expected to reduce electric vehicle costs by $3,000 to $9,000. As governments worldwide continue to invest in charging infrastructure and subsidize electric vehicle costs, we can expect to see more electric vehicle showrooms on high streets.
Heat and floods create problems for Asian garment centers
While the exponential growth of electric vehicles presents opportunities for a cleaner future, we must also address the climate risks faced by Asian clothing manufacturers. A study conducted by British asset manager Schroders and Cornell University reveals that extreme weather conditions, such as heatwaves and floods, could lead to significant productivity reductions in Asian garment hubs. The study focuses on Bangladesh, Cambodia, Pakistan, and Vietnam, estimating that these nations could lose $65 billion in export earnings between 2025 and 2030, equivalent to a 22% decline, if proper climate adaptation measures are not implemented.
Currently, climate adaptation measures such as installing cooling systems or flood barriers have been largely neglected in these garment hubs. The failure to address these issues could result in productivity losses, stranded assets, and job losses in the sector. The fashion industry must pay attention to climate breakdowns and take necessary measures to mitigate their impact. This includes considering aspects such as extreme heat and flooding, which have been overlooked by many brands and suppliers.
The financial consequences of heat and floods are already evident. One brand experienced a 5% drop in operating profit after tax due to declining productivity caused by extreme weather conditions. Investors need to factor these risks into their analyses of companies. However, companies face a difficult balance between climate mitigation and adaptation. They must please both suppliers and buyers while dealing with impending climate crises. This can create perverse incentives that hinder adaptation measures.
Despite the challenges, there is hope for progress. Investments in cooling systems, while seemingly contradictory to reducing CO₂ emissions, have shown positive returns. Governments and businesses need to collaborate to address climate risks and implement necessary adaptations. By doing so, they can protect both the environment and the livelihoods of workers in the garment industry.
Conclusion
The exponential growth of electric vehicles presents both challenges and opportunities. While projections suggest a bright future for EV sales, there are still obstacles to overcome, such as infrastructure limitations and supply chain concerns. Governments’ subsidies and investments in charging infrastructure are crucial in driving the adoption of electric vehicles.
Additionally, the fashion industry must recognize the climate risks faced by Asian garment centers. Neglecting climate adaptation measures could lead to significant productivity losses and economic downturns. Brands and suppliers must consider aspects like extreme heat and flooding in their sustainability efforts.
As we navigate the transition to cleaner energy sources and address climate risks, collaboration between governments, businesses, and stakeholders becomes imperative. By working together, we can create a sustainable future that benefits both the environment and the workforce.
Summary
Electric vehicle sales are experiencing exponential growth worldwide, with projections suggesting that they could account for a significant portion of global car sales by 2030. However, challenges such as infrastructure limitations and supply chain concerns need to be addressed. On the other hand, Asian garment hubs are facing climate risks, including extreme heat and floods, which could lead to significant productivity losses and job cuts. Governments and businesses must collaborate to address these challenges and implement climate adaptation measures. By doing so, we can create a sustainable future for both the environment and the workforce.
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Welcome back. At midnight last night, the largest auto workers union in the United States began its first coordinated strike against all three of Detroit’s major automakers.
This deserves the attention of anyone following the energy transition, because it highlights one of the key areas of work disruption around the transition to cleaner energy.
Large numbers of workers involved in making – and maintaining – complex internal combustion engines are at risk of being made redundant as the market shifts towards simpler electric powertrains. The United Auto Workers union also fears that automakers are seizing the opportunity to undermine organized labor by forming battery joint ventures with non-union companies with lower-paid staff.
As Patrick points out below, such concerns are just one reason to be cautious about bullish projections of exponential growth in EV production. Also today, Kaori examines some worrying research on climate risks for Asian clothing manufacturers. She has a good weekend. —Simon Mundy
Can electric vehicle sales sustain “clear exponential growth”?
Tucked away in Brooklyn’s bustling East Williamsburg neighborhood, there’s now a Rivian service center. Across town, the electric truck maker opened a high-end showroom in New York’s Meatpacking District. The storefront is a 10-minute walk from the Lucid Motors showroom in the same trendy hamlet. In London, Chinese electric vehicle maker BYD will open a showroom this month in Mayfair.
These examples are anecdotal evidence of a megatrend in the global economy: electric vehicles are taking over.
Research from the Rocky Mountain Institute published yesterday claims that “there is a clear pattern of exponential growth for electric vehicle sales.” If EV sales continue to accelerate – and sensitive issues like charging stations are addressed – then EV sales could account for 62 to 86 percent of global car sales by 2030, RMI says.
These findings are supported by the most recent forecasts from the International Energy Agency. Nearly one in five cars sold worldwide this year will be an electric vehicle, the organization said. And electric vehicles will account for 18% of global auto sales compared to just 4% of global auto sales in 2020, according to the agency’s annual forecast.
But these numbers should be treated with caution. China, the world’s largest auto market, has subsidized electric vehicles and these benefits are now being phased out. (Are also under attack from Europe).
Infrastructure challenges continue to pose a threat to the exponential growth of the electric vehicle market. THE “painfully slowConnecting new vehicle chargers to electricity grids is a problem in the UK and UK a shortage of charging stations it is still a challenge in the United States.
Let’s not forget supply chain concerns. Battery costs rose in 2023 due to inflationary pressures and the war in Ukraine, RMI noted, arguing that “the long-term downward trend in costs is likely to resume.”
But these problems can be overcome. Researchers at the University of Exeter found that electric vehicle sales in Norway increased to 79% in 2022 from 18% in 2015 thanks to subsidies that made electric vehicles cheaper than conventional cars. In California, electric vehicle sales now account for a quarter of the auto market. In the rest of the United States, government subsidies are expected to reduce electric vehicle costs by $3,000 to $9,000, Exeter said.
These trends are a good sign for the environment. According to the Environmental Protection Agency, automobiles account for most of transportation’s 29% share of U.S. greenhouse gas emissions. If governments around the world continue to subsidize the costs of electric vehicles and invest in charging infrastructure, you can expect more electric vehicle showrooms on high streets near you. (Patrick Temple-West)
Heat and floods create problems for Asian garment centers
While the world sizzled under oppressive heat this year, new research found that productivity reductions due to extreme weather in Asian garment hubs could lead to tens of billions of dollars in lost revenue.
The study, conducted by British asset manager Schroders and Cornell University in the United States, focused on Bangladesh, Cambodia, Pakistan and Vietnam, four countries that are home to nearly 10,000 clothing and footwear companies.
It found that the four nations could lose $65 billion in export earnings between 2025 and 2030, equivalent to a 22% decline, compared to a “climate adaptation” scenario. On top of that, 1 million new jobs could be lost due to slow growth and the loss of workers to other sectors, according to projections from Schroders and Cornell University.
The study found that climate adaptation measures, such as installing cooling systems or flood barriers – which would have prevented major reductions in productivity – had been largely neglected. Failure to address these issues could “manifest itself through productivity losses, stranded assets, or both,” he warns.
“Aspects of climate breakdown, [such as extreme heat and flooding] they haven’t received any attention from the fashion industry,” said Jason Judd, executive director of Cornell’s Global Labor Institute. “When we talked to brands and suppliers, very few of them had considered these two aspects of the problem.” , he has declared.
“The numbers are relatively surprising,” Stephanie Williams, a sustainable investment analyst at Schroders, told me. For one brand, declining productivity due to heat and floods led to a 5% drop in operating profit after tax. “There are definitely financial consequences associated with it, so it’s up to investors to try to start factoring that into their analyses,” she said.
At the same time, companies were walking “a tightrope of pleasing both the supplier and the buyers with fairly objective metrics,” on climate mitigation, while at the same time having to “deal with these impending crises,” Williams told me.
The result was that companies “end up having slightly perverse incentives. . . which could be to the detriment of adaptation measures,” Williams said.
Although installing energy-intensive air conditioning units seemed to go against the goal of reducing CO₂ emissions, Judd said he was “pleasantly surprised” by the return on investments in cooling. But he admitted that “the squeeze is real” for companies that find themselves having to balance both climate mitigation and adaptation. (Kaori Yoshida, Nikkei)
Intelligent reading
As tensions rise over EV subsidies, retaliatory measures against China it would not be in the EU’s interestsupports the FT editorial team.
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