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Achieving Sustainability

Driving the next phase of electric vehicles

Miguel Izquierdo

Electric vehicles have become central to the decarbonisation transition. However, challenges such as a lack of grid capabilities and issues with sustainable mineral sourcing are holding back progress.

Electric vehicles (EVs) are a solution for decarbonising passenger cars and vans, which account for over 75% of global transport emissions1 including 10% of global energy-related CO2 emissions. These figures are likely to climb further with populations increasing and wealth rising in developing countries.

Transitioning to EVs from vehicles with traditional internal combustion engines (ICEs) reduces emissions produced during vehicle production, operation and disposal. These are known as lifecycle emissions and are currently reduced by around 50% in the lifecycle of an EV compared to an ICE.2 But more work is needed to further reduce emissions of EVs, specifically in three distinct areas:

  1. Start and end-of-life emissions: Aluminium and steel account for most of the weight of a vehicle. The development of lower emission materials and a resilient circularity model is required to lower the emissions from these metals. Currently, recycled aluminium and steel do not meet the required standards for vehicle manufacturing.
  2. Responsible sourcing: The sourcing of critical minerals and metals used in vehicles, especially in batteries, can be linked to environmental and social controversies, which represent future supply chain risks. This is an important area of improvement needed in EV production.
  3. Energy consumption: Over half an EV’s lifecycle emissions are linked to vehicle use. There is scope for improvement in aerodynamics, vehicle weight, and battery consumption. However, the primary driver of decarbonisation is through a lower-carbon energy mix for vehicle charging.
Is the electricity grid ready for mass EV charging?

Despite some concerns that mass EV charging could overwhelm electricity grids, the challenge is manageable, particularly as most battery charging occurs off-peak during the night. Both attractive tariff pricing and smart chargers for drivers charging their cars at home can assist grid management. Smart chargers optimise battery efficiency by detecting the battery’s status and charging as required. That said, the expansion and renewal of electricity grids is a necessity to support the broader electrification of industrial and residential needs.

In summary, the shift to EVs is a global necessity, but it must be a managed transition. It requires combined improvements to vehicle production and grid management as well as expanded, lower-carbon charging to achieve decarbonisation targets for vans and passenger vehicles.

Look out for our forthcoming blog post on EV battery recycling.

1 Climate Trace, Country Inventory, 2022
2 IEA, Comparative lifecycle greenhouse gas emissions of a mid-size BEV and ICE vehicle, 2021

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    The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

    This material has not been reviewed by any regulatory authorities. In mainland China, it is for Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations and is for information purpose only. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication's sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of this document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced, except for the case of explicit permission by Allianz Global Investors. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional /professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.

    This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; Allianz Global Investors UK Limited, authorized and regulated by the Financial Conduct Authority; in HK, by Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; in Singapore, by Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; in Japan, by Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424], Member of Japan Investment Advisers Association, the Investment Trust Association, Japan and Type II Financial Instruments Firms Association; in Taiwan, by Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan; and in Indonesia, by PT. Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK).

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