The EV Conundrum

As more EVs hit the road, the demand for electricity to charge them will increase, and if that electricity is generated from fossil fuels, it could offset some of the emissions reductions achieved by switching from gasoline-powered vehicles to EVs. Therein lies the EV conundrum. The challenge of balancing the environmental benefits of electric vehicles (EVs) with the potential negative impacts of increased electricity demand on power generation and distribution systems. Additionally, the increased demand for electricity could strain existing power generation and distribution systems.

“Mummy, how is driving an EV more sustainable than a petrol car if we are consuming more electricity? Then the world will have to produce more electricity for more EV cars, and continue to burn coal, which also causes carbon emissions, so how does it work?” Very valid questions and I was very happy that, at 9, my daughter could challenge her parents' actions. The truth was, not only did my kids ask me, my friends and family were in doubt.

- Felicia Hong, Business Director and ESG Ambassador of ABrandADay

This doubt was further amplified by the global energy crisis in 2022, brought about mainly by Russia’s invasion of Ukraine. Natural gas supply was cut by over 80% to countries in the European Union which lead to a bidding war for supplies of gas all over the world.

In Singapore, electricity prices soared and the reason behind this is our fuel mix. Natural Gas accounted for 94.9% of our fuel mix. Other energy products such as Municipal Waste, Biomass and Solar accounted for 2.9%. The rest was contributed by Coal (1.2%) and Petroleum Products, mainly in the form of Diesel and Fuel Oil (1.0%) in 2021.

A quick history of EVs

Little did we know prior to writing this article that inventors and engineers first began experimenting with electric propulsion back in the 19th century and Thomas Edison thought Electric Vehicles were a superior mode of transport and worked to build a better battery. Ferdinand Porsche, the founder of the sports car, created the Lohne Porsche Mixte, the world’s first hybrid car. 

By the turn of the 20th century, electric cars were being produced by several manufacturers. They were popular in urban areas as they were quiet, emitted no pollutants, and required less maintenance than gasoline cars.

However, the widespread availability of inexpensive gasoline and the development of the internal combustion engine led to the decline of the electric car. By the 1920s, electric cars had all but disappeared from the market.

Lohner–Porsche Electromobile

The EV conversation in Singapore

Why the adoption of EVs is part of Singapore’s roadmap to reducing emissions

Covering climate change, mitigation, adaptation, and finance, the Paris Agreement was introduced in 2015 and adopted by 196 parties with the goal to limit global warming to well below 2, preferably 1.5 degrees Celsius, compared to pre-industrial levels.

Singapore ratified the Paris Agreement on 21 September 2016 in New York, becoming one of the first few countries to do alongside 30 other countries. The Paris Agreement subsequently entered into force on 4 November 2016, 30 days after it crossed the double threshold of 55 Parties ratifying and the total emissions of ratifying Parties exceeding 55% of global greenhouse gas emissions. It was also in 2016 that Singapore’s Climate Action Plan detailing Singapore’s roadmap and approach to reducing carbon emissions up to 2030 was launched.

Most recently, Singapore revised its 2030 Nationally Determined Contributions (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) to raise our national climate target to achieve net zero emissions by 2050. The commitment also includes reducing emissions to around 60 MtCO2e as part of our revised 2030 NDC. It is clear that the adoption of Electric Vehicles (EVs) is an important part for Singapore to meet net zero emissions by 2050.

Source: NCSS
Charting Singapore’s Low-Carbon Future

Are EVs the answer to climate change?

In 2021, the Transportation sector has contributed 11% of the total emissions in Singapore while the Industrial sector is the largest source of greenhouse gas emissions with 47%, followed by the Electricity and Heat sector accounting for 41% of total emissions.

While transportation is not a major contributor to emissions, we have to understand that to be able to achieve our targets of net zero, Singapore has detailed steps to (a) improve our energy efficiency; (b) reduce carbon emissions from power generation; (c) develop low-carbon technologies through innovation; and (d) ensuring collective action of government agencies, individuals, businesses and the community.

These steps are reflected in Singapore’s climate pledge under the UNFCCC. In July 2015, we announced our target of reducing emissions intensity by 36% from 2005 levels by 2030, and stabilising emissions with the aim of peaking around 2030. 

Currently, the Nordic nations are at the forefront of EV adoption rates whereas for Asia Pacific, the adoption rate is highest in China, followed by South Korea and Australia.

In Singapore, the growth of EV adoption has been significant, and in September 2022, hit a new high of 19%, almost triple the monthly adoption rate from 2021.

The EV landscape in Singapore

A 2021 conducted by YouGov revealed that when it comes to leaders in sustainability and innovation, Tesla took the top spot with BMW following closely behind.

Tesla taking the top spot is less than surprising, as Tesla Motors was founded as an electric carmaker in 2003 with the goal of inventing an electric car that was powerful, beautiful, and with zero emissions. In 2008, Tesla launched its first electric car, the Roadster with the ambition of creating more affordable car options for a wider base of consumers.

Positioned as a pioneer in the market of electric cars, Tesla evolved from a startup, to an established industry player that is growing at an impressive pace as compared to established automakers like BMW and Mercedes Benz.

With electric car registrations making up over 10% of new car registrations, one may hastily conclude that it was Tesla which stirred the interest of electric cars in Singapore, given its high-profile entry into the car market.

The case of Polestar

Polestar, a Swedish electric performance car brand entered the Singapore market with Wearnes Automotive in 2021, as its exclusive retailer. A quick google search lands you at Volvo’s dealer website in California where one can find some quick background regarding Polestar and its origins:

  • Founded in 1996, Polestar was originally created under the name “Flash Engineering” to manufacture a race car that would help the Volvo team to win the Swedish Touring Car Championship.
  • Finding success in the public market, Volvo quickly purchased the performance division of Polestar in 2015 having them focus on improving Volvo’s performance division.
  • In 2017, Polestar’s goal and purpose changed to being an electric performance car brand — focusing on innovation in a highly competitive emerging market.

This begs the big question. Why did Polestar spin off from Volvo when it could have taken the easy route and benefited from Volvo’s established presence in the automotive market?

  • Freedom from legacy culture.

The first Volvo car drove out of the factory in the year 1927. That’s almost a century’s worth of corporate culture and mindset embedded, which may hinder innovation, and decision-making processes.

  • Brand Protection from Volvo.

With a separate funding structure and brand disassociation from Volvo, which is highly recognised as a luxury automaker, Polestar is able to focus on its own set of KPIs, and not be afraid of the “start fast, fail fast” mentality.

  • No partnership and distributor constraint.

Polestar will be able to call the shots when it comes to working with suitable suppliers and partners including the choice of distributor in different markets.

  • Creating and crafting a Brand Narrative called their own.

We look back on the case of Mercedes-Benz, called out for greenwashing by sustainability review platform, Wherefrom, when it tried to its line of electric cars, Mercedes-EQ. Mercedes and its parent company Daimler, have also been sued multiple times, for cheating on emissions tests in Mercedes diesel vehicles, and agreed to a $1.5 billion settlement with the Department of Justice in 2020.

In this instance, Polestar has a huge advantage because of the spinoff and building of its own reputation in the space of electric vehicles.

“The maturity of the automotive industry has become a barrier to innovation. Over time, cars have started to all look the same, feel the same, be the same. We constantly question industry ideas and thinking, challenging ourselves to be better, never accepting mediocrity. We are passionate about design, performance and precision and obsess over each and every detail. We have no legacy, no ties to the past; we are free to find the right way. At Polestar, our passion drives us.”

- Polestar’s Mission

What can brands do to drive EV adoption in Singapore?

As for what drove EV purchasers to make the switch, two-fifths of EV purchasers cite the impact on the environment as their main reason for the switch while around a quarter made their purchase based on lower running costs and fuel costs. Surprisingly, “Future proofing (against the decline of petrol and diesel)” and “Depreciation of ICE cars” were at the bottom of the list.

Some may argue that the increased rate of adoption is clearly attributed to eco-conscious consumers who are already motivated and do not need to be convinced of the benefits. However, we need to understand that the challenge is not one of a mindset shift, but a behavioural shift, that is required. Here’s our humble take on how brands could use an educational narrative to influence consumers who are on the fence about making their first EV purchase.

  • Discuss the environmental advantages and why EVs are part of a country’s net zero strategy plans.

    How does the transition to EV fit into a bigger plan because the larger the pool of EVs, while we may reduce GHG in transportation, we may possibly be increasing the production of electricity and heat.

  • Use data and narrate it in a way that resonates with consumers.

How much emission is reduced? Is there a unit of measurement that car owners will be able to resonate with?

  • Discuss the pros, but do not downplay the cons.

Provide suggestions/solutions to mitigate the cons.

  • A brand tone of voice that is authentic and socially responsible.

Everyone is new on this sustainable journey, and consumers today prefer a brand that is honest and one that will constantly seek to do better, instead of over-promising.

If you are still sitting on the fence today, we hope that we gave you or your business that slight nudge to consider switching to an EV and converting your footprints into handprints.

References