Electric Vehicles are Coming
Curt Underwood is a partner in the energy practice at Oliver Wyman, focusing on operations improvement, operations strategy and business transformation.
Vehicle electrification is a monumental change for the transportation sector, but the impact on utilities may be equally profound. Based on our calculations, the conversion of all transportation fuels, gasoline and diesel, to electric vehicles would add forty-five percent to national electricity demand in the U.S. and as much as sixty percent in countries like France.
While this book-end scenario represents an opportunity, it also poses a threat to our aging and often stressed power grids. The crucial challenge for policymakers, regulators and utilities across the world is how best to prepare their national grids for this massive hike in demand.
The push to replace internal combustion engines with electric vehicles is gaining momentum across the world. Governments and car companies have begun announcing plans to phase out the internal combustion engine in favor of electric alternatives.
Volvo, for instance, has said that it will stop producing pure internal combustion engines by 2019. The U.K. and France intend to ban sales of gas and diesel cars by 2040. Norway and India have declared faster paths away from internal combustion by 2025 and 2030 respectively.