Car industry’s ‘Kodak moment’? Electric shift could put motor giants in reverse

Motorists need a mindset shift to fall for zero-emission driving, say experts, but makers could be caught out if they do not move fast enough

A Kodak moment once meant an image "never to be forgotten", but evolved to imply a company that failed to keep pace with the modern world. No one wants to suffer the fate of the once ubiquitous photo film company that bombed with the advent of digital cameras.

When technology shifts at pace, being nimble enough to adapt to a new wave of consumer demands is vital. In the world of motoring, a momentous shift is happening as combustion engines – with us since Carl Benz's first cars in the 1880s – are phased out to be replaced by electric motors.

There may be issues with supply and demand, and cost and performance, but the era of the electric vehicle is upon us with the Tesla Model Y vying with the Toyota Corolla for the crown of best-selling car globally. Companies that fail to spark their electric sales into life risk stalling, or breaking down.

Dr James Richardson, director of analysis at the UK's Climate Change Committee, told parliamentarians this week that car makers face a real challenge to make the transition and risk ending up like Kodak, or others with obsolete products.

"We've seen in other markets, like [video rental company] Blockbuster, companies don't always see how quickly these markets can change," he said. As electric vehicles become cheaper to buy, run and maintain it becomes the obvious choice for buyers, yet most makers still rely on petrol or diesel car sales.

Some motorists blame range anxiety, or access to charging points for holding them back. Elaine Yin, head of brand and communication at Lotus Flash Charge, said these were common anxieties in a new industry. "In the very beginning of the petrol car industry there was also anxiety because there was not enough gas stations. This is the same thing. It just takes some time to calm the range anxiety. It will be better."

Electric timing

Those at the heart of the electric vehicle industry have a distinct vision of the not-to-distant future. It is a city centre where all modes of transport, be they trains, passenger cars, taxis, motorbikes, buses, delivery vans, trucks and even flying taxis, are fully electric. Traffic noise has been reduced to a hum, air quality is improving and carbon emissions have plummeted.

"The urban areas should be zero emission," Carsten Astheimer, product director for ELM Mobility, told The National at the London EV Show this week. "I think it's not feasible and not practical at the moment for whole rural areas of the country to be zero emission, but EVs work very well for small vehicles and short distances.

"I would say: cities – zero emissions, full stop. Then you can start to create the infrastructures and the manufacturers can create the products to suit that legislation, but it has to be a very clear policy and legislation to set a clear road map.”

Relatively few countries have clear paths to mass adoption of EVs at the moment. Norway is arguably almost at mass adoption. According to its Road Traffic Information Council, 11,552 new passenger cars were sold in Norway in October. Of those, 10,862 were fully electric, meaning 94 per cent of all new cars sold there were EVs.

There are a lot of carrots and sticks in the Norwegian system. New EVs attract no VAT and no local car purchase tax. Internal combustion engine, or ICE, cars incur heavy taxes under the "polluter pays" principle.

Other incentives have been reduced, but without them the adoption rate might not have reached the heights it has. For instance, until 2017 EVs travelled for free on Norway's ferries and toll roads, and parked for free in municipal car parks. But some of those carrots fell away in stages as adoption increased and the sticks became gradually more severe for those who insisted on keeping petrol and diesel vehicles.

The increasing charges on ICE vehicles have, in part, been used to subsidise the incentives in Norway. It worked. In October this year, 257 diesel models were sold alongside only 63 petrol models, accounting for 2.2 per cent and 0.5 per cent of total car sales, respectively.

Civil disobedience

But Norway's road to electrification stretches back to the late 1980s and took some unusual turns, not least involving one of the country's biggest music bands. In the 1990s, Morten Harket, singer of Norwegian pop group A-ha, famous for their hit Take On Me, jumped in a Fiat Panda that had been converted to electric with the environmental activist Frederic Hauge, co-founder of the climate foundation Bellona.

In a campaign of civil disobedience aimed at promoting EVs, they drove around Norway refusing to pay road tolls or parking fines. Eventually, the car was seized by authorities, but the route to zero-emission transport in Norway was later mapped out. "I didn't feel like I was entering into the role of a rebel, really," Harket said in 2022. "It was just necessary."

The speed of EV adoption rapidly accelerated after 2012. That year, EVs made up just 2.8 per cent of the market. From 2025, the market for new private car sales will be 100 per cent zero emissions, beating the EU's target by 10 years.

"We have used the stick for fossil vehicles and the carrot for electric cars," said Cecilie Knibe Kroglund, Norwegian State Secretary at the Transport Ministry. "It's possible that other countries will have to use other types of incentives depending on usage, their geography and the way public transport works. But as far as we are concerned, our incentives have worked very well."

The largest car brand in Norway, Volkswagen, delivered its last ICE vehicle – a Golf – in July. "Since January 1, we have removed all fossil-fuelled cars from our catalogue," said Kim Clemetsen, head of marketing at a VW importer in Norway. "We now only sell electric cars."

But there has been opposition, even from senior politicians. Norway's Finance Minister Trygve Slagsvold Vedum said recently that if a few ICE cars are sold next year it would "not a problem at all".

Nonetheless, many feel other countries could benefit from the Norwegian experience on the road to mass EV adoption. "Norway was in many ways not a very likely country to succeed with this: it's a big country, long distances, very cold temperatures in winter, which affects the range of the car," said Christina Bu, secretary general of the Norwegian Electric Vehicle Association. "So there's not really any reason why Norway should succeed rather than another country."

Maltese crossroads

Globally, the big EV markets are in China and the US. In the year to the October 2024, more than 7 million EVs were sold in China, compared with 1.2 million sold in the US. While Germany is third, the UK has moved up to overtake France to become the fourth-largest EV market.

Others are making steady progress. EV adoption is gathering pace in Malta where, although only two per cent of vehicles on the Mediterranean island are electric, there was a 94 per cent rise in the number of EVs sold in the 12 months from October 2023. Malta also has ambitions to increase its charging infrastructure. At the moment, the country has only 372 charging points. The plan is to increase that to 1,500 by the end of next year and to 6,500 by 2030.

Malta has one of the most generous EV subsidy programmes in Europe, where every purchase gets an €8,000 ($8,442) grant. New EVs are also exempt from registration and road taxes for five years.

"Of course, these are financial nudges, but they are much more than that," Chris Bonett, Minister for Transport, Infrastructure and Public Works in Malta, told this week's London EV Show. "It was about levelling the playing field because, let's be honest, historically electric vehicles have been perceived as being a luxury, accessible only to the few. Our policy target is to change this perception, to make EVs affordable to middle-income families."

Countries are approaching this challenge in different ways. In the UK, the government cannot justify subsidising EVs with taxpayer money to the extent needed to significantly boost demand, so through the zero-emissions vehicle mandate (ZEV), the focus shifted to car makers. UK makers must sell an increasing percentage of EVs as a part of their annual total sales or face being fined. The ZEV mandate holds that 22 per cent of annual sales must be electric. If more than 78 per cent of total sales are ICE vehicles, the maker faces a fine of £15,000 ($18,997) for each vehicle in excess.

This has led to significant discounting of EVs as car makers look to hit the target. Data from Jato Market Dynamics showed that on average, EV buyers have been offered a discount of £5,006 in the past 12 months, just under double what purchasers of fuel-powered vehicles have been offered.

Factory closure

It has all been the subject of controversy in the UK this week. After the announcement that the European motor giant Stellantis was closing its Luton factory north of London, partly blaming the mandate and faltering demand for EVs, the Society of Motor Manufacturers and Traders pointed to a potential £6 billion hit to the industry this year. Meanwhile, Trade and Business Minister Jonathan Reynolds, having been lobbied by the motor industry, announced a consultation and promised a “pragmatic” approach to the ZEV mandate.

“These are deeply concerning times for the automotive industry, with massive investments in plants and new zero-emission products under intense pressure,” said Mike Hawes, the SMMT’s chief executive. “We will work with government on its rapid review of the regulation and the development of an ambitious and comprehensive industrial strategy to assure our competitiveness.”

Transition speed

Nonetheless, the major motor makers are advancing with investment in EV production around the world, simply because that is the way the market is going. The only discrepancies between countries are over the speed of transition. But the issues with the ZEV mandate in the UK illustrate the problems of stimulating weak demand and overcoming consumer reluctance.

For example, if urban areas are expected to lead the charge of EV adoption, what of people who live in apartment blocks? Norway introduced a "charging right" for people who live in flats, who comprise about 20 per cent of the population, a similar figure to the UK. Local housing associations are given financial support that often means they can install charging points at a discount of up to 50 per cent.

The "charging right" in practice means that people in apartments are never far from a charging point. But flat-dwelling percentages are much higher in places such as Germany (56 per cent) and Sweden (49 per cent), which presents challenges there.

However, while the main concerns of people considering the switch to electric can be boiled down to affordability and convenience, many EV industry insiders say it is the mindset that needs to change. Scott Edsall, managing director of EV Juice and Go, feels that we should approach EV charging more like we approach our mobile phones, rather than filling up only when needed, as with petrol cars. This change of behaviour would mean charging your EV almost every time you park it, at home, work or the supermarket.

"Right now you charge up your phone and don't think about it and use it all day," Mr Edsall told The National. "You don't stop somewhere along your journey to recharge your phone or to fill up your phone with petrol. So, I think it will become that way over time.”

The transition to EVs is highly complex and involves all of the above elements coming together at the same time. Research from UK digital financing firm Carmoola found a third of people are still not interested in EVs, and half of those were over 55. "This underscores the need for a broader strategy to address consumer hesitations, ranging from upfront costs and infrastructure concerns to the steep depreciation rates EVs can face," Carmoola's chief executive, Aidan Rushby, told The National.

Those consumer hesitations are born out of a lack of knowledge of EVs, according Charles Wood​​​​, deputy director at Energy UK, because "the public is not being given the best possible clarity and signals to invest".

"While the lifetime cost of an electric vehicle is now lower than the cost for an equivalent ICE model, upfront cost remains a barrier for those purchasing a new vehicle," he told The National. "What is positive is that the growing demand from business users will start to deliver a robust second-hand market in the coming years, making EVs more affordable for all consumers."

For most in the EV space, mass adoption is not a question of if, but when. Nonetheless, Mr Bonett is well aware the road to mass adoption is not without challenges.

"But every time we face a challenge, the global community has managed to unite and found the opportunity to innovate, to collaborate and grow," he said. "The problems we face around the world, and on a small island like Malta, shows that change is possible even in places where once it seemed to be out of reach."