Article by Cordatus Director, Gavin Munn
25th January 2021
Elon Musk might be on to something…
I have been watching the technological progress of electrical vehicles (EV’s) for a while now, initially with a view to getting a car myself but increasingly I have been considering the real estate implications of this impending electric revolution.
Public interest and media coverage has really increased in the last year and it is now clear that we are at a tipping point where their relevance and take up are starting to be significant.
2020 saw a dramatic rise in EV sales with an increase of 184% over 2019. That compares to hybrids (+56%), petrol (-21%) and diesel (-38%). In fact, pure electric models accounted for 6.7% of all new car registrations in 2020. Looking further ahead, projections by National Grid suggest that the UK stock of EVs could reach between 10.6 million by 2030 and could rise as high as 36 million by 2040. That is a mighty increase given there are only 375,000 plug in cars and 10,300 plug-in vans currently on the road.
This all presents one very obvious stumbling block which is charging. At the moment 80% of EV owners charge their cars at home, for which you need a drive. Outside cities some 40% of homes do not have a drive and within cities that percentage is very much higher. At the moment the public charging network is woefully inadequate and although there has been a significant improvement in recent years there are still only 35,000 public charging points in the UK. This shortage is a significant infrastructure challenge for stakeholders but it is also one that the real estate industry can contribute to and benefit from. Destination charging at supermarkets, retail parks, cinemas, offices, gyms all could offer a charging opportunity whilst we work or play and with an average daily drive distance of 25km cars only need a quick top up.
Wholesale EV take up in the commercial sector will take a bit longer due to vehicle size but once it starts to get traction the infrastructure and real estate implications will be huge. When cities ban internal combustion engines (ICE’s), as they surely will, then logistics fleets will need to be charged in depots. This will put huge demands on the grid which means that understanding tenants capacity requirements and the viability of delivery will be critical . The real estate implications of EV’s are huge across all sectors and therefore the investors and developers that are early to recognise and address the opportunity and issues that this revolution presents will reap the rewards.
At Cordatus we are very focussed on global trends in technology, sustainability, demographics and urbanisation both in the asset management of our existing portfolio and whilst considering new acquisitions. Electric vehicles straddle many of these trends and like many of them will be accelerated by the after effects of Covid-19. We will certainly be focussing on the opportunities that they present for both our business and our investors.
So whilst Elon might be on to something big, he needs the help of the real estate industry to make it something truly transformational….