Broker Jefferies (Jefferies) believes that electric vehicle production is currently facing a “hidden carbon emissions” challenge.
Simon Powell (Simon Powell), head of global research at Jefferies, said, “In order to reap the environmental dividends expected by the government, users will have to use them longer and drive farther than traditional internal combustion locomotives.”
He explained that only by doing this can we offset the materials such as steel, aluminum, and glass used to produce electric vehicles, as well as the “large” carbon emissions generated in the process of assembling electric vehicles.
The problems faced by electric vehicles are more complicated, he said, because the average weight of electric vehicles currently often exceeds that of fuel-powered cars.
“When they leave the factory, these [electric cars] are at a disadvantage,” he said. They contain more steel. The brakes are bigger. The battery pack is definitely heavier.”
Powell said the current relatively high weight of electric cars is a result of manufacturers focusing on the range range of these cars. Unlike cars that use internal combustion engines for decades, charging infrastructure for electric vehicles is far from developed globally.
The importance of “green steel”
However, Powell expects that the “hidden carbon emissions” of electric vehicles are expected to eventually fall to levels similar to those of traditional cars.
“The solution to this problem is to use more environmentally friendly steel,” he said. The use of hydrogen in the steel manufacturing process is also worth paying attention to.”
Powell said, “I don't think many people are talking about the steel industry being green,” admitting that decarbonizing the steel industry on a global scale would be “very challenging.”
Currently, steel production mainly relies on coking coal, and the production of low-carbon steel is often both resource-intensive and expensive.
Powell said, “I think this will take a long time. We're talking about big investments... long-term returns, long-term perspectives.”
At the same time, he said, investors should also keep an eye on the development of battery technology, as batteries with higher energy density will help reduce the weight and potential carbon content of electric vehicles.