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HomeMarketRivian, Polestar Push for Faster EV Adoption With Report on Climate Change

Rivian, Polestar Push for Faster EV Adoption With Report on Climate Change

Rivian and Polestar want faster development of renewable power generation and cuts in greenhouse-gas emissions throughout the automotive supply chain.

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Justin Sullivan/Getty Images

Electric vehicle makers
Polestar Automotive
Rivian Automotive
teamed up in an unusual, but not entirely surprising, way for auto makers. The pair produced a climate report with consultancy Kearney that found the world needs to make the shift to EVs more quickly.

Their overall conclusion about global warming is along the same lines as that from billionaire philanthropist Bill Gates. It isn’t encouraging.

The report, published Tuesday evening, concludes that the world is going to fail to reach the Intergovernmental Panel on Climate Change’s goal of limiting the increase in global temperatures to 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, by 2050.

The 1.5 degree goal represents climate scientists’ best guess for the maximum temperature increase that would still avoid the worst projected effects of climate change, such as significant changes to ocean currents, sea-level increases, and loss of biodiversity.

The Kearney/Rivian/Polestar conclusion is essentially the same one Bill Gates has come to recently. He said as much during a question-and-answer session in an online forum in January.

The current pace of vehicle electrification and roll out of renewable electricity generation just isn’t enough to hit the 1.5-degree climate goal. Rivian (ticker: RIVN) and Polestar (PSNY) recommend accelerating the transition. The pair also want to see faster development of renewable power generation and a reduction in greenhouse gas emissions throughout the global automotive supply chain.

All three would need to accelerate to meet the target. For the global auto industry, sales of battery-electric vehicles “must grow from 6% to close to 100% by 2032,” says the report.

The 6% figure is roughly the share of global new-vehicle sales that were all electric around 2021. A little less than 10% were all-electric in 2022.

Reaching 100% by 2032 is far faster than the auto industry currently projects. Most auto makers hope to be selling roughly 40% to 50% EVs by the end of the decade, with the balance traditional, gasoline-powered vehicles.

Speeding up would mean a lot more capital is required for EV development, assembly plants, and battery capacity. The global car industry spends roughly $120 billion on factories and equipment each year. Total commitments to electrification spending amount to roughly half that amount.

Billions of dollars are also spent annually by battery makers to expand capacity. EV battery capacity grew roughly 70% in 2022. Capacity is forecasted to hit about 749 gigawatt hours in 2023, up about 45% versus 2022. That’s enough battery capacity to build roughly 11 million to 12 million EVs, while global light vehicle sales are expected to hit about 84 million units this year.

Putting all that together, hitting 100% by 2032 would mean an incremental $700 billion in capital spending across the industry. That is only a rough estimate, but the correct figure would be enormous without a doubt.

The report isn’t impacting shares all that much. Polestar stock is down 0.5% in premarket trading Wednesday. Rivian shares are off 0.7%.
S&P 500
Nasdaq Composite
future are down 0.3% and 0.1%, respectively.

Coming into Wednesday trading, both stocks have bounced to start the new year. Coming into Wednesday trading, Rivian and Polestar shares are up about 8% and 12% so far in 2023, respectively.

Rivian shares are still down about 67% over the past 12 months. Polestar shares have lost about 43%.

Write to Al Root at allen.root@dowjones.com

Credit: marketwatch.com

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