Jeffery (Jefferies), a brokerage, believes that electric vehicle production now faces a challenge of "implied carbon emissions".
Simon Powell (Simon Powell), head of global thematic research at Jeffery, said: "in order to get the environmental dividend expected by the government, users will have to use longer and drive longer than traditional diesel locomotives."
Only by doing so, he explained, would it be possible to offset the "substantial" carbon emissions generated by the materials such as steel, aluminium and glass used in the production of electric vehicles, as well as in the process of assembling electric vehicles.
The problem for electric vehicles is more complicated, he said, because the average weight of electric vehicles now tends to exceed that of fuel-driven 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 must be heavier. "
Powell said the current relatively high weight of electric vehicles is the result of manufacturers' focus on the mileage of these cars. Unlike cars that use internal combustion engines for decades, the charging infrastructure of electric vehicles is far from developed around the world.
The importance of "Green Steel"
However, Powell predicts that the "implied carbon emissions" of electric vehicles are expected to eventually fall to levels similar to those of conventional cars.
"the solution to this problem is to use more environmentally friendly steel," he said. The use of hydrogen in steel manufacturing is also a matter of concern. "
"I don't think many people are talking about green protection in the steel industry," Powell said, acknowledging that decarbonization in the steel industry on a global scale would be "very challenging."
At present, iron and steel production mainly depends on coking coal, while the production of low carbon steel is often resource-intensive and costly.
"I think it will take a long time," Powell said. We're talking about big investments... Long-term returns, long-term vision. "
At the same time, investors should also pay attention to the development of battery technology, because batteries with higher energy density will help reduce the weight and potential carbon content of electric vehicles, he said.