EV Industry Faces Misinformation Storm
Automotive sector’s links to oil and gas lobbying come under scrutiny, as misleading reports about electric vehicles risk slowing down the low-carbon transition.
The UK tabloid press has faced mounting accusations of having an agenda against the electric vehicle (EV) industry. Stories reporting about EV batteries “exploding into fireballs”, the “crippling hidden costs” of owning an electric vehicle and “chronic shortages” of technicians who can fix the vehicles have been populating the pages of newspapers such as The Sun, Daily Mail and Telegraph.
The matter reached fever pitch this month when a UK House of Lords Committee urged the government to tackle misinformation about EVs to correct the industry’s flatlining growth. Baroness Parminter, Chair of the Lords Environment and Climate Change Committee, reportedly said: “We have seen a concerted effort to scare people…we have seen articles saying that cars are catching fire – but had evidence that the fire risk is absolutely the same as [petrol and diesel] cars.”
Parminter’s Lords Committee held a six-month enquiry into how the UK could scale its EV industry to reach net zero targets, through which it quickly found that misinformation and negative press represented a dangerous barrier.
Actor Rowan Atkinson – better known as Mr. Bean – was name-checked during the enquiry for having called EVs “a bit soulless” in the press. Richard Bruce, the director of transport decarbonisation at the UK Department for Transport told the Committee that there was a “concerted campaign of misinformation” about EVs.
In its final report, published on 6 February, the Lords Committee accused the UK government of contributing to negative sentiment towards the EV industry, calling for clearer communication and more leadership.
Prime Minister Rishi Sunak’s announcement in September that the phase-out of petrol and diesel in the UK would be pushed from 2030 to 2035, in particular, was a case in point that irked the Lords. Following the speech – in which Sunak also warned that achieving net zero by 2030 was “going to be hard” – 37% of consumers surveyed by UK magazine Auto Trader said they would never buy an EV.
“[The government] must do more to convey a positive vision of the EV transition,” said the report, urging more action particularly on misinformation.
Investor focus
However, companies also have a role to play when it comes to combatting misinformation that breaks consumer trust in EVs.
“There’s a huge onus on the companies who produce them, or have some role in the production or supply chain, to make sure the information going out into the public domain is accurate,” says David Duffy, Co-Founder of the Corporate Governance Institute (CGI). “This work must filter through from the executive-level in companies, through to the board and investors.”
The issue has certainly been on investors’ radars. On 6 February, UK-based asset manager Liontrust attempted to counter “conflicting news stories” about whether EVs were better or worse than internal combustion engine (ICE) cars for society and the environment. The group concluded that EVs were better for the environment compared to ICE vehicles, but conceded that there were negative environmental and social externalities in producing EV batteries.
“There are so many myths [about EVs] flying around that people don’t know what to believe and who the trusted source of information is,” says Lauren Pamma, Managing Director for UK Decarbonisation Programmes at the Green Finance Institute (GFI). “One of the challenges is there’s always going to be misinformation about something that’s a significant and complicated change. I don’t know who’s fueling the misinformation, but it feels like someone with a vested interest in keeping oil and gas sales going.”
There has, indeed, been a historic link between the oil and gas and the ICE automotive industries on lobbying against climate measures and in favour of weakening policies for EVs. In addition, oil and gas form a key part of the ICE vehicle supply chain.
“Many investors are not aware of the scale of negative lobbing across the automotive industry against climate policy” Ben Youriev, Director of Research on energy, mining and transport at lobbying-focused NGO InfluenceMap tells ESG Investor. “It often flies under the radar just how much of a barrier [that] is.”
Last year, Volkswagen shareholders failed in a bid to force the carmaker to disclose its climate corporate lobbying through the courts.
In a January report, InfluenceMap noted a growing divide between ICE automakers who had strong EV policies and supported climate measures, and those who opposed policies to reduce ICE car demand. Overall, the automotive sector remains a major opponent to climate policy globally, with industry associations spearheading lobbying activities.
Just transition concerns
While ICE automakers may be slowly shifting gears in favour of EV climate policy, the EV industry remains plagued with accusations of human rights abuses and poor choice for consumers – leading to concerns that it could stand in the way of a just transition.
This week, 29 investors with US$1.2 trillion in assets under management released a statement demanding companies enhance their environmental and social due diligence in nickel supply chains for the EV industry. They called for the incorporation of responsible mining requirements into mineral supply chain policies, and said companies should adopt a time-bound commitment to deforestation-free nickel supply chains.
Although the single-largest growth in nickel demand over the next two decades is expected to come from the EV industry, the nickel industry is “riddled with human rights violations”, according to the Business & Human Rights Resource Centre.
“We acknowledge the importance of the EV industry for the energy transition,” said Eric Uijen, Chairman of the Executive Board of PME Pensioen – a signatory to the investor statement. “At the same time, companies that depend on minerals for their products should adhere to social standards and respect the rights of indigenous peoples and local communities, including in their supply chains.”
But for InfluenceMap’s Youriev the focus on human rights risks in the EV industry is unfair. “There are many genuine, real issues across the world on this,” he says. “[These accusations] completely and wantonly ignore the oil industry – which is intrinsically linked to the automotive industry – and its detailed history of human rights abuses, which continues to this day.”
Pamma agrees with Youriev. “We haven’t got the same concern about having a mobile phone or a laptop with a battery when they all use the same materials,” she says. “We’re using this as an excuse to delay the transition.”
Initiatives such as the Global Battery Alliance, however, are striving to establish a more sustainable and equitable battery supply chain. “It’s developing battery passports that will ensure you’ve got full traceability of everything that goes into the product – from raw material, right through to the refining process in the factory,” Pamma explains.
Another just transition challenge raised by the EV industry is cost to the end-consumer. EVs generally cost a lot more to purchase than ICE cars, and due to a lack of charging infrastructure and less expertise in repairing them, their upkeep is generally more expensive too.
Geographical differences
Other countries, such as Norway, have bucked the trend through good incentives. In 2023, a whopping 82% of new car sales in the country were EVs, according to the Norwegian Road Federation.
“It’s been a huge success story,” says Sondre Myge, Head of ESG at Norwegian mutual fund group SKAGEN.
A number of things have helped in that respect. First, the Norwegian government slashed VAT on EVs, which made them much cheaper. Road customs were also slashed pretty significantly for EVs, while insurance companies offered more affordable policies and cheaper parking was made available for the vehicles in parts of the country.
“A key difference between Norway and the UK is that many people live in homes with a big driveway and garage,” Myge explains. “The EV industry growth [in Norway] was not about wanting to save the climate – people bought into it because it was in their economic interest to do so. Installing chargers was straightforward too.”
However, Myge stresses that EV’s role in the low-carbon transition can often be overdone.
“We need to remember how EVs fit into the broader, rather idealistic view of our future energy markets,” he explains. “It’s naive to think that scaling EVs is the one secret to solving transportation-related emissions. Having been to Brazil last year, I think it’s safe to say that we won’t see scaling coming out in many of the emerging markets – but they’ll do other types of stuff.”
Those other options could include sustainable biofuels for ICE cars, or plug-in hybrids as alternatives to EVs. “It’s important to keep in mind that EVs aren’t the panacea,” Myge stresses. “They’re not as sustainable as some people say. I support their scaling and think they’ll have an important role to play, but there is a lot more to it than just making sure enough people buy EVs.”
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