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EV Disruption

I ran across a great post over a month ago on the Tesla Motors Club forum, and am finally getting around to sharing it. Just like this article, it was titled “EV Disruption.” Interestingly, it comes from someone living in Texas, home of the US oil industry. The post echoes a lot of the key points I’ve made over the past few years… and I thus like it very much. 😀 He also makes some points I don’t think I fully agree with, but I get the argument, and think he could be right. Anyhow, have a read and then chime in with your own thoughts and/or jump over to the original post to see the discussion it generated on the TMC forum:

EV Disruption

By tonybelding

I’ve been thinking about whether electric cars (and I do mean BEVs) can reach a tipping point and suddenly explode in popularity. Can they be a “disruptive technology?” And just to be clear: My definition of a disruptive technology is that its sudden popularity not only supplants a previously established technology, but also puts established companies out of business because they cannot adapt quickly enough.

If this is going to happen, electric cars have to be clearly more desirable than gasoline cars. I think this is possible. Right now the main obstacles are either price (for Tesla) or range (for most others). Bring the cost to par with gas cars while still achieving a solid 200 miles range, and then I think many people will choose the electric car — for its greater convenience, better driving experience and lower cost of operation.

The best comparison I can think of is the shift from film cameras to digital cameras. The first digital cameras found a niche, even though they weren’t yet a viable, direct replacement for film cameras, and they sold in modest numbers. As technology improved, we came to a tipping point where the masses preferred digital. Digital cameras operate similarly to film cameras, and they perform the same tasks, but they just do it with much lower cost of operation and greater convenience.

How it won’t happen… I’ve read a scenario that electric cars will soon start putting gasoline stations out of business. That will make gasoline cars even less convenient to own, and things will spiral from there. I don’t buy this theory, though. It’s true that gas stations already don’t make much profit, but that’s because of the high level of competition. If a few of them go out of business, that will concentrate the remaining sales among the remaining stations. For example: In my small town we have six gas stations (all of which are basically convenience stores rather than service stations as such). If demand for gas falls, some of those stores may stop selling gasoline. Every time that happens, the customers who were still using that store will migrate to the remaining stores and help keep them afloat. We would have to get down to one or two stores before this begins to become a significant inconvenience to gas car owners.

Very few people switched to a digital camera because they were having trouble getting film or processing anymore. To the extent that this did happen, it was long after the tidal wave of digital had already washed through.

However, the market for film cameras imploded very quickly. Cameras are durable goods, and new cameras always have to compete with used cameras. When people started shifting to digital, they began dumping their old — but still perfectly serviceable — film cameras at the flea market, the resale shop, the pawn shop, the garage sale, eBay, etc. Very soon anybody who did still want a film camera had screaming bargains to choose from in used models, and not a lot of compelling reason to shell out for a new one. For companies making only film cameras, this was a nightmare.

The same thing can happen to gasoline cars. However… The analogy isn’t perfect. Cars are far more expensive items than cameras, the scale of the car industry is vastly larger, and product cycles are much longer. It takes a long time to turn over the automotive fleet. Changing the auto industry is like trying to steer the Titanic.

So, how are car companies going to fare? Can they adapt? Will the “big three” US car makers of 2025 be Tesla, Google and Apple?

I do think that many established car makers are going to have great difficulty making this transition, for reasons that are not outwardly obvious to most people. A few seem to be on the path… GM and Nissan are both on track with BEVs. Toyota is not, but they have the resources to pivot to BEVs when it finally becomes obvious that they need to. BMW and Kia have had some success with their quirky little electric cars, so maybe they’ll use those as a springboard. We’ll see.

Still, there’s a long list of car companies around the world that have got nothing. When the tipping point comes, these companies are going to find themselves without the financial and engineering resources to catch up. Their only chance will be to outsource their powertrains, just as many camera makers outsource their digital sensors from just a few producers. Whether that approach will be viable in the car business is hard to predict.

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Written By

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.


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