Bill Gates said, “Innovation is moving at a scarily fast pace.” Nowhere is that more true than in the world of electric vehicles. Did you watch the US football games to start the new 2020 season? It seemed as if every automotive manufacturer featured at least one electric vehicle in its commercials. Electric vehicles have arrived much faster than many insiders anticipated as little as 5 or 10 years ago.
Automakers are waking up. And they’re not alone. Technological progress in the electrification of cars, bikes, scooters, buses, and trucks has advanced and the market for them is growing at an exponential rate.
Only about 17,000 electric cars were on the world’s roads in 2010. By 2019, that number had expanded to 7.2 million — 47% were in The People’s Republic of China, 9 countries had more than 100,000 electric cars on the road, and at least 20 countries reached market shares above 1%.
Battery innovations are bringing down the cost of EVs — look at all the enthusiasm around Tesla’s Battery Day. It’s becoming common to see charging stations at local shopping malls and restaurants, and the ease of driving an EV has infused many consumers with new confidence about owning an EV.
The Benefits Of Driving An Electric Vehicle
The IEA Global EV Outlook 2020 affirms that EVs are a key technology to reduce air pollution in densely populated areas. They’re a most promising option to contribute to energy diversification and greenhouse gas emissions reduction objectives.
Electric vehicle benefits include:
- zero tailpipe emissions
- better efficiency than internal combustion engine vehicles
- a large potential for greenhouse gas emissions reductions when coupled with a low-carbon electricity sector
These objectives are major drivers behind countries’ policy support in the development and deployment of electric powertrains for transport. To date, 17 countries have announced 100% zero-emission vehicle targets or the phase-out of internal combustion engine vehicles through 2050. France, in December 2019, was the first country to put this intention into law, with a 2040 timeframe. Indeed, far-sighted policy announcements have been crucial in stimulating the EV rollout in major vehicle markets in recent years.
Government Subsidies For EVs
As more and more governments around the world set zero emissions goals, EVs will soon be as competitive as traditional vehicles that burn fossil fuels. Government subsidies have helped — well, not so much in the US, but certainly around the world. Today battery-powered cars account for about 2% of new car sales in the US, while in Europe the market share is approaching 5%.
Government subsidies currently can cut more than $10,000 from the final price of an EV purchase. Of course, government support is only temporary; it must be commensurate with increased consumer awareness and sale volumes increase. Soon technology learning and economies of scale will have driven down the purchase cost of electric vehicles and have triggered mass-market adoption.
The Moment When Batteries Will Be Affordable
An article in the New York Times outlines how purchase prices in Europe are coming “tantalizingly close” to the prices for cars with gasoline or diesel engines. Venkat Viswanathan, an associate professor at Carnegie Mellon University, admitted, “We are already on a very accelerated timeline. If you asked anyone in 2010 whether we would have price parity by 2025, they would have said that was impossible.”
The US Department of Energy agrees that improving the batteries for EVs is key to improving vehicles’ economic, social, and environmental sustainability. In fact, they say that transitioning to a light-duty fleet of EVs could reduce US foreign oil dependence by 30-60% and greenhouse gas emissions by 30-45%.
The power per pound in a battery is called “energy density.” A battery with high energy density costs less, due to needing fewer raw materials and less weight to deliver the same range.
Currently, battery packs range from about $150 to $200 per kilowatt-hour, or around $20,000. When the cost of battery packs — the rechargeable system that stores energy — arrives at below $100 per kilowatt-hour, more and more consumers will be aware of the degree to which electric vehicles have arrived. That’s because EVs will be in every suburban neighborhood then and on every city street.
Elon Musk did announce a breakthrough at Tesla’s Battery Day in which, in the not-so-distant-future of 2023, batteries will cost less than the magic $100 per kWh. That means a significant reduction in vehicle cost and the real likelihood that a mass-market, $25,000 Tesla will be available in 3 years.
With an expected 52% annual growth in batteries from 2022 to 2030, batteries are expected to only make up only 15% of a vehicle’s total costs by 2030, compared with 30% today, according to BloombergNEF estimates. This is really important, as better batteries will allow electric vehicles of all shapes and sizes to travel significantly farther without adding weight.
Electric Vehicles Have Arrived, In Large Part, Due To Increased Charging Availability
The price of charging has dropped 80% since 2008, according to the US Department of Energy, as the infrastructure for electric vehicle charging continues to expand. In 2019, there were about 7.3 million chargers worldwide, of which about 6.5 million were private, light-duty vehicle slow chargers in homes, multi-dwelling buildings, and workplaces.
The European Union has nearly 200,000 chargers, far short of the 3 million that will be needed when electric cars become ubiquitous, according to Transport & Environment, an advocacy group. The US remains far behind, with less than half as many as Europe.
US Presidential candidate Joe Biden’s proposal to install half a million chargers is part of a larger intended program in which an investment in EVs would create one million well-paying employment opportunities for US workers in the auto industry and re-establish the US as a leader in the auto industry globally.
In the meantime, it’s not just on major highways and in urban centers where EV charging is available now. ChargePoint has partnered with the National Association of Truck Stop Owners (NATSO) to launch a $1 billion initiative to deploy DC fast charging and level 2 EV chargers at more than 4,000 NATSO member locations, travel stops, and fueling locations across the country.
Electric vehicles have arrived and will continue play a critical role in meeting the environmental goals of the Sustainable Development Scenario to reduce local air pollution and to address climate change. The transition from internal combustion engines to electrified vehicles in the transport sector needs governments with long-term visions and diversified and adaptive portfolios of policy measures, including new fiscal schemes, according to IEA. For instance, governments may need to anticipate and adapt taxation approaches early to replace lost fuel tax revenues, such as taxation based on vehicle activity (e.g. distance- or congestion-based pricing).
And the trickle effect from more EVs will be very interesting. They’ll create a mindset that will prod oil companies to green their businesses faster. Oil prices have stayed at about $40 per barrel for the last few months, with even lower prices forecast for the years to come.