By Randy Bryant
I was driving around town a month ago (windows still open) with a noisy truck on one side and a motorcycle on the other. So my mind wandered again to thoughts of what our life will look like as electric vehicles proliferate and gas and diesel vehicles dwindle. It’s a strange preoccupation, what with electric vehicles being just 1% of the cars on the road, and fuel vehicles being 99%. But, more progressive societies are making plans for this change, so the time seemed right to share my thoughts.
A perfect storm of trends is converging toward electric drive over the next five to ten years which will disrupt the transportation business in a big way. For instance:
The costs of 100 years of polluting cars and utilities are becoming ever more visible and expensive.
Battery prices are improving steadily (halving every four years).
Battery capabilities are improving too (doubling every six to seven years). Car range and charge times will improve.
Electric vehicles are more powerful (fun), and regenerative braking systems get some energy back (efficient).
Electric cars are easier to manufacture and need much less maintenance.
Tesla pre-sold 400,000 Model 3 electric cars in a month (confirming market readiness).
Whole countries, states, corporations, cities are starting to mandate the restriction or end of combustion vehicles.
The major car makers are all rushing to introduce greater variety and volume of electric vehicles.
The result will be a booming market in electric vehicles over combustion vehicles. Though electric cars are more expensive now (federal tax credit helps), operating costs (e-fuel and maintenance) are much lower, so that the total cost of ownership breaks even in three to five years and favors electric drive thereafter. New electric vehicles will reach initial cost parity with combustion vehicles by 2025. Current 30 to 60 minute charge times will go to 15 to 30 minute charging, eventually to sub-15 minutes. The writing of big change is on the wall. According to modelint Morgan Stanley, annual plug-in electric vehicle (PEV) market growth of 30 to 50% is predicted during the coming decades, while overall vehicle sales stay static.
Effect on Car Industry: The disruptive speed of electric vehicle emergence has caught the car manufacturers off guard. Some started their R&D, sourcing, and market testing sooner, some delayed as much as possible. Some may have waited too long, like Volvo, Saab, Mazda and Mitsubishi who “partnered.” Look for others (such as Fiat-Chrysler) to follow suit. R&D for engines will dwindle, all cars will become “electrified,” some barely. The Chinese manufacturers will go global and be very competitive, buying more of the West’s manufacturers. In the U.S. market, manufacturers will try to retain SUVs and trucks as plug/hybrids (profit), while issuing CUVs and sedans as EVs. Hybrids will proliferate for a while, to retain the value of engines, but fade as battery technology improves and battery electrics take over the market.
Car dealerships will get squeezed as sales margins get tighter for EVs, while volume ramps up and the Chinese move in. Maintenance facilities are key revenue generators now, but service needs will shrink (EVs need one-third the maintenance of fossil-vehicles, over-the-air updates take root). Still, dealerships will remain and focus more on sales (new and pre-owned). Gear-headed sales and service staff will have to learn about EVs or stay with the shrinking combustion market.
Effect on Oil Industry: As CAFE standards get tighter and combustion vehicles get displaced by PEVs (especially EVs), the demand for oil will shrink (peak demand predicted within 10 years). It won’t take much demand shrinkage to affect oil prices (ex; past oil supply jolts). The long range effect will be continued low oil prices. Oil and gas investors and lenders will get much tighter, squeezing smaller independents and projects with more expensive oil and gas into bankruptcies or orphaned fields (such as tar sands, shale oil, tertiary production). Low cost oil from large fields and improved production techniques like fracking and 4D reservoir tracking will rule. Oil based products (plastics, fertilizer) will proliferate.
Gas stations vs charging infrastructure: As combustion vehicles get displaced by PEVs, the number of gas stations will shrink. Hardly perceptible now, but as the market moves en-mass (a decade away), finding a gas station could feel more like finding a charge station now. How/when will this affect car buying decisions? I think sooner than later.
The electric charging business will be complicated. About 80% of charging will be done at home (90% for suburbs, lower for cities). Travelers will charge up along the highway with ever faster chargers. The number of local charge/gas stations (level 2 and 3) will shrink. The whole design of charge locations will be different from gas stations since the dwell time for charging will remain longer than for fueling. Fast charger (Level 3+) locations will need large power feeds, large battery banks, and sit-down cafes with tables and Wi-Fi in the middle of a wired parking lot. Medium (Level 2) charger locations will be wired parking lots convenient to the destinations.
The charging business has problems. There are currently 3 standards; CCS (USA), Chademo (Japanese), and Tesla. Tesla is winning the speed and competence game so far, as the U.S. standard is mired in car manufacturer foot dragging. Charge station speeds need to improve from max 50-100kW now to 500kW-1MW (400 mile battery in 10 minutes). Then, car charging speeds need to follow suit. Hopefully, one standard will win. Another problem; charging stations need to be installed before cars are sold, and the economics of the charging business are not so good. That’s part of the reason that we are NOT awash in charge stations now. This area needs a massive infusion of money/buildout, technology, and competent operators. Tesla has done well here (hence their fast sales), while the other car makers (and charge standards) are playing catch up. Electric utilities should be an obvious player. But, most seem hamstrung by their public utility commissions and their own regulated business pace. They can’t/won’t move fast enough to fill the business vacuum.
Ironically, this vacuum may play to the oil companies. Oil companies have the cash, the locations (gas stations), and operation expertise to thrive in this field. I predict they will move in. But in some locales (like New England), they won’t make much money getting their electricity from utilities. So, they may use more of their cash to become clean energy suppliers (wind and solar, as an energy company). They may even go for distributed power, linking their power sources to their charge locations. If their power sources undercut utility prices, they become profitable. Shell and Total have taken the first baby steps in this direction, while BP walked away a few years ago and may have to get back in. Exxon-Mobil is the pink elephant. In an oil and energy companies vs utilities contest, there will be sparks flying!
In summary, as battery technologies improve, electric drive will overrun combustion drive, and those businesses or industries that help make it happen will be the winners. It will take decades to unfold. But, I can’t wait to see it happen.
Randy Bryan has been an advocate for electric cars for over eight years. His company, ConVerdant Vehicles, has converted vehicles to plug-in hybrids, including his own Prius in 2008 and developed and sold inverters that turn a Prius into an emergency generator. He is one of the co-founders of Drive Electric NH.
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