Optimism about the future of electric vehicles continues. But skepticism also continues about the reality of EVs making a major dent in the sales of internal combustion engine cars and trucks in the U.S. and worldwide.
Earlier this month, Bloomberg New Energy Finance, with the characteristic aura of superior wisdom for these sorts of analyses, unveiled its latest assessment of the future of EVs. The headline of the press release captures the essence of the analysis: “Electric transport revolution set to spread rapidly into light and medium commercial vehicle market.”
“Based on analysis of the evolving economics in different vehicle segments and geographical markets,” said Bloomberg, “BNEF’s Electric Vehicle Outlook 2019 shows electrics taking up to 57% of the global passenger car sales by 2040, slightly higher than it forecast a year ago. Electric buses are set to hold 81% of municipal bus sales by the same date.”
According to BNEF, the driver for such a dramatic shift in vehicle technology is “further sharp reductions in EV battery costs, making electric cars cheaper than internal combustion (ICE) alternatives by the mid-to-late 2020s in almost every market, on the basis of both lifetime costs and upfront costs.”
The analysis bases this optimism on the cost reductions in lithium ion batteries since 2010, which may be a shaky assumption. Lithium ion batteries have an aging problem, which means they have to be replaced fairly frequently, driving up the costs. That doesn’t appear to be addressed in the BNEF’s optimistic assessment.
Basic resource and environmental issues dog lithium ion batteries, as does the question of what to do with spent battery packs. An Institute for Energy Research commentary says, “The global stockpile of these batteries is expected to exceed 3.4 million by 2025, compared with about 55,000 last year. This is almost a 62-fold increase in 7 years. Automobiles have overtaken consumer electronics as the biggest users of lithium-ion batteries. Because batteries contain toxic chemicals that should not be placed into landfills, they need to be either recycled, which involves an intensive manufacturing process, or repurposed for other uses.”
The IER analysis continues, “Batteries can be recycled, but recycling them is not easy due to the sophisticated chemical procedures involved. If not handled properly, the heavy metal contained in the battery can lead to contamination of the soil and water.”
Economist Lucas Davis at the Haas School of Business at the University of California, Berkeley, has a somewhat sober assessment of the future of electric vehicles. In his blog posting “An Electric Vehicle in Every Driveway?” Davis says that for EVs to reach the ambitious goals that many analysts are positing, “EVs will need to stop being a niche product and appeal to as many drivers as possible.” Looking at U.S. EV sales in recent years, he observes, “Bottom line – it is mostly high-income households that have EVs. This is true for older EV vintages, but also true for newer EV vintages.” The greatest penetration of EVs is to purchasers with an annual income of $200,000 and above.
While Tesla has touted, but often failed to deliver, its lower cost ($35,000) Model 3, and the Chevy Bolt ($36,000 price tag) has hit the market, buyers with moderate incomes aren’t interested. “If newer EVs were appealing to a broader spectrum of buyers,” says Davis, we should see a lowering of the income of buyers of the newer models. “You don’t. Instead, newer EVs are just as skewed toward higher income households as older EVs.” So far, says Davis, EV buyers “are mostly affluent drivers in coastal areas.”
They best advice about the advent of EVs and the demise of gas guzzlers comes from Quartz, where reporter Michael J. Coren looked at a bundle of projections of the advent of the rule of EVs, including BNEF’s rosy projections, and bears such as ExxonMobil and OPEC. They vary widely, based on widely different economic assumptions. [One old wag describes economists as folks “who go from an unwarranted assumption to a foregone conclusion.—Ed.]
The Quartz headline says it best, “Researchers have no idea when electric cars are going to take over.”
— Kennedy Maize