Time for EVs to Get Real
A flood of EVs is coming, but do consumers care?
Although Tesla has been selling electric vehicles (EVs) in earnest since launching the Model S since 2012, other OEMs’ efforts—the BMW i3 or the Chevy Bolt—have had little effect on the overall market. But lately the auto industry has been ballyhooing its plans for electric cars as it tools up to build them. This autumn, consumers are getting their first hands-on look at the first round of high-volume models from mainline producers.
It’s the beginning of a five-year tsunami of electrified vehicles, including plug-in hybrids, that will give consumers the choice of some 200 electrified models that weren’t there last year.
Buyers will soon have electric options for virtually every type of main-market model. Expanding the selection from high-priced, uber-performance sports cars to more pedestrian cars, crossovers and pickup trucks is critical to gaining the traction the industry needs to recoup those billions of dollars spent on EV development.
Now all we need is for lots of consumers to get on board and actually purchase an EV.
The buying part has been a big worry among OEMs for years. Few doubt the compelling air quality reasons for moving to electric powertrains. This reality, embodied in ever-tightening carbon dioxide emission regulations in most parts of the world, give carmakers no choice but to embrace electrification in places such as Europe and China.
But everyone knows there’s big trouble ahead if consumers remain wary of electrification much longer.
Polls suggest that buyer skepticism—based mainly on concerns about vehicle range, price and available charging points—is slowly thawing. But “slowly” is a scary word at this stage. The industry’s EV capacity is about to surge well ahead of demand.
There are some encouraging signs of balance ahead. The International Energy Agency (IEA) says the number of electrified vehicles in the global fleet rose from next-to-nothing in 2010 to more than 1 million units in 2015. Then the fleet doubled to 2 million in 2016, topped 3 million in 2017, surpassed 5 million in 2018 and zoomed to more than 7 million last year.
Sales of electrified cars last year reached a record 2.1 million units, according to IEA. But that was less than 3% of total market volume. EVs must capture a double-digit share to support the number of electric models coming our way.
Carmakers know there will be a transition period, probably stretching to 2030, during which sales of piston-powered vehicles must continue to carry the cost of electrification. Fortunately, the global market mix favors relatively profitable SUV/crossovers and, in North America at least, even more profitable pickup trucks. But the sooner the EV business can become self-supporting, the better for the bottom lines of mainline vehicle producers everywhere.
That all-important pivot is being pulled forward by technical advances that are lowering vehicle production costs, slashing the price of batteries themselves and closing the range gap between EVs and comparable IC-propelled vehicles.
Battery costs have dropped 85% since 2010, IEA notes. The agency points out that some of today’s EV batteries have twice the energy density typical at the start of the decade. Solid-state storage, due to begin commercial production a few years from now, promise huge new performance gains.
Technology is an enabler of EVs, but it isn’t the main issue here. It’s all about revenue.
Many observers have pointed this out before, of course. Some say the industry must launch a major educational campaign to boost demand. I’m not one of them.
I am convinced that word-of-mouth and exposure to EVs will carry the day. It won’t happen overnight. But by the end of the decade, I suspect one the industry’s biggest challenge will be cranking up production fast enough to pace a “sudden” global shift to electrification.
Lithium-ion batteries have become the technology of choice for EVs, and falling costs and rising energy levels could keep them on top for nearly two decades.
A young(ish) guy that I’ve known for a number of years, a man who spent the better part of his career writing for auto buff books and who is a car racer on the side, mentioned to me that his wife has a used Lexus ES Hybrid.
While you are probably familiar with origami, the classic art of paper folding that results in things like birds that flap their wings when you pull the tail, or plot devices in one of the Blade Runner films.