Electric carmaggedon

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This week China announced it will ban the production and sale of fossil-fuel-powered cars in the near future, prompting speculation: have we finally reached the tipping point for the shift to electric vehicles?

Cartoon by Greg FoysterDetails haven't been released, but the announcement is consistent with the government's 13th Five Year Plan (2016-2020), which aims to expand the electric vehicle market, including building a network of charging stations to service five million electric cars by 2020.

China also previously announced a policy requiring car makers to ensure eight per cent of their vehicles are electric or hybrid by 2018, rising to 20 per cent in 2025. Because China is the world's largest car market, this could have a dramatic impact on the decisions of auto manufacturers globally.

There are lots of reasons why China wants to accelerate the uptake of electric vehicles. It desperately needs to curb air pollution, which the World Health Organization estimates kills more than a million of its citizens each year. It also wants to reduce dependence on imported oil, and help meet climate change targets. Most crucial, however, is China's intention to dominate the global market for electric vehicles and the technology that powers them, lithium-ion batteries.

There's a precedent here. In the late 1990s and 2000s, the Chinese government supported solar panel manufacturing as a strategically important industry, creating massive economies of scale that drastically reduced costs. Could the same thing happen with batteries and electric vehicles?

China's move follows plans announced by France and Britain to ban petrol and diesel cars by 2040. Spurred on by Tesla's success, big car manufacturers like Volkswagen, Nissan, Ford and Volvo are also ramping up production of electric vehicles.

They're starting from a low base. There are more than 2 million electric vehicles globally, according to the latest report from the International Energy Agency (IEA), which is just 0.2 per cent of the total number of passenger cars and light trucks in existence. But the number is at least doubling every two years, and the IEA expects a 'significant scale-up'. Its most ambitious scenario is 200 million electric vehicles by 2030, about a third of the market.

However this estimate is based on a like-for-like 'replacement model', in which people simply switch their petrol or diesel cars for electric vehicles, without a major challenge to the culture of individual car ownership. That could all be about to change.

 

"Banning sales of diesel and gasoline vehicles by 2040 is a bit like banning sales of horses for road transportation by 2040: there won't be any to ban." — Tony Seba

 

There's another, more disruptive business model that could see electric vehicles completely dominate the market as early as 2030. It's called 'Transport-as-a-Service', and it's being promoted by Stanford University economist Tony Seba. Seba's report Rethinking Transportation argues that much mainstream analysis is wrong because it's based on 'linear and incremental forecasts', whereas the growth rate for disruptive technologies like mobile phones and solar panels actually follows an exponential S-shaped curve.

This Transport-as-a-Service scenario combines electric vehicles, ride-hailing apps like Uber and fully autonomous driving — the highest level of self-driving cars. If it comes to pass as Seba predicts, then electric vehicles booked through digital platforms could provide 95 per cent of the passenger miles travelled in the US by 2030.

Imagine fleets of driverless electric vehicles roaming large cities for passengers to pick up. You can get a lift on demand, 24/7, at a fraction of the cost of car ownership. They're all electric so there's far less pollution to breathe in. 'The disruption will be driven by economics,' explains the report. 'The average American family will save more than $5600 per year in transportation costs, equivalent to a wage rise of 10 per cent.'

Why? Because individually owned petrol or diesel cars are incredibly inefficient. They only convert about 20 per cent of the energy in the fuel tank into motion — the rest goes up in smoke and heat. They have about 2000 moving parts, requiring extensive maintenance and capping their lifespan to about 200,000 miles. They run on expensive fuel, and mostly they sit in garages, depreciating in value. They're only used four per cent of the time.

Electric vehicles, in contrast, convert more than 90 per cent of their energy into motion. They have about 20 moving parts, requiring less maintenance and extending their lifespan to at least 500,000 miles. They run on electricity, which is much cheaper than petrol, and if they're part of a ride-hailing fleet, they can spend 40 per cent of the time on the road. 

All of this dramatically lowers the costs, and makes them the perfect driverless vehicles. In Seba's analysis, the economic benefits will overcome any behavioural constraints, such as nostalgia for driving, to usher in the next era of transportation. He predicts sweeping impacts: the total collapse of car dealerships, the 'abandonment' of 100 million secondhand fossil fuel cars, and the rapid contraction of the oil industry. All in a decade.

But here's the catch — it hinges on regulation to permit fully autonomous vehicles, which Seba forecasts for 2021. Other analysts say technical and legislative hurdles mean this is a decade or more away. Bloomberg New Energy Finance, which takes a bullish view of the prospects for electric vehicles, still forecasts 'the impact of autonomous driving is limited for the next ten years'.

Plus, as the report acknowledges, the US would have to give up $50 billion in revenues from gasoline tax, five million jobs could be lost in the upheaval, and the oil industry would probably mount a scare campaign against self-driving cars.

Nonetheless, Seba has pedigree: he correctly predicted the exponential cost reduction of solar panels, which are now the cheapest form of electricity generation in some countries. People scoffed at that too, but he was mostly right.

With the announcement of petrol car bans in France and Britain, Seba doubled down on rhetoric. 'Banning sales of diesel and gasoline vehicles by 2040 is a bit like banning sales of horses for road transportation by 2040: there won't be any to ban,' Seba told The Guardian.

Many in the car industry will be skeptical, but they need to keep alert to the possibility of technological disruption. An accelerating electric vehicle can be so quiet you hardly notice it coming. Will its rise to market dominance also take people by surprise?

 


 

Greg Foyster headshotGreg Foyster is a Melbourne writer and the author of the book Changing Gears. Illustration: Greg Foyster. Concept: Vladimir Chishkovsky

Topic tags: Greg Foyster, electric cars


 

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Thanks Greg for the clear explanation of this market's likely directions, and especially for the linked references - always thoroughly researched, and you make follow-up reading readily accessible. Thank you, again!
Richard | 15 September 2017


A very helpful article full of hope for a more sustainable future; thanks Greg for informing us so concisely and accessibly. Hopefully our politicians, of all parties, will read this and begin to plan - in a non-partisan way - to ease this mega transition. Am particularly thinking of the need to update courses in TAFE and to proactively offer training for all manner of people in the motor industry, so they are able to find employment as the EVR (electric vehicle revolution) takes hold. This requires not just political will but also a major focussed, cooperative effort between government, unions and universities; perhaps even new 'EVR Departments' and 'EVR Faculties'. Commercially, too, no doubt the early birds will have the advantage.
Dr Marty Rice | 15 September 2017


Thank you Greg. It is a very exciting time to be living. I have not seen any information on what happens to people who live in isolated areas. It takes us 4 hours to get to Sydney (not even isolated). My understanding that at present an electric car could not make the trip in one go. How long will it take to 'recharge'? Are these issues being addressed? Jorie
Jorie Ryan | 15 September 2017


Excellent article thanks Greg. The whole world appears, somewhat perversely, to stand to benefit from China's particular topography and climatic conditions and massive population. These mean that, in China, pollution hangs around in the streets and cities rather than being blown away or dispersed by winds. It means China cannot afford to look the other way (as most in the West do) when it comes to air pollution because the current generation is affected. So when China, unlike Australia and many other countries, adds lots of cars to its streets, the resultant pollution (e.g. multiple pathogens in exhaust fumes like carbon monoxide) is immediate and deadly. The outcome is action now in the form of a crack-down on car pollution by converting to electric vehicles. The by-product being a much-welcomed reduction in climate-changing greenhouse gas pollution as well. If any of us drove a car today, 20% of the resultant carbon pollution will still be in the atmosphere in 1000 years. Is not a similar dynamic operating in China with respect to pollution from fossil-fuelled electricity generation power plants? Again, the big worry is the enormous amount of green-house gases emitted from these plants. But like cars, these power plants also emit toxic air pollution. In Australia we get away with it. Not so in China, which has put a ban on developing more coal fired power plants. It looks like China will lead the world in combating climate change - not out of noble motives to save the planet, but because it has no choice.
Rex Graham | 15 September 2017


Thanks Marty and Richard. Also thank you to Grant Allan for suggesting this topic in a comment on my last column! Btw, two things I didn't have space to include. The Koch brothers, who made their fortune converting crude oil to gasoline, recently launched a near video campaign smearing electric cars for containing rare earth metals. (Which they do, but an analysis of overall environment impact still shows they are far, far better than fossil fuel vehicles.) And second, this month the House of Representatives in the US passed a law that will make testing self-driving cars less onerous. Not sure exactly what it means in practice, but things are indeed moving quickly, as the law apparently allows circumvention of byzantine state regulations. Lots happening.
Greg Foyster | 15 September 2017


Awesome cartoon: would look great on a T-shirt! But, also, it's no joking matter for the millions who are made seriously ill and the thousands who die prematurely from the toxins spewed-out in diesel and petrol exhaust gases. Does anyone know what legal consequences might possibly eventuate?
Dr Marty Rice | 19 September 2017


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