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Electric Cars

thomas-parker-1895

Figure 1: Electric car built by Thomas Parker, photo from 1895

In 1900 of the 4,192 cars produced in the United States 28 per cent were powered by electricity, and electric automobiles represented about one-third of all cars found on the roads of New York City, Boston, and Chicago.   By 1908 Henry Ford had changed the face of the US automobile market and the electric vehicle lost out to its gasoline powered rival. Fast forward now to 2016 and electric vehicles are starting to become more widespread in their appeal.

In February this year Bloomberg published a report claiming that sales of electric vehicles will represent 35 per cent of global car sales by 2040.  Go Ultra Low says that by 2027 electric and hybrid cars will outsell their petrol rivals.

Car companies such as Honda, Toyota, Chevrolet, Mitsubishi, Tesla, Nissan and BMW have all invested heavily into electric and hybrid vehicles and some of that investment is starting to pay off.    To date Toyota has sold 5.7 million units across their Toyota Prius Range.   But the entire sales figures of electric vehicles still only represent one tenth of one per cent.

So what are the challenges?  Do people really want to own an electric vehicle?

Infrastructure

There were 37,500 petrol stations in the UK in 1970, there are now only 8,600.   Although this is a significant reduction, vehicle range has been increased and so there has been no real material impact for vehicle owners.   In the case of hybrid or electric vehicles the story is very different.   In the UK there are charging points now appearing.   Zap-Map provides  information on charging points including their location and type.   Their website lists 4,105 locations.  Not bad you might think, however if we assume that it is the fastest type of charge (there are only 1,970 of those) then the vehicle still requires 30 minutes to get an 80% charge.

As a result the single charging point is occupied for far longer than a pump at an old fashioned petrol station.   And that is only if your vehicle can take a fast charge plug.   Network providers such as Chargemaster and Charge Your Car are growing but the surge in demand for electric vehicles has led Electric Highway, the charging network run by Ecotricity, a green power company, to introduce fees. It will charge £6 for 30 minutes of electricity at its 300 power points.  Customers say that this makes charging their electric cars more expensive than filling up with petrol.

The challenge with infrastructure is that without the demand there is no viable case to build it but without it many people believe there is no case for buying an electric vehicle.

 So how could demand for vehicles be driven?  

Many governments offer incentives for buyers.  The Chinese government tax incentive is almost $14,500.   The aim is to offset the higher cost of the vehicles and to encourage more people to purchase them.   As you might expect China has seen a surge in sales of electric and hybrid vehicles, up 162 per cent already this year although it is unlikely that the government can continue to give $14,500 to each purchaser for the foreseeable future.   In London the congestion charge is waivered for electric and hybrid vehicles and there is no road tax for them either.  The UK government offers 35% of the cost of the vehicle up to a maximum of £4,500 depending on the type.

These incentives are key to driving sales and have undoubtedly been instrumental in the increase of electric and hybrid vehicles on the roads.

Vanity

toyotaLet’s face it though many of the designs for electric vehicles have not exactly been sleek and elegant.  As much as people might say they do not care the reality is many people simply just like to look good in their cars.  People derive pleasure from putting their foot down and speeding off into the sunset which is hard in a glorified milk float.   Therefore as with many technologies it comes down to design and performance.

Thankfully times are changing.  No one could argue that the Tesla Model S was anything other than stylish.   Many companies are simply making their existing models as hybrid versions.   However the cost of a hybrid Range Rover next to the petrol version is £25,000 more and this tends to be the case with most companies.   And this is really the crux of the problem, hybrid and electric vehicles are simply too expensive unless you want a tiny city run about like the Nissan Leaf which at £20,000 is still £3,000 more expensive than a basic Volkswagen golf.

Of course the running costs may be slightly lower but it is unlikely that you will have a charging point outside your house and competition for points is surprisingly fierce.

tesla-gigafactory

Figure 2: The Tesla Gigafactory

Elon Musk has claimed that his Gigafactory will bring down the cost of batteries by 30% and so make electric vehicles more affordable.   The site will be the second biggest building in the world and will use innovative recycling methods and be powered by alternative energy sources.

Other technologies such as carbon based thermoelectric power generators are in early stage development and might offer improved ranges for vehicles meaning infrastructure costs could come down.

What is Next

Electric and hybrid vehicles sales will continue to grow as manufacturers improve designs.   However for these vehicles to be adopted by the majority the costs need to come down.   There will be a tipping point when battery and other power generating technologies become more affordable through economies of scale and better manufacturing processes.   However this needs to be combined with widespread investment into infrastructure.  The US government recently announced a $4.5bn investment into electric vehicle infrastructure but with President Obama on his way out of office and the potential for a republican president this initiative might be cancelled before it even starts.    Private enterprise is the best hope for infrastructure development and innovative ways for companies to get a sound return on their investment are required.

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