The age of the Internal Combustion Engine (ICE) is over. Electric cars are the future. The transition has just begun, but the move from ICE vehicles to Electric will happen sooner and more quickly than most people suspect.
What are the factors that lead me to say this with such confidence?
- China says so! China is now the world’s largest car market (of the 86m cars sold in 2017, 30% (25.8m) were sold in China, compared to 20% (17.2m) in the US, and 18% (15.6m) in the EU). Unsurprisingly, car manufacturers want to have access to this market. However, China has passed a law which requires any vehicle maker to obtain a new energy vehicle score of at least 10% by 2019, which rises to 12% by 2020, and on up to 20% of sales by 2025. As a result of this announcement, all the major OEM’s have suddenly found EV religion. A slew of announcements has followed about the 10’s of billions of dollars or Euros they are investing in their EV development programs and the partnerships or huge investments they are creating to secure their battery supply chain. The CEO of Porsche has even gone on record as saying that after 2030 all Porsche cars will be 100% electric. So, China has spoken, and the car manufacturers have listened. In the next 18 months, expect the number of electric vehicle models available to purchase, to increase significantly.
- The main cost of an electric vehicle is the cost of the battery. These price of these batteries is falling significantly. Lithium-Ion batteries cost $1,000 per kWh in 2010. By 2017 that cost had fallen to $200 per kWh, and it won’t stop there. At the Tesla shareholder meeting on June 5th of this year, Elon Musk stated that Tesla would be at $100 per kWh within 2 years. $100 per kWh is widely agreed to be the figure where EVs and ICE vehicles will have a comparable upfront purchase price.
So, by 2020 the cost of batteries will have fallen 90% in 10 years, and the price will continue to drop.
- Lithium-Ion batteries are increasing in energy density at a rate of 5-8% per annum. Mercedes has said that their EQC, which will come to market in 2019, will have an expected range of 500km. While the Tesla Roadster, which launches in 2020, has a stated range of 1,000km. When Electric Vehicles have a range of 1,000km, it is the ICE vehicles which start to have a range problem.
Moreover, other battery technologies like solid-state batteries will come on stream giving us batteries that are cheaper, faster charging, and with even greater range still.
- Contrary to what many believe, the batteries in electric vehicles don’t degrade over time or over miles/kilometers driven either.
This is a graph of the battery capacity of Tesla Model S/X vehicles, and it shows that after driving 270,000km (roughly 168,000 miles), the batteries still had 91% of their original capacity. There are more details in this article, but the bottom line is that the batteries lose about 1% of capacity every 30,000km (18,750 miles). This means that the upfront cost of an electric vehicle can be depreciated over a far longer time – EVs will just keep on working. Having said that, this data is specific to Tesla batteries which may be down to the good thermal management system Tesla has for its battery packs.
- Another factor in favour of electric vehicles is that they are far more reliable. The drivetrain in an ICE vehicle contains 2,000+ moving parts typically, whereas the drivetrain in an EV contains around 20. A quick scan of the top 10 cars repairs of 2015 is telling. Not one of these faults can happen to an electric vehicle.
- Electric vehicles are typically significantly cheaper to fuel as well (unless you happen to live somewhere that has particularly cheap petrol and extremely expensive electricity). And with the price of oil going up 50% in the last 12 months, finding somewhere with cheap petrol will become increasingly difficult.
- Lastly, as outlined above, the number of models of electric vehicles available for sale is about to increase enormously; the purchase price of electric vehicles is falling significantly; the range of electric vehicles about to match or even surpass ICE vehicles; EVs have essentially zero maintenance issues apart from the need to replace brakes and tyres; the batteries in EVs last hundreds of thousands of miles/kilometers with absolutely minimal degradation; and EVs are cheaper to fuel, so why would anyone consider buying a car with an Internal Combustion Engine? Most people won’t.
And consequently, the resale value of ICE vehicles will collapse. And if the resale value of ICE automobiles is going to collapse in 3-4 years, why would you buy one today? Think about that for a second. Why would you buy an ICE vehicle today, if its resale value in 3-4 years will have collapsed? You wouldn’t. And when people start to realise that, the market will flip. And it will happen quickly. Sooner than most people think. Will your next car be an EV?
And if none of that convinces you, maybe check out the rest of the specs for the Tesla Roadster – 0-100kmh (0-60mph) in 1.9 seconds, top speed of 400kmh (250mph), and range of 1,000km (620 miles). Or maybe watch a Tesla Model S race a Boeing 737, or even more incredibly, watch a Tesla Model X set a Guinness world record by towing a Boeing 787 Dreamliner
UPDATE: I loved this response to this post on Twitter:
Update 2 – post updated with 2017 car sales figures Jun 29 at 10:22 CET