The Electric Vehicle Revolution Is About To Get Messy

August 21st, 2019 by Zachary Shahan

(Excerpt, full article

Those of us who have followed the electric vehicle market for several years (or, for some of you, decades) can easily get complacent about where the EV revolution is and where it’s headed. We can be lulled into a semi-sleeping state by monthly sales reports, by routinely seeing EV market share of 1–2% in some markets, 5–10% in others, and 50% in Norway. We can be blown away by the Tesla Model 3’s success, while at the same time underestimating what it means.

As Tesla CEO Elon Musk recently mused, it’s super hard for humans to comprehend exponential growth. Indeed, we are not good at thinking in exponential rather than linear ways. It’s one reason why there are popular riddles or tricks related to exponential growth. I’d argue that, in general, we are not good at forecasting, at processing changes that take more than a day to occur. Just think about some major changes in your life that you knew were coming — your brain probably couldn’t digest them, could absorb them until the changes occurred, and even then you might have needed a while to mentally adjust.

Getting practical for a minute, much has changed in the electric vehicle industry — beyond Tesla — that has gone under-noticed for various reasons. A new Nissan LEAF today is not much different in price from a new Nissan LEAF 7 years ago, in 2012. The big difference, the big evidence of change, is that the car now has much more range, more than double the range of a 2012 LEAF. The battery inside the Nissan LEAF is much better and holds considerably more energy despite coming at essentially the same price. The same thing has happened for other models or types of vehicles.

The thing that I think we get complacent about is that we inherently assume the battery technology is now settled and static. Of course, if we think about it, we know that’s not true, but we don’t think about it much. Our brains just accept today as reality. Just as the 73 mile LEAF of 2011 wouldn’t last long and range would more than double in 7 years, EV technology of today won’t last long. In 7 years, a LEAF could have much more range or be much cheaper.

While the LEAF has gotten much better in the past 7 years, Tesla has developed and rolled out the Model 3, a car that is much better than a 2012 Model S in many regards while also being significantly cheaper. In another 7 years, imagine what continued battery improvement will do for Tesla.

In 3–7 years, the Model 3 won’t be the only EV in its class that crushes any gasoline competitor. Nissan should have a model that does so, Volkswagen certainly will, Ford should, GM should, everyone should. If the don’t, they will struggle to stay in business.

Tesla’s vehicles will keep improving and Tesla will make more money on them as underlying prices come down. Elon has said they don’t plan to bring the Model 3 any lower than $35,000. That means reduced costs will put more money into Tesla’s piggy bank for additional investments/projects. Additionally, Tesla could end up rolling out a “Model 2” for $25,000–30,000. If the Model 3 looks like a disruptive top seller, imagine the Model 2! Who could sell a gasoline car at that point?

In general, much more of the public will soon find out that you can’t buy a gas car in most classes that can hold a candle to its electric competitors, and automakers still trying to push gas mobiles onto consumers will get burnt. Tesla will still be setting the pace for the industry, but that won’t be nearly as necessary. Other automakers will have mass-market electric vehicles that regularly rank at or near the top of sales charts (like they do in Norway today), because automakers know the technology is ready and they know that if they don’t sell the cars, a competitor will, and they will die.

Of course, we can assume some automakers are still not prepared, some continue to stick their heads in the sand, and they will be punished for it. Perhaps some of them will get bailed out by their respective governments. Others won’t.

Gasoline/diesel cars that come off lease or hit the used car market will struggle, since consumers won’t want to adopt cars that are costly to fuel, polluting, and expensive to maintain. Automakers that try to hold onto the gas/diesel era will file for bankruptcy or beg for government support. Tesla will continue seeing word-of-mouth sales light its future, while other electric vehicles will offer traditional options to go electric without compromise or worry.

And then there’s autonomy.

We see growing EV sales right now, and dropping gasmobile sales in some countries and globally, but what we don’t appreciate is that multipliers come into effect as the market changes. All of a sudden, an engine factory closes, an EV factory opens, a company folds, EV leaders gobble much more of the pie. As these things occur, more people find out about the revolution, and the revolution grows. As people’s preferred brands enter crisis mode, they look for new brands, and many find Tesla. Others catch word of VW’s hot new ID lineup, or Nissan’s electric crossover and sedan, or the new & improved Jaguar I-PACE. Of course, the automakers that evolve fast and intelligently will have a lot of opportunity to grow their market share.

The change is not just coming — it’s underway. The battery evolution that brought us the Model 3, a Nissan LEAF with 2–3 times more range than a 2011 LEAF, the Hyundai Kona EV, and the coming VW ID.3 will not stop. Batteries will keep evolving. We’ve already entered the crossover point where an EV beats its competitors in about 10 ways and doesn’t lose in any significant ways. We’ve already entered the vortex. As word of mouth blows around and awareness rises, the forces pushing us from 1% to 2% EV market share will become much more powerful and demand will start to skyrocket. At that point, things get messy.


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Nice opinion and hope piece presented to sound like fact.

Looking into the future to predict how technologies evolve is always a form of opinion however Mr. Shahan's opinion is well supported by the facts available today.  The pace of change is open to opinion but the trajectory is certain. 

I think the pace of change is over estimated in the article, with the following notes:

1. Certain countries (think Mexico, India, most of South America, etc) are going to lag US and European adoption if for no other reason than the reliability and scale of the electrical grid.  

2. The rare earth metals in the motors are likely to be the bottleneck, particularly if we are fighting with China over them.  Tesla, IMHO, has benefited from the relatively sparse competition for the electrical motor components in its vehicles. 

3.  Battery capacity is going to grow incrementally, in part because as the power density goes up, the instability of the battery increases (more likely to get hot/run away).  And few, other than Telsa, are willing to bet at automotive scale to build a factory for batteries that may have chemistry that is going to get displaced in a few years.  This "potential" IMHO, is going to keep a lot of legacy companies from making the investment due to risk (real or perceived).  

4.  Portions of the grid in the US and potentially some European countries are going to require upgrades to handle the charging demand or to throttle it, if for no other reason than to keep the grid from going down the 3 or 4 days a year a given area is really cold or really hot.

That said:

A. I would not build, buy, or investment in a convenience store that did not have electrical chargers and the potential to add more.

B. If I were building or renovating a house, I would have the electrician add a 50 amp 3 phase service to the garage

C. The pickup truck side of things is going to be fascinating.  I think there is a good chance that for 1/2 ton and 3/4 ton trucks, the battery range and torque advantages are going to turn that market on its head.  If the first all electric trucks are halfway decent, the fleet adoption is going to seriously impact the legacy car makers, unless its their product.  

I agree with your suggestions A,B & C, dbob.  I never discount the evolution of batteries and feel confident that investment and research will overcome some of the current short comings.  I also agree that Tesla is taking a big chance with their reliance on current lithium-ion technology and their associated major manufacturing investment.  Of course, in the short term it gives the company a decided advantage.  Although I definitely agree with your opinion of how battery EV will turn light truck sales on their head, I must say that anyone that values performance would take a EV over an ICE vehicle of any kind for any and all purposes after just one test drive.  I had a ride in a Tesla S five years ago and it made a lasting impression.  The innovations since that iteration are astounding.  Over the air up dates to EV operating capabilities are another game changing innovation.

As far as rural portions of the countries you mention, I think many will not need the EVs we will be driving.  Bicycles with electric motors and small multi-purpose EVs chargeable from a micro grid should do the trick.  The technology can be adapted to any task.


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