SF Technotes

All-Electric Cars—They’re Coming!

By Michael Castelluccio
July 12, 2017
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Two recent EV (electric vehicle) news items grabbed the sleeves of the prognosticators and turned their attention back to trying to peg a precise date for the demise of the internal combustion engine.

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In one of the news stories, Volvo confidently announced that “every Volvo it launches from 2019 will have an electric motor, marking the historic end of cars that only have an internal combustion engine (ICE) and placing electrification at the core of its future business.” But that’s hedging. It still allows for both hybrid vehicles and battery-only EVs. The other major announcement won’t provide a lot of guidance on future events because it came from Tesla, which doesn’t have any vehicles with ICEs—it’s always been all-EV.

 

PATIENCE

 

Forty years ago in its July/August 1977 issue of Technology Review, the MIT editors explained their rationale for the open horizon they saw for EVs in an article titled “Zapmobile.” “The electric car seems inevitable,” they wrote. “As oil resources dwindle, it will appear far more prudent to develop an automobile powered by electricity, charged by an already-in-place power generation system, than to invest in huge plants to produce synthetic gasoline.”

 

At the time, the electric cars on the market were hardly adequate. Consumer Reports tested two models in a 1975 report and found they performed poorly with sluggish acceleration (0 to 30 in about eight seconds), limited range (30 miles at 50 mph), significant power loss on hills, and “cold-weather battery performance [that] plummeted, rendering the electric cars they tested practically useless.” These cars weren’t much cheaper to run than gas-powered subcompacts, and there was significant worry about ruptured batteries spraying sulfuric acid in the event of an accident.

 

Today, a Tesla Model S will crank out more power than you might need, accelerating from zero to 60 in as little as 2.5 seconds. The Tesla 100D provides a range-per-charge of 351 miles at 65 miles per hour in 70-degree weather. With the Model S, in the event of an accident, not only will eight airbags protect the passengers, but the high-voltage power source (lithium not acid-based) automatically disconnects.

 

With these latest EVs, there are two new advantages to add to the original rationale of the MIT editors. More stringent emission controls, especially in Europe and China, will make EV’s even more practical, and home solar installations will bring down the cost of fuel, for some, to practically zero. The extinction horizon for internal combustion seems to be moving closer.

 

VOLVO NEWS

 

Photo/ Volvo Car Group

 

On July 5, 2017, Volvo Cars announced that every Volvo it launches from 2019 will have an electric motor, marking the historic end of cars that only have an internal combustion engine. The official press release noted, “Now over a century after the invention of the internal combustion engine (ICE) electrification is paving the way for a new chapter in automotive history.”

 

Håkan Samuelsson, the company’s president and chief executive, said the change ultimately has come from its customers.

 

There will be five fully electric cars in the EV fleet launched between 2019 and 2021. Three will be Volvo models, and two will be high-performance models from Polestar, the company’s performance division.

 

Samuelsson concluded, “This announcement marks the end of the solely combustion-powered car. Volvo Cars has stated that it plans to have sold a total of 1m electrified cars by 2025. When we said it, we meant it. This is how we are going to do it.”

 

The 90-year-old Swedish manufacturer won’t be alone, according to a new forecast from Bloomberg New Energy Finance, published a day after the Volvo announcement. Salim Morsy, a senior analyst at Bloomberg, told HuffPost.com, “We think the next 20 years are going to bring a revolution of personal mobility that we haven’t seen since the car replaced the horse carriage.”

 

Last year’s Bloomberg forecast estimated that by 2040, 54% of new car sales, worldwide, would be EVs. That’s about 64 million automobiles, and it doesn’t account for buses, commercial trucks, or other smaller electric vehicles like motorbikes. The report breaks down the anticipated spikes. In the next four years, the number of EV sales will increase from 700,000 to three million. By 2040, sales of new electric vehicles will dominate: 67% of the European market, 51% in China, and 58% in the United States.

 

But these numbers might be underestimating what’s coming. The Bloomberg report offers the drop in price for lithium-ion batteries as a primary reason for the increased sales. In 2010, the price was $1,000 per kilowatt hour (kWh) for the power source of these cars. In 2017, the cost had fallen to $273 per kilowatt hour. If battery prices continue this trend, prices for EVs should follow. (For reference, the Tesla S and X models run with 100 kWh batteries. When Elon Musk was asked if the Model S will have the same, he tweeted this response: “No, will be lower. Wheelbase can’t fit 100.”)

 

Alexander Kaufman’s HuffPost review of the Volvo announcement concluded with the addition of a number of other players in the doomsday timeline for ICEs. He pointed to Volkswagen, which in May 2017 announced its plan to build one million EVs per year by 2020, bragging, “Anything Tesla can do, we can surpass.”

 

And BMW, he adds, will have an all-electric 3-Series sedan ready in September. The BMW 3 will compete head-on with Tesla’s midprice Tesla 3. Ahead of both of these projected models, there’s GM’s flagship midprice EV, the Chevy Bolt: On the road since February 2017, priced under $40,000, likely to exceed 10,000 buyers by year’s end, it has won the Insurance Institute for Highway Safety’s top rating for safety and Motor Trend’s Car of the Year.

 

TESLA NEWS

 

Tesla Model 3 mid-priced EV
Tesla Model 3 mid-priced EV

 

Two days before the Volvo announcement, Tesla’s CEO Elon Musk tweeted, “Model 3 passed all regulatory requirements for production two weeks ahead of schedule.” The first one off the lines was expected on Friday July 7.

 

What followed was a “handover party” for the first 30 customers who had signed up with their $1,000 pledges. Mass production and delivery was promised to the early customers to commence in 2018, but now the handover would begin with 30 Model 3s in late July, 100 on August 1, 500 in September, and 20,000 in December.

 

These Model 3s were reserved with $1,000 down by customers who hadn’t seen, sat in, or driven this latest Tesla vehicle. Pre-orders were taken more than a year ago, at a pace that was astounding. Tesla’s most recent public number showed 370,000 willing to guarantee their place in line. Ultimately, Musk is planning to ramp up production to 500,000 cars in 2018.

 

The company experienced a recent serious shortage of 100 kWh battery packs for its current models, but that problem should be addressed with the new Tesla $5 billion battery Gigafactory outside Reno, Nev. Musk has admitted also to the limitations of the current production lines at Tesla, “There is no room at Fremont. We are bursting at the seams.” But he has also discussed at a recent shareholders’ meeting plans for additional assembly plants, including one near Shanghai, China.

 

Tesla’s Gigafactory on Electric Avenue in Sparks, Nev.
Tesla’s Gigafactory on Electric Avenue in Sparks, Nev.

 

All the pieces seem to be in place for what might be a seismic change looming for one of America’s iconic heavy industries. “When” now appears to be the predominant question, not “if.”

 

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Michael Castelluccio has been the Technology Editor for Strategic Finance for 21 years. His SF TECHNOTES blog is in its 19th year. You can contact Mike at mcastelluccio@imanet.org.


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