In Defense of the Electric Car – part2

[Full disclosure: I own an electric car, and I think they are useful for city transportation. However, having owned one for a decade, I can say that it hasn’t been practical or cost-effective. John Hardy believes they are the future, I’ll let you, the reader, decide. – Anthony Watts]

The demise of the Western auto industry: Part 2 – the problem

By John Hardy – Re-Blogged From

Part 1 of this series here, expressed the view that regardless of “the environment”, Electric Vehicles (EVs) are poised to inflict a massive disruption on the automotive industry, and outlined the strengths of the technology and some of the reasons that it is happening now.

In Part 2, I outline what I see as the main issues for Western automakers. They need to wake up and smell the coffee: the history of technology is strewn with examples of once-great companies that failed to adapt to a technology advance and went to the wall. Traditional Western automakers may just do the same. They appear to have failed to realise that gearing up for EVs is not just business as usual with a different drivetrain. In particular they have until very recently shown no sign of thinking about fast charge, sourcing the cells that go into batteries, the dealer network or maintenance.

Fast charge

First of all, fast charge*. Most privately owned cars spend most of the time parked, and most of their journeys are short (in the UK private cars average around 21 miles per day)[1], but are occasionally called on to go cross country (think commuting in the week and visiting granny on occasional weekends). The comparable figure in the US is about 30 miles per day [2]. Overnight charging at home handles most driving.

Fast charge capability is however critical to cross-country driving; and most people require this capability, even if they don’t use it much. The fast charge standards supported by the major Western automakers have been inadequate (pitiful power levels), coverage spotty and use cumbersome. By contrast Tesla built their own supercharger network with twice the power levels of most public stations: and the sat nav in the car knows their location. Tesla cars are internet connected and do over-the-air software updates like laptops, so presumably the fast charge locations the car knows about stay up to date. If the major automakers do not take ownership of the fast charge issue they will remain at a disadvantage compared with those who do. Relying on a publically-funded infrastructure won’t do. Generic commercial charging stations after the style of the present auto fuel infrastructure may become viable on busy routes (with profit coming from the cake and coffee sold to drivers sitting for the 20 minutes while their cars charge) but most charging will be at home, and with electricity so cheap it may never be very attractive commercially.

*There is some terminology confusion here. By “fast charge” I mean charging from a DC source at 40Kw upwards. This is also sometimes called “rapid charge”.


Next, cells (a battery is composed of many cells wired in series like the battery in an electric toy is composed of a few AA cells in series). In 2013, world output of lithium ion cells was said to be a little over 30 Gigawatt-hours (Gw-hr) per year [3]. A Gw-hr is a measure of energy. A high powered household device like an electric kettle or electric fan heater might use 3 Kilowatts (Kw). Leave it on for an hour and you have burned 3 Kilowatt-hours (Kw-hrs). If you do half an hour of vacuuming with a 1 kW vacuum cleaner, you will have used half a Kw-hrs. A Gigawatt is a million kW, so if you do the maths, if you took all the lithium battery output of the entire world for 2013, it would (in theory and neglecting losses) power a million 3Kw electric heaters for ten hours, or ten thousand for 41 days (a thousand hours).

More pertinently, an EV burns 1 Kw-hr every 3 – 4 miles; so a 300 mile range EV would need 75 – 100 Kw-hrs of cells, so world output of lithium ion batteries in 2013 would at best be enough for around 400,000 EVs with a 300 mile range. Worldwide car production in 2016 was probably about 72 million. To electrify all of them to that range would require (again ball-park figures) roughly 200 times the 2013 production of lithium ion batteries.

The majors seem to be waking up (arguably too late and too slowly) to the fact that the supply of cells for battery packs is an issue. In June 2017 Ulrich Eichhorn of VW, went public with a statement that the whole VW group (Audi, Seat etc.) would need 200 Gw-hr of battery cell production by 2025 [4]. They have not announced any definite plans for sourcing these cells. Meanwhile, Tesla have once again thought ahead of the pack. They broke ground on their gigafactory in Nevada in 2014 with the initial target of 35 Gw-hr per year capacity: at the time this was roughly equal to existing global output from all manufacturers (love him or hate him, Elon Musk can’t be accused of timidity). More gigafactories are planned.

The problems for the traditional majors are illustrated by the GM Bolt. The Bolt is a 200+ mile range EV, which is seen by many as competition for Tesla’s new Model 3. However the Bolt uses cells from LG Chem (a Korean company). LG produce cells for the Bolt in a plant in Michigan which has a capacity projected to rise to around 3 Gw-hr in the next year or two [5]. Even if we assume that all these cells go into Chevy Bolts that is going to constrain Bolt sales to a fraction of what Tesla can achieve: 3 Gw-hrs is enough for about 50,000 Bolts. Tesla’s stated intention is to ramp up to ten times as many Model 3s.

For the next few decades at least the traditional majors need to think of cell production the same way they think of engine plants and put serious money ($billions) into it. There are trade-offs in the chemistry and packaging of cells that potentially affect battery management, charging, heating and cooling of the pack etc. This in turn has an impact on the cost and performance of the car.

Sales and maintenance

The standard sales channel for new conventional piston engine cars is via dealers, and the dealers do much of the maintenance, especially on new cars. The profit on the sale of new cars is low; the dealers make much of their money on maintenance [6]. This model probably won’t work with EVs, because they need so much less maintenance; no oil and filter changes, no exhaust replacements, no intake air filters, no spark plugs, no cam belts, even fewer brake pad and disc changes because of regenerative braking. Add to that the preference of the rising generation to do everything on line, plus the move to disintermediation across the commercial world [7], and the dealer model is probably dead.

There is another potential dealer-related issue for traditional automakers where the dealer is selling a mix of EVs and conventional cars. If a savvy dealer has two cars on the lot, one a high maintenance conventional piston engine car, and one a low maintenance EV, which vehicle is that dealer going to push [8]? Tesla have no dealers; they sell direct on the web and have in-house service centres (they also do software upgrades wirelessly and don’t do conventional advertising)

The Chinese aren’t just putting in lots of new coal fired power stations; they are developing EVs and lithium battery capacity. One forecast suggests that Chinese production of lithium ion battery production will increase by a factor of five between 2016 and 2020, making it easily the largest producer worldwide [9]

Figure 1 The all-electric Nio EP9 (photo Wikipedia)

China’s indigenous auto industry is also flexing its muscles. For a brief period in May the production car lap record at the Nurburgring was held by the Nio EP9 (Figure 1) [10]. It actually held the record for just two weeks and then a McLaren took the record. With a hybrid.

If this doesn’t make the CEOs of the traditional Western automakers wake up screaming at 2:00 a.m. then they lack imagination. Here is a company few in the West have heard of, from a country with almost no previous performance car pedigree, strolling onto one of Europe’s most iconic circuits and beating all-comers with a pure electric car.

Finally consider this statistic: plug in hybrid and pure EV sales in China in 2013 were under 20,000. In the US in the same year sales were about five times greater: close to 100,000. By 2016, US sales had reached about 160,000: a respectable percentage increase, but less than half the sales in China. Over 350,000 EVs were sold there in 2016 (Figure 2).

Figure 2 – Sales of Battery EVs and plug in hybrids in China and the USA for 2013 and 2016. Note that China’s growth rate is vastly higher than the US’s

A lot of the growth in China was a result of subsidies which were reduced in 2017 [11], leading to a slowing of growth in sales in Q1 of 2017, but in one sense that hardly matters: the capacity is being developed. No US or European automaker (apart from Tesla) could get anywhere near 350,000 units even if they wanted to.

In conclusion

Much of Western economic activity relates to cars: apart from the automakers themselves there are all the parts suppliers, and much of Big Oil is focussed on fuel for road vehicles. EVs will have a big impact on all this. It may already be too late for the Western automakers: they should have been breaking ground on cell production and rolling out fast charge years ago. But we are where we are, and maybe some will survive. If they don’t, our children will inherit even more of an industrial wasteland than is coming their way already.

In part 3 of this series I will take a look at several misconceptions about EVs



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