In a report released on the 24th March 2015, the German based Centre for Solar Energy and Hydrogen Research Baden-Württemburg (ZSW) stated the global numbers for electric vehicles is close to three quarters of a million vehicles (740,000) with just about half of those (320,000) being purchased in 2014 and that’s despite lower global oil prices. The United States retains the number 1 spot with the number of vehicles increasing by 117,000 to a total of 290,000 (a 69% increase).
The disruption of the oil and vehicle manufacturing industries has already commenced.
One of the major cost hurdles of EV uptake has been price. The EV battery is a substantial amount in the overall cost of the vehicle but battery prices have been falling at a rapid rate and this trend will not only continue but might very well accelerate with the likes of the Tesla Gigafactory coming onstream towards the end of 2016.
It has been estimated by Tesla and Panasonic that in full production the Gigafactory will produce the equivalent of the current world production of lithium ion batteries leading to a further drop in price of between 30% to 40%.
Tesla has announced the Model 3 and expects to start production towards the end 2016/2017. It will cost between $30K – $35K and will face stiff competition from the revamped Nissan Leaf and the likes of the Australian designed GM Bolt. All these vehicles will have a range over 300kms (200 miles) on a full charge. So by 2017/2018 we will start to see EVs compete with similar sized internal combustion engine vehicles but with the advantages of cheaper fuel costs (free, if run from rooftop solar) and virtually no servicing.
Coupled with the superior smooth quiet ride and exceptional performance, the era of electric vehicles will begin to replace the old tech of the fossil fuelled internal combustion engine (ICE). The ICE vehicles have served us well but for a variety of reasons (environmental, climate change, energy security and health) that technology needs to be retired and the sooner the better.
Moving forward to 2025 the cost of batteries will reduce to a point where EVs are cheaper to buy and cheaper to run than even the low end current ‘cheap’ petrol cars. With increased range and the requirement of only a weekly or fortnightly charge for the average driver the economics will be compelling to buyers.
Looking towards 2030, EVs will have replaced the ICE vehicle in all major markets. Like the stone age, the age of oil will be over because of technological advance. Of course the oil industry doesn’t see things that way. That is often the case when industries have been disrupted – the insiders and ‘experts’ don’t see it coming. For example the BP outlook to 2030, doesn’t see much impact from Electric Vehicles till 2030. In it’s 36 page document – “The Oil Market to 2030—Implications for Investment and Policy” electric vehicles are mentioned in 2 places and pretty well dismissed as a near term threat.
What is missing in this piece by the industry experts is the rapid evolution of technology. EVs are more like smart devices on wheels than the traditional idea of a vehicle. They will evolve just as quickly and the battery price and technology will show the same kinds of trends we’ve come to expect in the computer/tablet/smartphone market. With the oil industry depending on the transport sector for the bulk of its product, it is incredible they are so dismissive of the threat of EVs to their primary business model.
Having said that, at least one ‘expert’ in the oil industry, Saudi Arabia, has seen the light and they are trying desperately to sell as much of the stuff as they can before the industry dies. “Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.” Saudi Oil Minister – Sheik Yamani, 2000. Looks like he was spot on target picking 2030 as the death of the industry.