http://blog.geoffralston.com/the-electric-car

Geoff Ralston from Y-combinator speculates on the future for electric cars. He makes a couple claims which I think would be interesting to debate. And since many of us are invested in oil companies, this should be relevant.
1. "It is likely that electric car penetration, at least in the US, will take off at an exponential rate over the next 5-10 years rendering laughable the paltry predictions of future electric car sales being made today"
Not sure what his exact claim here is, but lets assume he means 25% of cars sold will be EVs in 10 years.

2. "When 10% of the vehicles on the road are electric many of them will go out of business." referring to gas stations, he talks about a tipping point where gas stations are no longer convenient and everyone switches to EVs quickly.

#1
I think Geoff extrapolates a couple things from his own experience that aren't true for everyone. He drives a Tesla and has a place to charge it.

The Tesla is a nice car, but it is out of reach for most people. The Nissan Leaf is affordable, but it's sales have been declining this year. Chevy Volt sales are also declining. You can get a used Leaf, only a couple years old for $10k. I am not sure why they don't hold their value as well as other cars, but it does show that demand isn't that strong for them. The slower sales this year might result from lower gas prices making EVs less attractive. Did a subsidy go away? I think his claim is going to hinge on whether Tesla (or some other manufacturer) creates a low end model that people love much more than the Leaf or Volt.
The other bit problem with EVs today is the biggest reason I don't own one. There is no place to charge it. I live in an apartment and my parking situation would have to be reconfigured for EV charging. I don't see that infrastructure changing massively in less than 10 years. This won't prevent 25% market penetration because a lot of people still live in houses. But it won't help either. A lot of young early adopter types live in apartments.

#2. There are a lot of places where gas stations are located next to each other. If one went out of business price would go up a little, but I don't think we're very close to convenience being affected so much that people are forced to buy EVs they wouldn't otherwise.

sales info: http://insideevs.com/monthly-plug-in-sales-scorecard/

His comments are ridiculous.

The battery tech isn't there for 10%, let alone 25%, of cars to be EVs in 2025. Advanced battery tech would need to be in the lab now to be ready by then, given lead times between lab and large scale production - let alone "25% of cars" type production. It isn't, and isn't on the foreseeable horizon.

The opening comments are ridiculous too.
These thing were in fact imagined (and expected) long before now. Have a look at MSFT's predictions for 2019 - 3.5 years from now - put out in 2009.



Futurists have always been on the optimist side, even the norm has been on the optimist side.

and painting a highly inefficient picture...

most of your biggest EV+ work is done in dirt; (or code; or gym?)
not in fancy skins on glass table (lol win 8)

this is sales video of a future lifestyle of low EV output corporate middle level+ management...
and it scarily features a lot of chicks and men with small ****s... (but I believe this to be the norm today)

TS I know you follow TSLA pretty closely. You don't think with success of the gigafactory that they can begin to scale EVs? If they even come close to the goal of 500k by 2020 that is 3.5% of the new car market. This doesn't even include the other auto companies who likely would have similar battery tech and their own gigafactories in place.

Car companies don't make known all production costs but most industry estimates have LI-ion around 250ish right now. You get it around 150-180ish and you can put a 50-60 kWh powertrain in then that is on par cost wise with ICE vehicles.

I agree futurists tend to be too optimistic but 10 years is a long time. Surprised you are so bullish on SDCs but not on EVs. Feels like most of the companies developing SDCs would want them to be EVs. Charging a fleet rather than using conventional fuel would be a big $ saver.

If he's talking just about the US? That's 5% of the world's population though, maybe 1/10 of new cars in 2025. Yeah, maybe, because the number is then 2.5% rather than 25%.

25% of world car production? Absolutely no way.

In terms of cost, EVs are going to be more expensive for a very long time. If the battery/rare earth powertrains are costing $10K, that's the cost of a complete car, right there, before you've built the rest of it. Then you've got the charging infrastructure build out; special wiring in your house. Ultimately the EV car consumer pays for that. Also note that TSLA is running at a loss right now, even with subsidies and direct sales (cutting out lots of dealer profit), whereas other car makers make healthy profits. The numbers just don't add for up EVs.

On top of that EVs are highly inferior in terms of range, reliability and refueling (and refueling time, even with stations), making them undesirable for most consumers. Few people want a TSLA, despite the company hype. They're for 1% rich playboys with other cars. The average person will find them inferior.

I assumed he was talking US. Gigafactories would have to popup all over the place for mass global scaling of EVs. I can see EVs getting to 25% of new sales in 10 years in US though. That would be 4M US cars a year (no clue what global would be but considering gas prices in Europe I'm sure EV demand would be big there)

If TSLA could get to like 350k in domestic sales in 2020 then I'm not sure why they couldn't get to like 2M by 2025.

If you can get a powertrain in there for 10, you should be able to sell a car for 35. This isn't much more than something like a Toyota Camry costs. obviously with extras it is going to be closer to 40-45ish new but then you account for less fuel costs, less maintenance, oil changes, etc and it is pretty competitive for people who want to buy a new car.

I'm not sure what TSLA will do on the lower end but if the price of LI-ion does comedown that much then the other auto companies will likely fill that void. Something like the Leaf or Bolt can sell for 25-30. That is on par with a new Corolla for 18k. So I do think it is possible once you scale the LI-ion, everything else should fall in line and given the low fuel costs I'd think people would want to buy. Battery storage tech coming along to allow for cheap home charges would be a game changer as well.

Range for all of these vehicles should continue to improve as well.

The main things I disagree with the author about

1. Trying to disrupt the cell phone market in 2007 is absolutely nothing compared to trying to disrupt the ICE market. Cars are already really good products, new development is extremely capital intensive, margins are thin. There is a reason TSLA is the 1st US automaker in almost 100 years to gain any traction

2. He seems like he pretty much knows nothing about the gas station business. Don't think 10% EVs on the road would cause majoriy of gas stations to go bankrupt. He basically made that up and his reasoning was very flimsy. SDC would though. Maybe the gas station land could function as mini fleets?

If we believe SDCs are the future though then it seems like we should try to imagine the EV market existing within the SDC market rather than the EV market existing within the current car market, no?

If you have a centralized fleet, then powering EVs is much more cost effective for the fleet than using gasoline. The SDC taxi's putting 50k miles a year on them will reap tons of savings from this. With battery storage/solar, the fleets could be powered with renewables. So obviously paying 30k for a nice SDC EV is a much better deal than paying 30k for an SDC ICE when your saving 30-50k in fuel costs over the life of the car.

The google/apple/teslas of the world don't seem too interested in ICE over EV for SDCs as well.

I think when finding the negatives to EVs, the list is a little longer in the current car market but really if SDCs do scale then EVs are in a perfect position to do so with them.

Georgia, yes that one, has accounted for ~ 1/3 of Nissan Leaf sales in the US on what I assume is an annual basis. Until recently the state of GA had a 5000 dollar tax credit for emission free vehicles. Combined with the Fed credit of 7500 dollars and low interest rate leases, people in GA can lease a LEAF for almost free. Like seriously, almost free.

So now what you have are the first rounds of LEAFS coming off lease so there is a huge glut in the market. So much so that Nissan is lowering the buyout on the LEAFS by 5k.

tldr; yes a subsidy did expire so don't extrapolate slower LEAF sales and low resale to the greater EV car market.

yeah that's a sick deal to get a leaf for 5k.....It's not for everyone but for a lot of people the 80 mile range is fine. Especially 2 car households.

Agreed
Renewables are a clown show for reliability. Not to mention absurdly expensive. In desert environments (Cali or Nevada) it might pay off.

You don't need to invoke them. Electricity is cheaper than fuel. But electricity costs will be rising (thanks to renewable madness) and fuel costs will be dropping, particularly if EVs take hold. You saw what a 1% oversupply did to oil prices this year; what do you think 5% of cars becoming EVs will do to oil prices? The lower limit for the bulk of oil, extraction costs, is probably below $10 per barrel for the huge fields.

The other major problem is the power grid. Put simply, transportation uses almost as much energy as we use in electricity:



The power grid simply could not handle the load of such a shift from petroleum as a source of energy, to coal and nuclear. Massive build outs would be required of nuclear and coal. Renewables are unreliable and incredibly expensive, so they're not going to fill the gap. A couple of cloudy/snowy days in a row in the US, and your entire city grinds to a halt as all EVs are stranded, blacking out the power grid as well as all the baseload can't handle the demand of plugged in cars. Electric cars cannot be viably powered by renewables with current or 10+ year technology. Sans renewables, large scale electric cars aren't viable without hundreds of billions in (very unlikely) infrastructure spending. It's even more unlikely given the deeply entrenched political dickheadery (created by the green lobby) around building more coal or nuclear power stations, which is the only way you can scale to 5%, let alone 25%, let alone 100%, EVs.

This is one of the many reasons why Toyota thinks that EVs simply have no future on a large scale in the next 15-20 years, and that hydrogen fuel cells are the only viable future. You may think they are nuts (it certainly seems like it on the surface when you see TSLA pumping out perfectly good EVs without any of the fuel cell hassles), but when you actually get into the economics and logistics of more-than-1% EVs, you see why a lot smart experienced people are betting on such a weird and complex and energy inefficient technology as hydrogen fuel cells, rather than the obvious and simple choice of EVs.

The savings are fictional. On the other side, you have rare earth demand pushing up prices, and if the environmental damage/energy cost ever gets priced in, they'll be even more expensive.

A cheaper outlook for EVs simply can't happen once you get over 2%-5% EVs. ICEs will be cheaper for a very long time.

Well, no. Not without subsidies. And you're making out like a $15k is the same as a $30k car. It is for wealthier people, but the mainstream is extremely price sensitive.

Was really hoping we would be onto hovercrafts by 2025, but doesnt seem realistic.

But EVs are bit more realistic, but they need some improvements before fully accepted mainstream. Joe Smith from mid-west isnt going to give up his mustang/camero/muscle car with fuel prices being so low.

From only a consumer perspective I think a few things need to happen: 1) fuel price spike again; 2) no substitute in performance; and 3) affordability. If these 3 stars align I could see a big jump in EVs.

I see what your saying in terms of grid infrastructure and all that. When I said could use renewables, I did mean more sunny areas that it could be pulled off (and obviously some improvements in battery storage technology)

I don't get what you mean by the savings are fictional on EVs? If you have an EV taxi that is putting 40k miles a year on it and saving 6-8k in fuel costs, how isn't that a meaningful savings? I actually read a UK company did this with Nissan Leaf's.

Maybe consumer cars going to EVs is further away than people think, but it seems like cars that are on the road a good amount should be able to go to EVs very easily. One of the founders of Tesla now has a company that retrofits garbage trucks with an EV powertrain, this actually seems like the best use of EV possible. Garbage trucks get like 3 miles a gallon with all the stopping and going.

TS, given the big discrepancies in fuel costs....Do you see EVs being adopted in most of Europe/Japan before US? I mean they don't produce oil for the most part, they gotta be eager to get on the EV train no?

Yeah, in dense cities EVs make a lot of sense.

As for cost, once EVs starting becoming any appreciable percentage of transport, several things happen:

1. Oil costs drop a lot
2. EV car component costs rise
3. Electricity costs rise due to the large infrastructure changes needed (everything from local grid components to new power stations to renewables to charging stations).

So the fuel cost difference is going to be a lot smaller than we see today. ICEs will continue to improve as well, especially in cities through energy reclamation/small batteries (Pure EVs are at their energy efficiency limit already).

EVs make a lot of sense for city transport. I live in France at the moment, and small electric vehicles are very common. Cities are so much denser. I love to drive, but here I use about half a tank of fuel per month, compared to a couple a week back home. So I think EVs will mainstream in European cities long before the US. They just make sense here, and there's more a socialist push for that kind of infrastructure. One of the books I read looked at the viability of EVs becoming an appreciable fraction of a country in Europe. Cost was high, but the limiting factor was the ability of the power network to handle both grid spikes (power networks just aren't designed for mass EV charging) and the raw energy requirements.

TS you forget that price of solar is coming down each year. So by 2025, solar will probably a lot cheaper. Now if battery costs can be cut 30%, it doesn't matter that home batteries are still expensive. Because the cheapness of solar panels will make up for that.

Imagine going far into the future, and getting enough solar panels for your house costs only about a thousand euro;s. It doesn't matter then that batteries will still be expensive.

In my area i can get solar panels installed for about 6.5k euro's (that would be a good deal though). Now if this comes down to 3k euro's, and a battery pack comes down to about 5k euro's (one that is actually large and useful), then I can see how it ebcomes cost competitve.

So if I pay about 16-1700 euro's a year in power costs, paying 8-9k euro's once becomes interesting. Id get my money back in about 5 years. I think you will see explosion in adoption rate when that becomes reality. Just like with computers. You will probably get financing deals so you can just pay what you normally would have paid in electricity each year.



If you add in self driving cars in the equation, a lot less cars will be on the road.

BUT if you look at penetration of car ownership in China and India, that is still very low and growing rapidly.

So honestly it is very hard to say what will happen. But it looks likely solar power will become big, and a affordable battery car becomes reality at some point. And those numbers of 25% penetration are probably optimistic.

Also interesting to note what BYD is doing in China.

I think it is completely realistic that in 2025, half of all US cars sold are hybrids or electric. I think we'll see very fast acceleration starting ~2018 with the ramp up of Tesla's 3rd generation (and whatever comes out to compete with it).

And it's not just gas stations that are in trouble, auto mechanics too.

I would probably agree with this statement.

Hybrid is very, very different to pure electric though. The first can easily ramp, has no range problems, has no reliability problems, has no power grid problems, and doesn't hurt gas stations or mechanics.

What do you think the mix is going to be?

No clue, but the technology is a no brainer as it gets cheaper and more efficient.

It is an inevitable switch

I am pessimistic about the market share projections of both EVs and SDCs, but I am curious why folks here think SDCs will be bigger first? EVs are already available and mass produced. No one is really selling a self driving car yet.

Because it is software not hardware

What do you think about the potential grid issues that TS highlights on page 1.

Think it's already been mentioned, but electric cars will mostly charge at night, a time when electricity demand is at its lowest levels (and at its cheapest). There is also battery technology on the horizon.

No idea what he is talking about with renewables being expensive. Coal is more expensive than wind & solar in many parts of the country. It makes 0 economic sense to build a new coal plant in, for instance, Nevada. Natural gas as a reliable base load energy generator + renewables is our path forward the next couple of decades.

Solar is another no brainer technology like EVs. You have roofs not doing anything with the sun beating down on them all day. The cost of solar panels is getting low enough that they're going to start to become standard on new homes.

Can car bonnets and roofs be made of solar panels in any reasonable timeframe?

Do some reading. This has all been extensively modeled. There are multiple charging scenarios, but all involve major loads on top of all parts of the day for even a smallish percentage of EVs. Multiple books and studies (granted, rather technical0. The grid can't handle it.

What is this battery technology "on the horizon"?

I'll have to do a post. Most people share your delusions. Solar is absolutely useless and will always be more expensive than normal baseload no matter how low the cost/watt becomes. There is no one in this field who thinks solar will become an appreciable percentage of power.

Yes, this is the only reason that power has remained cheap in the US. It's quite remarkable what has happened, a true energy revolution, and also the reason US emissions are falling.

When he says battery tech on the horizon, I am thinking he refers to storage to bring all of this together regarding EVs and solar. That would be a game changer.