EVs are awesome, but they can’t save the world. What now?
Can the world wait for electrification?
I was never much of a car guy growing up. It wasn’t until the first hybrid cars hit the street that autos started catching my attention, especially since code was such a big part of their powertrain, and coming from the software industry, that was compelling. Plus, after 9/11 it just seemed obvious that things needed to change, and batteries and fuel cells seemed so necessary.
For years I didn’t care about any new vehicle technology except those with batteries. I even wrote off fuel cells for a while. Sure I believed they would happen one day, but my focus was today. In that regard hybrids, including those with plugs, seemed the game-changing call to action.
Of course, in the early days, I had never heard of issues such as the legacy effect. Nor did I have any understanding of the depth of automotive supply chains and their impact on scale in the auto industry, nor how long it takes to move a car from concept to reality or to retool a production platform. Likewise, I didn’t know much about battery technologies themselves. I just assumed once lithium hit the street, it was on.
Well, lithium has hit the street, but the revolution is far from on. Why?
For one, there is little consensus in the auto industry regarding how exactly the auto industry is going to move forward according to a recent KPMG study of automotive industry executives. While automakers are investing heavily in all forms of electrification — hybrids, plug-in hybrids, range extended electrics, battery electrics, and fuel cells — there is no consensus regarding which will dominate and when. In fact, it seems obvious that their won’t be ONE powertrain solution for many decades into the future.
By 2025, for example, automakers expect all the above forms of electrified powertrains, combined, to achieve less than 15 percent of total auto sales, combined. Sure, some form of hybrid is the dominant technology, but there isn’t even one hybrid technology that dominates.
Several years ago I might have questioned such a study, arguing that these automotive execs just can’t think outside of their box, or they don’t realize how fast technologies are going to evolve. But, today, I look at things differently.
While there can be some surprises and things can change, I now accept the fact that these are the guys and gals that have to sell future business plans to their corporate boards to determine how money is spent heading into the future — often many years into the future. These are the people that set new supply chains in motion and order new manufacturing capabilities to be built or old ones retooled — processes that take many years to execute, even for just one new vehicle.
Consequently, all of the above can be broken down into very simple numbers. It’s exactly such numbers that powertrain analysts from JD Power, for example, used to make hybrid sale’s forecasts that I would mock many years ago. But the joke was on me. Many years later those forecasts were spot on. If you have access to the numbers, forecasts aren’t fortunetelling, just simple math. New supplies and supply chains don’t magically appear. They’re planned, many years ahead of time. Nothing in the auto industry happens over night.
The legacy effect, for example, is one of those real head spinners that exemplifies this reality. If you have a few hundred million vehicles already on US roads, and you sell 13 million vehicles per year, how many years does it take to replace the fleet?
Yet, America is nowhere near any huge embrace of automotive change — in terms of automakers and/or consumers at large.
When it comes to plug-ins, for instance, recent analysis found that more than half of all Californians have no off-street parking and, consequently, no place to charge. Couple that with the fact that 50 percent of all US vehicle sales are light duty trucks and the difficult road ahead for EVs becomes ever more apparent. I mean where are the plug-in pick up trucks — THE most important vehicle segment in America today? Furthermore, if a hybrid pickup truck like the Chevy Silverado hybrid can only achieve a few hundred sales every year, how is a more expensive plug-in pickup with less range supposed to compete?
Ohh, but batteries are going to become drastically cheaper and change everything, and there will be wireless charging along every sidewalk.
Maybe, but the people most responsible for understanding such possibilities certainly aren’t betting on such a reality. Betting on just 10 percent EV penetration by 2020, for instance, is a HUGE gamble today. Moreover, even if a major breakthrough were achieved today and it were instantly scalable, it would still take many, many years to develop all the supply chains and manufacturing capabilities necessary to set the revolution in motion.
Typically, however, even a revolutionary breakthrough will still require time to scale into a truly cost-effective one. Lithium batteries have been around for more than 30 years already. And they’re still not ready to mainstream.
None of that is a problem, of course, as long as the world — especially America — has the luxury of time. Do we? Do we feel lucky America?