Today, Automakers around the world are racing to catch up with Tesla and bring out a full slate of Electric Vehicles (EV). General Motors has set the Goal of going All-Electric by 2035. Mercedes just leapfrogged with a Goal of being All-Electric for Llight Vehicles by 2030. “The EV shift is picking up speed. … The tipping point is getting closer,” Mercedes CEO, Ola Källenius, said last month. “This step marks a profound reallocation of capital.”
The No. 1 factor speeding the shift to EVs is Governments putting an increasingly heavy foot on the Accelerator. The European Union (EU) is proposing tough Regulations on Carbon Dioxide Emissions from Cars Made or Sold in Europe that would effectively Ban the Sale of New Cars with Internal Combustion Engines after 2035. California and Massachusetts similarly have announced ambitions to Ban New Cars with Internal Combustion Engines by 2035.
Biden has now upped the ante by pressing Automakers for, 50% Electric Goal by 2030.
Governments around the World are also fueling Consumers’ purchases of EVs with Generous Tax Incentives and Subsidies, and Emission Standards are becoming ever more Stringent. Just this month, the Biden Administration proposed tougher Fuel Efficiency Standards in the U.S. This will drive up the Cost of Conventional Cars with the aim of pushing more New Car Buyers to Switch to Electric instead.
In Shanghai, China, the City offers Free License Plates for what Beijing calls “new energy vehicles,” while Consumers must go through an Auction to get a License Plate for a Car with a Traditional Engine.
It will take time for EV adoption to have a Major Impact on Emissions as Cars stay on the Road for a long time, the average in the U.S. is 12 years. But a Total EV Fleet for Light Vehicles would have a Direct Emissions impact. “Light vehicles” are responsible for about 16% of Human CO2 Emissions in the U.S., and about 6% on a Global basis).
But as the shift to EVs speeds up, Three Big Challenges stand out:
One: The Mining and Supply Chains to support that shift. Batteries require a lot of Minerals, and that means a lot of Mining and Transporting of Materials. According to Mining and Energy Specialist, Mark Mills, a thousand-pound Electric Car Battery requires the moving of 500,000 Pounds of Earth in the course of Mining. But Battery Costs have come down enormously. A step-up in Government and Private Sector Research will drive Costs Down further and Improve Performance.
Very Large and Ccomplex new Supply Chains will be required to Replace those that deliver Gasoline to Motorists. Today, many of these Supply Chains are dominated by China, with which Tensions are obviously rising. China, for instance, currently controls 80% of the Lithium Battery Supply Chains. To Reduce the current High dependence on China, U.S. Automakers are building Battery Factories in the U.S. General Motors in Partnership with Korea’s LG Chem, and Ford, in Partnership with Korea’s SK Innovation. Ford is also making an EV Partnership and a Half Billion Dollar Investment in Start-Up, Rivian, which is introducing Electric Vans for Amazon Deliveries and All-Terrain EV Trucks and SUVs this year.
Expect “energy security”, the mantra that has dominated Policy for half a Century, to give way to “battery security,” with Government Policies backing it up.
But the scale of what is required should Not be underestimated. It will be a massive job to build up a Supply System that supports the current 600,000 New EVs annually into one capable of supporting Biden’s Goal of about 9 Million Annual new Car sales by 2030. Just to get to Biden’s 2030 Goal of 50 % would require a 15-fold Increase in Annual Production of Electric Cars over a short Eight-year period.
Two: Ensuring the Infrastructure to support EVs in the post-gasoline era. That means the building of a ubiquitous EV Charging Infrastructure and the Modernization and Expansion of the Electric Grid. The Grid also needs to be 100% reliable, a Requirement that the recent Major Power Disruptions in California and Texas underline. As the Futurist, Peter Schwartz puts it, the Entire Electric System becomes part of the EV Supply Chain.
These Requirements are embodied in the New Infrastructure Bill, that the Senate just Passed. In Championing the Bill, the White House emphasizes Competition with China: “U.S. market share” of EVs “is only one-third the size of the Chinese market.” And this, it adds, “must change.” To that end, it puts $73 Billion into Modernizing and Expanding the Nation’s Electric Grid and Clean Energy. It also apportions $7.5 Billion “to build out a national network of EV chargers” as part of the Administration’s Goal “to accelerate the adoption of EVs.”
A Group of House Democrats, jumped in this month, to propose that the $7.5 Billion be Increased to $85 Billion. But the System that currently “charges” Cars, Gasoline Stations, was developed by the Private Sector without Government Support. A long-term viable EV Charging System needs a Business Model, that is also based on the Private Sector and is Not dependent on the Federal Government and Shifting Ppolicies.
Three: Involves the Public, the People who buy Automobiles. For most People, their biggest Capital Expenditure, after their Homes, are their Cars. It is simply too soon to know how eager People, beyond early Adopters, will be to shift away from something they have always known, gasoline-powered Cars, to something that is New for them, EVs. And that’s true even as Battery Improvements extend Driving Range. But confidence will grow as they see EVs on the Road and in their Neighbors’ driveways, as the choice and range of Models and Features increases, and as Automakers step up their Commercial Drive to push Buyers to make the switch.
It’s just 18 years since Elon Musk launched the idea of EVs. And now an Auto Industry that seemed immutable in its Business and unlikely to Change is, in its Second Century, tipping into the Future. How fast it tips will only become clear in the next few years.
NYC Wins When Everyone Can Vote! Michael H. Drucker
No comments:
Post a Comment