Guest blog by S. A. Shelley Are we on the cusp of mass adaptation of Electric Vehicles (EVs) for transportation? Probably not for at least a while longer. When doing the financial analysis comparing EVs to Internal Combustion (IC) Vehicles at the personal or family level, the comparison usually yields these results:
For personnel transportation, EVs have significantly higher deprecation costs compared to ICs, quite simply because there is a very limited secondary market for EVs. Thus with no resale value, EVs tend to depreciate to 0 value. But this could change rapidly. The U.S. already had around 700,000 EVs on the road at the end of 2017 and is on pace to have more than 1 million electric vehicles on the road by the end of this year. Globally the total was closer to 3 million EVs (including PHEVs) at the end of 2017 and it is very likely to be closer to 4 million or more by the end of this year. As supply increases, the depreciation cost will decrease. (Editor’s note: I passed a used car lot in L.A. last week that had 2 Tesla Model S for sale, so we could be seeing the early stages of good used EVs entering the secondary markets in some areas.)
Of course most EVs also have a high initial capital cost, but that is already decreasing rapidly. In spring of 2017, analysts at UBS took apart a Chevy Bolt and found that there was significant room to reduce production costs without changing the design. Looking a bit further out, the UBS analyst then forecast that EVs will reach price parity with ICs in 2018. (See Telegraph.) As more large automakers bring manufacturing technology and scale to bear, they will be able to bring EV costs down below IC vehicle prices. Scary.
So how are EVs being integrated into society? From the top down, just the way horseless carriages replaced horse driven carriages. Wealthy buyers today tend to gravitate towards the high performance, luxury EV sedans such as Tesla Model S, Jaguar I-Pace, Fisker, or forthcoming Mercedes S-class. (See Handelsblatt and Forbes.) For the well to do and well driven, these EVs are affordable, dependable and outperform in style, comfort and brute power most things IC.
Just like the turn of the 19th century, the wealthy were the first to adopt the new automobile technology, while middle and lower class folks continued to trod along with horses for several decades. Truly, in this sense, EVs are evil in that they reinforce class divisions in society.
Eventually EVs will become more affordable and secondary markets will begin to flourish, battery technology will improve and then EVs will be adopted and used en masse. But it is at this point that the true evil of EVs will become apparent: Their ability to destroy industries and the jobs that go along with them. (See Reuters.) EVs don’t have transmissions, belts, hoses, radiators, mufflers, or a whole host of things that need to be built, supplied and maintained as in traditional ICs. EV drive trains have around 20 moving parts, while ICs typically have 2000. (See CNBC.)
With so few moving parts to maintain, society will not need as many mechanics as it now needs to support IC vehicles. And the follow-on effect will be horrendous. Mechanics make decent wages, pay taxes, support families. So too with the remaining auto factory workers. It might be darn near impossible to completely automate assembly of 2000 pieces, but automating the assembly of 20 pieces is much more doable. More shockingly, it may even be possible in the near future to buy EV car parts, body, engine and motors on-line to assemble not just a home-built name brand EV, but a totally unique, model John or Jane Doe EV. The customization possibilities can be as wide and varying as all individual drivers (robots and AI included). And how about the IC fueling process’ Without the risk of spilling a combustible material, gas stations won’t need on-site personnel or require tanker trucks or drivers, and the all-automated charging station / snack shop will soon displace the traditional gas station.
Sure EVs are evil. But that’s not the first time somebody has said that about cars. Back in the early 20th century, there were serious concerns about the evil contraptions suddenly taking over the roadways, with the Georgia State of Appeals court writing that, “Automobiles are to be classed with ferocious animals….” (See Detroit News.) Somehow, we need to prepare ourselves against these ever propagating electrical ferocious animals as best as we can, for eventually and probably sooner than expected, EV finances will trump ICs at all levels of society.