NYT journalist Bret Stephens has written a column attacking Elon Musk as “the Donald Trump of Silicon Valley”. Musk, whose 27% share of Tesla stock is currently worth $13.2bn, can look after himself. Perhaps Stephens has friends in the dispirited coterie of Tesla bears who need a helping hand?
What interests me is Stephens’ undocumented attack on Tesla’s main product, electric cars.
Tesla, by contrast, today is a terrible idea with a brilliant leader. The terrible idea is that electric cars are the wave of the future, at least for the mass market. Gasoline has advantages in energy density, cost, infrastructure and transportability that electricity doesn’t and won’t for decades. […] Electric vehicles were supposed to be the car of the future because we were running out of oil — until we weren’t.
Set aside the easily checked fact that governments do not subsidise electric cars because they worry the world is running out of oil, but because of climate change and urban air pollution – plus a good dose of energy independence, as in China and India. Let’s see how electric cars have actually been selling. A chart from the IEA:
Source: IEA, Global EV Outlook 2017, data in Tables 4-6
The 5-year CAGRs are: PHEVs 143%, BEVs 85%, all EVs 107% (see spreadsheet).
The growth has been extremely steady as well as explosively fast. It is also well-balanced between the USA, China and Europe (contrast solar panels). The curve shows none of the signs of a fad or bubble, and all those of a revolution on the march. Subsidies for early adoption have played a part, sure – see Norway. But consumers like electric cars.
Stephens has a rapidly eroding half-point on the deficiencies of electric technology. But it doesn’t work for his claim of failure. Go back a decade, and there were hardly any electric cars on the market, and they were both expensive and limited, like the first Tesla Roadster. That really was a toy for trendy rich men. But the growth rate was high even then. The customer base has smoothly expanded from hardy pioneers to early adopters to pragmatic buyers like taxi owners.
The technology has improved in every way. (Again, contrast solar panels and smartphones, the first models of which did essentially the same job as those sold today.) The best Tesla S has a single-charge range of 537 km, according to the EPA, eliminating the range anxiety issue. Cheaper BEVs have lesser but still respectable EPA ranges: Tesla 3 base model 354 km, 2018 Nissan Leaf 243 km, Chevy Bolt 383 km. The issue doesn’t arise with PHEVs. The charging infrastructure is expanding fast, though with these ranges most users will rarely need on-road chargers.
The growth curve suggests that there are in fact a good number of drivers who don’t like their ICEVs much. They are complicated beasts, with hundreds of moving parts to go wrong, supporting a large industry of car mechanics. BEVs just have very reliable sealed electric motors as the moving parts on the drivetrain. Refuelling involves a detour to a smelly gas station; EV owners just plug in the car at night in the garage, and pay a fraction of the fuel price. ICEs need gears: either the hassle of a manual shift, or the sluggish response of an automatic. Electric motors have full torque from a standing start. And they are quiet.
It is true that there is still a way to go. The range of models on offer has grown, and you now have several electric choices for a sports car, a city runabout, a hatchback, or a sedan. But there are few crossovers or SUVs, and no pickups - a weird American fad, but a real preference all the same. Midprice BEVs require compromises on price or range. Sticker prices are still higher. Few private buyers think in terms of total cost of ownership, though fleet buyers do.
Crucially, EV prices have been dropping steadily. Economies of scale have been reinforced by sharp falls in the cost of batteries. The increase in energy density has been less spectacular, but it’s still significant as it increases range or reduces weight. The Tesla S is a heavy car: 10% more than the competing Audi A7. The Tesla 3 has a kerb weight within 5% of direct German competitors in the compact premium sedan market. Everybody qualified seems very confident that progress will continue. A good number of companies, including Toyota, are working on solid-state batteries, with potentially double the energy density of lithium-ion.
Source: IEA, Global EV Outlook 2016
Finally, let’s see what some ICE car companies say. They may know more about cars than Mr. Stephens.
VW : “We intend to offer the largest fleet of electric vehicles in the world, across all brands and regions, in just a few years.” - Matthias Müller, CEO
GM: “We are well on our way to bringing at least 20 new all-electric models to market by 2023 – our next step toward a zero-emissions world. We are optimistic about EVs because last year, automakers sold 1.2 million plug-in electric and plug-in hybrids around the world.” - Mary Barra, CEO
Renault-Nissan-Mitsubishi Alliance : “Now they come. Everybody’s coming. The reality appears more clearly to a lot of people today.” - Carlos Ghosn, CEO
Elon Musk may be an annoying conceited foreign twit. But he’s annoying partly because on electric cars, he bet his fortune on their future, and was absolutely right.
Cross your fingers too that the Nobel Prize Committee for Chemistry will recognize John Goodenough, inventor of the lithium-ion battery, before it’s too late. Or better, write them (info@kva.se).