PASSPORT RESEARCH
September 25, 2020 | 10:00 AM ET
Envisioning vehicle
electrification as the
future of transportation
Today, the transportation industry confronts
ever-tightening regulatory measures to reduce
global carbon emissions. Automakers and
transportation providers are scrambling to build
or adopt solutions that reduce their carbon
footprints to stay in line with the mandated
emissions goals. This change primarily has been
made possible via electric vehicles (EVs).
Alhough transport electrification is still in its
nascent stages, the idea of zero-emission
vehicles has captured the collective consumer
consciousness, as global sales of EVs registered
impressive growth over the last decade. While
global sales of passenger cars hit a plateau in
2019, EV sales grew 9% year-on-year, accounting
for 2.6% of global car sales last year.
A large chunk of these sales came from China,
with the country eclipsing the West in its fervor
to adopt EVs. While there were roughly 17,000
electric cars on the road in 2010, the number rose
to 7.2 million by 2019, with 47% of them in China.
Chinese EV market share in 2019 was 4.9%, nearly
double that of the global average.
Though the coronavirus crisis and the associated
economic hardship could last a few more years
and dampen EV adoption, it would likely not
have a sizable impact on long-term adoption
trends. Improvement in EV lithium-ion battery
and fuel cell technology has made EVs more
affordable, with entry variants in commercial
vehicles available at competitive prices
compared to internal combustion engine (ICE)
vehicles.
Consumer interest in EVs has led original
equipment manufacturers (OEMs) to improve
existing models and design new ones, as the EV
market progresses from the early adoption
phase to mass adoption.
Global electric car stock 2010-2019 (Source: IEA)
Vishnu Rajamanickam
Technology Reporter
vishnu@freightwaves.com
+49 17645930780
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PASSPORT RESEARCH
September 25, 2020 | 10:00 AM ET
Parameters that power electric vehicle adoption
Though EV technology is exciting from the transport industry perspective, to gain widespread
adoption, these vehicles must perform equally or better than their conventional counterparts — the
ICE vehicles. A few of the most important parameters are discussed below.
Price point
For an electric vehicle, a bulk of its on-road price depends on the procurement cost of its electric
batteries. Over the years, the price of batteries has gone down dramatically due to technological
progress and better processes of mining and refining materials needed to build a lithium-ion
battery — the mainstay power source of most EVs.
Lithium-ion batteries average roughly $150 per kilowatt-hour (kWh) today, which is more than six
times less than the $1,100 per kWh in 2010. The International Energy Agency (IEA) reported that the
average battery pack size used in light-duty EVs have progressively increased every year, from 37
kWh in 2018 to 44 kWh in 2019. A lot of EVs today are available with a 50-70 kWh range.
(Source: Shutterstock)
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Mileage per charge
The mileage per charge of an electric car directly corresponds to its battery energy densities. Today,
the battery cells can reach nominal energy densities of 0.14 to 0.17 kWh per kilogram (kg). This limits
the driving range of an electric vehicle to around 200 miles between charges. Though this might
look like a disadvantage compared to ICE vehicles, the reality of automobile usage comes up as an
interesting statistic.
The U.S. Department of Transportation reports that eight out of 10 commuters in the U.S. drive less
than 24 miles round trip each day, making commuters who travel over 100 miles a day an outlier.
This would mean that EVs do not hamper the lifestyle of commuters to a large extent.
Desmond Wheatley, the president and CEO of Envision Solar, explained that the future of EVs was
not in packing more miles per charge but instead serving the needs of the consumers. This
decreases the number of batteries needed on the vehicle and inevitably reduces the vehicle sticker
price. If EVs could be priced below ICE vehicles, it would propel adoption further.
Fueling possibilities
The issue with the current idea of an EV charging infrastructure network is that it needs to be
spread out in the same way gas stations are today. Wheatley pointed out that electrification must
look beyond the idea of charging stations being specific destinations where drivers congregate, as
this is an ICE vehicle model and not suitable for EVs.
“ICE vehicle fueling is achieved by everybody going to specific destinations, which are designed for
fueling and nothing else — although these destinations are dressed up with convenience stores and
cafes. This model will change in the future, with charging taking place where people and vehicles
already go — workplaces, restaurants, shopping malls and sports venues. EVs can be charged when
they are idle rather than users taking them out for the specific purpose of charging,” said Wheatley.
This way, even if EVs take a longer time to charge than ICE vehicles, they would always be charged
enough for people to travel comfortably over their daily routine.
Still, charging infrastructure networks must be built to accommodate commuters who travel long
distances. This could become a chicken-and-egg problem, however, as people would likely not be
convinced to shift toward EVs if they witness a lack of an elaborate charging infrastructure network.
The EV automakers might not see the incentive to build an intricate charging network if they have a
lukewarm response from society.
In this context, the onus to build out the infrastructure should ideally rest on the government, as
governments have had a long history in putting infrastructure in place before achieving tangible
adoption — like the motorways and interstate freeways in the U.S. and the autobahn system in
Germany.
Maintenance needs
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An EV would perform spectacularly better in this aspect as it has far fewer moving parts than a
conventional ICE vehicle, thus needing very little maintenance. EV users, if they have renewable
energy sources like solar panels installed in their homes, could power their vehicles for free through
their life span.
Last-mile delivery fleets can save a considerable amount of money on fueling the vehicles and
maintenance, making the total cost of ownership (TCO) of an EV less expensive than an ICE vehicle.
With EVs, fleets can also comfortably address their carbon emissions goals regarding policy and
compliance requirements.
Setting up an ecosystem encouraging EV adoption
For EVs to be adopted en masse, automakers must look to build vehicles that blend utility, comfort
and ease of use at a competitive price tag. Today, EVs’ sticker price is expensive enough to be out of
reach for the average commuter, thus considerably shrinking the size of its consumer base.
Wheatley pointed out that to reduce sticker price, the number of batteries fixed within an EV should
be brought down. “In the future, we would be seeing a lot of EV models that come with much less
range,” said Wheatley. “The reason is not that consumers will not be prepared to pay the premium
associated with longer-range EVs, but rather because they hardly ever use that range.”
That said, battery prices are coming down precipitously with technological advances, significantly
impacting EV prices. A sustained increase in EV demand combined with economies of scale will
further help lower EVs’ sticker prices.
Automakers and consumers will have to lobby in favor of government funding to transport
electrification, including subsidies to buyers, tax cuts for EV makers and setting up EV infrastructure
like charging networks. Stimulus spending on transport electrification will enable governments to
move closer to their climate goals, as EVs can make a massive difference with their ability to run off
renewable energy sources.
Wheatley explained that the EV industry would see syndication of automakers, helping create a
standardized system for building EV infrastructure. For instance, companies can join together to
create charging stations with the same energy specifications and charging plugs, making stations
uniform and available for all EV variants and brands. Rather than being concentrated across
metered facilities that specifically exist for fueling, these charging points could be stationed in
places where people frequent.
The energy efficiency chasm between EVs and ICE vehicles
The ICE vehicles run on a far higher number of parts compared to EVs, making it a lot more
inefficient in its ways of propelling a vehicle. In essence, the ICE burns fuel to provide the energy
needed to move the pistons within the vehicle. However, the inefficiency of the process makes
roughly 70% of the energy to dissipate as heat, noise and friction.
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PASSPORT RESEARCH
September 25, 2020 | 10:00 AM ET
An EV is built to run at very high efficiency, with over 90% of the energy going into moving the
vehicle on the road. The fewer moving parts and the efficiency of the process ensure little idle time,
little to no heat creation, little to no noise and zero carbon emissions at the exhaust.
Nonetheless, EV efficiencies have been getting better every year, courtesy of the technological
breakthroughs in batteries, including higher energy densities and more efficient power
transmission.
That apart, the recyclability potential of EVs far outstrips ICE vehicles, which is harder to recycle due
to the variety of its parts. EV recycling is mostly about its batteries, which can be easily stripped and
boiled down to their constituent elements and recycled effectively.
Impact of EV manufacturing on ICE vehicle production lines and workforce
With EVs having fewer moving parts compared to ICE vehicles, EV manufacturing plants can look
quite different from their ICE vehicle counterparts, requiring a workforce with different know-how
and skill sets. In the future, where EVs become more mainstream and cut into the market share of
ICE vehicles, existing ICE production plants might have to be repurposed and workers retrained to
meet needs.
“We need to concentrate on what happens to the labor force that is currently engaged in the
production of ICE vehicles and its drivetrain components, including the engine, gearbox, driveshaft
and other large components, which will not be needed with EVs,” said Wheatley. “EV production
lines are also getting automated. This could lead to declining workforce requirements.”
With EVs requiring less maintenance during their lifetime, the number of repair and maintenance
shops would also considerably reduce. This could potentially result in a backlash due to lost
livelihoods, with the onus on the government and associated EV stakeholders to make sure people
are retrained or well compensated.
That said, workforce shuffling and repurposing are inevitable with technological disruption, which
was seen when horse-drawn buggies were replaced with ICE vehicles in the early 20th century.
However, an EV ecosystem would bring in new jobs to build out the supporting infrastructure in
terms of battery production and charging dock networks.
Increasing grid capacity to support EV infrastructure
Discussions over transport electrification are centered around raising adoption levels and building
out charging network infrastructure required to support the EVs on the road. However, it is easy to
overlook the issue with the lack of enough grid capacity to support the EV ecosystem — in a reality
where EVs dominate the auto market.
Electric grids within cities are built for current load scenarios. When EVs become mainstream, grids
will witness massive 40% increases in the baseload, which will be unsustainable with existing grid
infrastructure. Improving this situation would require cities to build power stations, transmission
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September 25, 2020 | 10:00 AM ET
and distribution infrastructure and substations — amounting to several years of work and billions of
dollars in investment.
“At the current rate, EV adoption would outstrip grid ability to keep up with fueling it,” said
Wheatley. “Beyond that, even if the grids are built to withstand the load, the centralized vulnerability
that comes along with having all of your fueling infrastructure on a single platform would be an
unsupportable risk.”
Centralized vulnerability with fueling is a topic that the U.S. is familiar with, as the country suffered
during the oil crisis of the 1970s as oil embargoes forced citizens to queue up at gas stations. This led
the U.S. to build the Strategic Petroleum Reserve — storage for petroleum products — to prevent
the country from falling into a similar trap. A centralized electric grid would be an issue in the same
context, as a failure of the grid would mean thousands of people being effectively cut out from using
their EVs.
Wheatley contended that the solution to this predicament is to build several distributed power
generation stations and energy storage options, while also pushing to generate and store energy
locally.
The COVID-19 impact on EV adoption
Though sales of EVs contracted by 25% over the first quarter of 2020 due to COVID-19, estimates
show that EV sales for the full year would remain at 2019 levels, while ICE vehicle sales will drop by
roughly 15% relative to last year. By this metric, the portion of EV sales as a percentage of overall
vehicle sales will continue increasing this year, accounting for about 3% — a 0.4% gain from 2019.
(Source: McKinsey)
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PASSPORT RESEARCH
September 25, 2020 | 10:00 AM ET
Analyzing EV sales across specific regions shows a slight shift in adoption intensity from China to
Europe, with the latter cushioning a decrease in EV sales growth across China in 2019. Europe
increased its overall EV market share to 26%, growing at 44% in 2019, while China registered a paltry
3% growth last year.
Wheatley explained that EV sales would be relatively less affected by the COVID-19 downturn, as the
demographic that adopts EVs is usually farther up on the socio-economic ladder — a segment that
has been less impacted by the economic strain of the pandemic.
Post-COVID, to sustain and improve EV adoption across the board, a combination of consumer
interest, government stimulus and infrastructure spending, and automaker interest in EVs will help
create a smooth transition from an ICE vehicle-dominant ecosystem to an EV-powered future.
