04.09.14

How Quickly will the Electric Vehicle Revolution Come?

Posted in Uncategorized at 3:45 pm by Administrator

In a previous posting I stated my belief that the pure electric vehicle was the way of the future and that this sector of the automobile industry would grow more or less continuously for the foreseeable future. I decided to do a bit more investigation into how quickly that could happen given trends in vehicle sales over the past few years. I also decided to look into what has been happening with fuel economy rates given that retail gasoline prices have more than doubled in North America in the last ten years. Unfortunately, what I found was not terribly encouraging.

The chart below displays U.S. vehicle sales since the turn of the century.

There are a couple of things of note.

First, the shift from passenger cars to “trucks” (which includes SUVs) between 2000 and 2005 was significant. This trend did not slow down until the price of gasoline hit about $2.30/gallon and even then the impact was not dramatic. What was very dramatic was the decline in vehicle sales in the U.S. as the financial crisis of 2008/2009 battered the economy.

In those years, when cash was scarce for so many Americans, vehicle sales dropped almost 30% sending almost every U.S. automobile manufacturer into bankruptcy. Truck/SUV sales were hit particularly hard, dropping below sales for passenger cars for the first time in the 21st Century. Presumably this reflected a recognition that the cost of owning and operating a truck/SUV was hard to justify in tough economic times.

As the economy gradually recovered it could have been the case that this lesson would have had a lasting impact; that more economical and fuel-efficient vehicles would continue to dominate. Sadly (in my opinion), this has not been the case.

Sales of Trucks/SUVs have rebounded even more quickly than sales of passenger cars and have regained their leadership position. There is every indication that the gap will continue to grow despite historically high gasoline prices.

What impact have these buying patterns had upon the average fuel consumption for the U.S. vehicle fleet? The trends are shown in the graph below.

The gap in fuel economy between trucks/SUVs and passenger cars is large and has actually increased from 6 MPG to over 7 MPG since the turn of the Century. This is primarily because the two categories of vehicles are treated differently under the Energy Policy and Conservation Act which mandates certain levels of fuel economy for vehicles manufactured in the U.S.

The bottom line is that despite having made some progress in the past few years Canada and the U.S. continue to exhibit the worst vehicle fuel economy in the world (for an in-depth analysis see “International comparison of light-duty vehicle fuel economy: An update using 2010 and 2011 new registration data”). And despite record-breaking retail gasoline prices, tough economic times, and an increasing awareness of environmental issues we keep slipping back into the habit of driving fuel-hungry vehicles.

There are justifiable reasons for that purchasing pattern. We do get some nasty weather in much of North America including snow and ice which makes a four wheel drive vehicle a safer ride. And because there are so many SUV’s, pickup trucks and 4×4’s on the road driving a smaller, lighter passenger car can be more than a little intimidating. To some extent the whole situation becomes one of “I need to drive a big, strong vehicle because everyone else has a big, strong vehicle.”

Is there any realistic hope that vehicle buying habits will change in North America anytime soon? The incentives for such change could include significant increases in retail gasoline prices (very likely in the next 5-10 years), significant changes to the CAFE rules (unlikely because of intractable opposition from automobile manufacturers and conservative politicians), and/or a real change in public attitudes towards CO2 reductions that could moderate climate change (I have seen very little evidence of this as described in another blog posting).

Taking all factors into account the prognosis for a significant change to more fuel-efficient, generally more expensive and smaller vehicles is poor. That does not bode particularly well for EV’s which are even more expensive and often smaller than fuel-efficient gasoline, diesel, or propane-powered vehicles.

It was recently announced here in British Columbia that the the “Clean Energy Vehicle Program Rebate” has depleted its funding pool and would not be extended. These rebates provided up to $5,000 in direct government grants for EV’s, representing about 14% of the price of a Nissan Leaf. Even with this fairly generous rebate program less than a thousand EV’s were sold in BC in the last two years – and BC considers itself (perhaps incorrectly) to be the “greenest” province in Canada.

There is another concern that may start to become apparent over the next year or two. The new breed of EV’s rely upon Lithium-ion batteries – the same type of battery that is used to power mobile phones, laptop computers, iPads and other tablets. Having used these types of devices extensively over the past 10 years I have never had a single device where the battery was not essentially useless after about 3-4 years. Perhaps automobile batteries will perform better – I certainly hope they do. But as the early Nissan Leafs and Tesla’s start to age they may degrade significantly; And that would have a chilling impact on EV sales around the world (note that the Prius uses a NiCad battery that has proved to be extremely reliable over 10 years or more).

So have I changed my opinion on EV’s? The short answer is “No”. I still believe that we have embarked upon a revolutionary change that will take place at a steady pace. However, it could well be that the pace of that change will be slow for most of this decade. Only a serious spike in the price of oil, which is always a possibility, could radically speed up the EV revolution. But that would have all kinds of other negative economic impacts that we would all probably like to avoid.

Addendum:

Less than a week after writing this post I was on a business trip to Anaheim and finally was lucky enough to find a Nissan Leaf “in the wild”. It’s owner, Matt Buchanan was kind enough to spend a few minutes talking to me about his beautiful “Felix”. In fact he stated that he was always happy to talk to people about the car and has had lots of questions about it.

Matt has had the car for a few months and is very pleased with it. He noted that the acceleration was particularly impressive and he feels that the Nissan Leaf is the best engineered car he has ever driven.

In terms of range Matt feels that the 75 mile range on a charge is a reasonable claim although he has not driven more than about 50 miles with the car yet – hasn’t had the need to in his normal driving.

One issue that Matt highlighted was the situation with fast charging stations. Originally almost all the stations were free but some are now charging a fee – typically a monthly subscription plus a per minute charge. So this will impact the economics of driving the car if the trend continues.

Overall Matt is very satisfied with his “Felix” and would recommend a Nissan Leaf to anyone considering purchase of an EV.

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