J. B. STRAUBEL, TESLA CTO1
I AM embarrassed to say that EVs (electric vehicles) got short shrift in The Weather Makers, receiving less than a paragraph. By 2005 electric cars had been around for over a century—and had gone nowhere in the marketplace. Hydrogen fuel cells, or even compressed-air cars, were looking more promising. What a change a decade has made!
In 2014, 30 models of electric car were available. The current market leader is the Renault–Nissan Alliance, which had sold 176,000 units by August 2014. Tesla is in second place with about 50,000 units sold. Mitsubishi, BMW, BYD (a Chinese company), Ford and Volkswagen, to name a few, also have models in the market.
Tesla is at the forefront of EV innovation. In September 2014, it announced its biggest investment to date. Partnering with Panasonic, Tesla will build a ‘Gigafactory’ in Nevada that is capable of producing half a million electric-vehicle batteries per year. It will be the largest factory in North America. Construction is due to commence in 2016, and by 2020 it will be producing more EV batteries annually than were produced worldwide in 2013. As a result, vehicle battery costs are expected to drop by 30 per cent.2
The Tesla Gigafactory batteries could prove to be a game changer, not only for transport but also for stationary electricity supply. They would do this by feeding electricity into the grid from their batteries at times of high grid demand, and then charging up when demand is low. As energy expert Chris Nelder puts it:
If Tesla’s new ‘Giga factory’ can achieve its goal and slash the cost of lithium ion batteries . . . it would probably put the cost of owning an electric vehicle (EV) below that of a cheap, average gasoline-burner. Then, EVs could pick up real market share (they currently have less than one per cent of the US market). That would enable vehicle-to-grid (V2G) and vehicle-to-building (V2B) technology to become a real player in grid power, after years of languishing for lack of enough EVs on the road to make it effective. Just 100 electric cars parked at a 150,000-square-foot office building during the day could meet most of that building’s peak demand, shaving off the most expensive hours of the building’s power consumption. With widespread deployment, technologies like this could reduce the amount of expensive peak generation capacity that utilities need to build, and reduce electricity prices across the board.3
Battery technology has not been waiting for the Gigafactory. Already, enormous strides have been made in improving battery performance, as well as lowering costs. In 2014, J. B. Straubel, the chief technical officer at Tesla, said that ‘battery energy density [a measure of energy stored relative to battery mass] has doubled over the last ten years and the curve is not starting to plateau’.4 And the cost of batteries for EVs has fallen more rapidly than projected, from about US$1000 per kilowatt-hour in 2008, to $410 per kilowatt-hour by April 2014.5
In June 2014, Tesla made its patents for the charging of EV batteries public property, saying that it couldn’t possibly manufacture sufficient charging stations to meet future demand. Currently, there are several options: from home-installed plugs that charge overnight to direct-current fast-charge stations that can recharge a battery in 30 minutes and are often located at highway stops to battery exchange facilities that can swap a battery in 15 minutes. The many billions of dollars invested in EVs by car companies across the spectrum attest to a widespread confidence that they have in the future of electric motoring.
In June 2014, France announced that it intended to enter the EV age in earnest—perhaps not surprising given that the market leader in the field is Renault–Nissan Alliance. The French government pledged to install seven million EV charging stations by 2030 and to make 50 per cent of its public-sector fleet purchases from EV models. It also announced a €10,000 subsidy for those trading-in a diesel vehicle for an electric one.6 Despite this dramatic shift towards EVs, the market for electric cars remains nascent: in 2013 Tesla produced a mere 20,000 vehicles, and it was expecting to make 33,000 in 2014.7
The greatest agent of change will doubtless be China. The nation’s first EV manufacturer, BYD, produced just 2000 vehicles in 2013, but it looks set to make 20,000 (mostly plug-in hybrids which can run 70 kilometres on a fully charged battery) in 2014.8
With reforms to green energy incentives, which cut the US$65,000 price tag for a BYD plug-in hybrid by a third, China plans to have half a million plug-in hybrid and electric vehicles (the majority of which will be imported) on the road by 2015 and five million by 2020.9 It’s the sheer scale of the Chinese market that makes it so important, and I have no doubt that the prices of electric vehicles will drop as Chinese manufacturing picks up, just as the prices of solar panels fell.
One hopeful sign for fully electric vehicles concerns the sales trends of plug-in hybrids as opposed to first-generation hybrid vehicles that power their electric motor from energy conserved in braking or by using the petrol motor. Plug-in hybrids are selling far faster at the same stage of delivery into the market as first generation hybrids, which gives hope that they can build a far larger market share, and faster.10 This is important because a limited supply of batteries means that plug-in hybrids (which have smaller batteries) are likely to reach the Chinese market earlier than pure electric vehicles.
Some electricity utilities hope that electric vehicles will drive up the demand for power, and so give their languishing industry a second life. But such hopes are forlorn. Estimates from Germany indicate that, if every vehicle on German roads were electric, national electricity demand would rise by only around 20 per cent, a figure that would not vary greatly among developed countries.11 And because electric vehicles might feed into the grid at times of peak demand, when electricity is most expensive, they may actually detract from the profitability of the utilities. In fact, electric vehicles are perfect for storing energy from renewable (intermittent) sources like wind and solar, and they are widely seen as enabling wind and solar to take a larger share of the electricity-generation market.
The low oil price prevailing in early 2015 has caused some to wonder whether sales of EVs might slow as a result. It is possible that some potential EV buyers might be persuaded that petrol or diesel vehicles represent good value. But it’s also possible that potential new car buyers will think that the wild fluctuations in the oil price are likely to bring far higher prices in future as OPEC countries try to recoup their losses. As of mid-2015, the impact is unclear.
Despite the astounding pace of innovation seen in EVs, nobody expects them to dominate the road anytime soon. But, like solar and wind, electric vehicles are a disruptive technology. It’s reasonable to assume that by 2020 electric vehicles will be eating away at oil demand without creating demand for coal or gas. They are the perfect storage system for renewables, and the synergy created with their widespread deployment may well provide the momentum for a decisive end to the fossil-fuel era.