At the turn of the 20th century, a third of all cars on the road were electric. Electric cars had advantages over their internal combustion engine rivals: According to the US Department of Energy early electric cars “were quiet, easy to drive and didn’t emit a smelly pollutant like the other cars of the time. Electric cars quickly became popular with urban residents — especially women. They were perfect for short trips around the city, and poor road conditions outside cities meant few cars of any type could venture farther.”
So what happened — why did gas-powered cars win? It was the rise of Henry Ford’s Model T, which made gasoline-powered cars affordable and available, that killed the electric car. For nearly 100 years after the Model T, there was little focus on developing an electric car that could compete with gasoline-powered ones.
The Toyota Prius, a hugely popular hybrid, and then Tesla, were the catalysts for the renewal of the electric car. Toyota’s and Tesla’s battery technology advancements made electric cars viable alternatives to gas-powered cars. Plus, Tesla made them super fast, fun to drive, and sexy (which is why the Tesla models are “S” “3” “X” and “Y” (they would have a Model E but Jaguar blocked it due to having had a model called an “E-Type” — so they went with a “3” because it’s basically an “E” backwards).
The Rise of EVs
Sometimes two opposing things can be true at once. For electric vehicles those two things are:
- Electric vehicles make up a small percentage of overall car sales; but
- Sales of EVs are growing exponentially.
About 1 in 20 new cars is now electric. All the major automobile manufacturers are pouring billions of dollars into EVs. Currently, Tesla models make up over half of EV sales, but EVs from other auto manufacturers are gaining market share. A year ago there were 25 EVs on the market. Now there are 46. “There will be 63 EVs on the market by year’s end, according to S&P Global Mobility’s forecast. Expect 192 EVs to choose from by 2026, and 253 by the end of 2030.” Source.
Even though sales of EVs are small as compared to internal combustion cars, if EV sales continue to grow exponentially, over the next decade we’ll be seeing EVs everywhere. That’s how exponential growth works — at first, there seems to be little change, but then growth on growth makes it seem like the new technology is everywhere. That’s what we’ve seen with other technology/products like the Internet, mobile phones, PCs, Facebook, streaming services, etc. Check out this IFOD on exponential growth.
Here’s a chart from Bloomberg showing what the US adoption of EVs might be if it it follows that of other countries who’ve previously hit the 5% EV sales tipping point:
I’ve owned an EV for about a month — a 2022 BMW i4 M50. It’s ridiculously fun to drive. It gallops to 60 mph in a mere 3.3 seconds on the back of its dual motors which produce 536hp. It’s quiet and smooth. After my month of driving an EV, when I drive my wife’s gas-powered car, it feels like using a flip phone after being used to an iPhone.
I plug my EV in at night, and when I wake every morning, my car is full of energy (actually 80% charged, which is the recommended charge unless you need the full range). It has 270 miles of range which is more than enough for my usual driving. I haven’t taken it on a road trip yet and likely would choose my wife’s car for a long trip at this point (more on that below).
I bought an EV mainly because its super fun to drive. When friends drive my car they typically giggle or even shout “whoo who.” It’s a totally different experience than driving a gas-powered car. Full torque with zero delay.
It also has environmental benefits. EVs are powered by the electric grid which is dirty, so EVs aren’t totally “clean.” And, there are carbon emissions involved in EV manufacture, plus the environmental costs of battery production. But, even with all that, EVs are less carbon intensive than gas-powered cars. Here’s a study from Yale University published in Nature that finds that EVs are substantially less carbon intensive than gas-powered cars after accounting for both direct and indirect emissions. But how clean your EV is depends on how clean your electric source is. Here’s a link to a calculator that compares your EV to a gas powered equivalent car for your location and EV model.
Driving an EV is unbelievably cheap. Even during the summer, when the cost of electricity is higher, it costs about $3.50 per 100 miles to power my EV. Starting in October, my cost per 100 miles will fall below $2.00. Compare that to my prior car, a 2018 BMW 440i that got about 22 mpg around town. At $4.50 per gallon for gas, that translates into $20.45 per 100 miles for the 440i.
EVs don’t require much in the way of maintenance; the only recommended maintenance for my i4 is a checkup at the dealer in two years. According to my BMW sales guy, I might need wiper blades between now and then. That’s it. The brakes should last super long as the car is mainly slowed by “regenerative braking,” which means the engine slows the car and recharges the battery. As compared to a gas-powered car, there just aren’t many moving parts. No oil. No filters. No cooling fluids. Super simple drivetrain.
GM says it will stop producing gas-powered cars in 2035, and Audi will stop by 2033. Other car manufacturers have similar plans. But there are huge challenges to EVs becoming truly mainstream. Here are the biggies:
- Installing a home charger is expensive. It cost me $2,400 to put a level two charger in my garage. That’s expensive and that sort of upfront cost will dissuade many from buying an EV. Of course, the $7500 federal tax credit more than makes up for that but you don’t get that until you file your return the following year. Plus, I’m lucky to have a garage. Many people don’t have a garage or live in an apartment or condo without a garage. If I didn’t have a garage I wouldn’t have bought an EV because of the need to charge it. Widespread adoption will require apartments and businesses to install chargers for their tenants.
- Lack of Charging Infrastructure. When my wife gets a new car in a few years, it won’t be a fully electric car (it might be a plug-in hybrid, however). There aren’t that many public fast chargers, and even if we use one, we wouldn’t want to have to stop every few hours and wait 30-40 minutes for the car to charge back up. In order to fully embrace EVs, charging infrastructure will need to be greatly expanded and battery technology will to improve so charging can be done much quicker.
- Enough resources to make enough batteries. Batteries currently use lithium and nickel, among other minerals. Demand for lithium is expected to grow by 7 times between 2020 and 2030. Extracting lithium, nickel and manganese currently requires huge amounts of energy which eats into the environmental benefits of driving EVs. Plus, cobalt is also required and 2/3rd of which comes from the Democratic Republic of the Congo which creates human-rights concerns. So, it’s a challenge to mine all the materials necessary to power an EV future. Battery technology will need to progress and hopefully use less of scarce or hard to mine minerals. Recycling of batteries will need to be part of the solution. Read more about these challenges here.
- They’re Expensive. Thus far, EVs have been attractive for those in the upper socioeconomic echelons. The average EV costs $67,000 and there are few viable budget models. In order for EVs to go mainstream, we’ll need to see cheaper ones.
- Consumer Preference. A recent survey by Consumer Reports found that 36% of people would “definitely” or “seriously consider” an EV as their next auto purchase. While that’s a large number of potential buyers, it still leaves 64% who won’t consider an EV yet. The biggest reason cited for not considering an EV is charging logistics. That makes sense. The number one question I’m asked about my car is “what’s the range?” and “do you worry about running out of charge?”
Why the EVs are Probably the Future
Will EVs overcome these challenges? Maybe. Looking back at the adoption of the gas-powered car in the early 1900s is instructive. In retrospect, the triumph of the automobile appears inevitable, but in 1900, the future of the car was anything but certain. It was a novelty at the turn of the twentieth century; there were only 0.11 cars per thousand people compared with about fifty non-farm horses per thousand people. There were few paved roads and no gas pump infrastructure. Cars were prone to break down. And they were expensive; in the early 1900s, cars cost about $850 while a horse and buggy could be had for $50.23 Most people believed that automobiles would never amount to more than an indulgence for the wealthy.
Check out this chart of cars vs. horses from the investment management firm ARK:
Over the first few decades of the 20th century, gasoline delivery infrastructure was built, roads were paved, auto repair shops sprung up all over. The force of capitalism spurred innovation, reduced costs, and led to the widespread adoption of automobiles.
The same sort of pattern may play out for EVs. There are tons of advantages to them (not the least of which is how well they drive) and are better for the environment. Car makers are moving to EVs from gas-powered cars not because the government is making them or because they altruistically want to reduce emissions. They are doing so because they see that EVs are just better cars. They know that consumers will prefer them in the future. They are confident that the technological and infrastructure issues are solvable.