The Wall Street Journal said the star of the LA show was Tesla, whose influence “can be seen in every corner of the L.A. Convention Center.” Yes, the company is losing money and has had issues producing at the scale it promises; but it also has a waiting list of half a million and technology that experts (and drivers) love. In addition, VW showed the ID Buzz; it lacked psychedelic writing, but looked otherwise just like the old hippie buses—and is fully electrified. The company promises the equivalent of a people’s electric car by 2020, and a dozen more models by 2025. BMW’s i8 Roadster, a plug-in-hybrid, got strong reviews; BMW says it will feature an electric Mini by 2019 and two dozen electric models by 2025.
Conventional American carmakers are definitely in the game. The Chevy Bolt (pictured above) is cheaper than any of the above ($30,000, after the federal tax credit); has a range of almost 240 miles; and is a “hell of a car,” says the Journal’s car guy, Dan Neil. The Bolt was Motor Trend’s 2017 Car of the Year and GM is promising a full range of EV models by 2023. And let’s not forget the Chinese, who not only have more EVs actually on the road than any other country, but also accounted for 43 percent of EV production last year, according to McKinsey research. Chinese consumers can choose from something like 75 models, and get a healthy subsidy (of about 23 percent of the sale price) for doing so.
“Every global carmaker is pouring resources into electrification,” concluded the Journal, “which lives in harmony with other rising tech such as autonomy, immersive connectivity, and sharing. The OEMs are coming and they’ve got their knives out.” To a degree, the drivers are coming, too. There were more than 2 million EVs on the road in 2016, double the number of 2015, according to the International Energy Agency, and the figure is running well ahead of 2016 this year. “The future is all electric," says GM product chief Mark Reuss.
If all this optimism sounds familiar, it should be. Many a seer has seen EVs ramping up market share for many years, and many of these predictions have been embarrassingly wrong. Carlos Ghosn, CEO of Renault-Nissan was off by 90 percent (and McKinsey has been over-eager, too). That said, considering the commitment that the major American, Asian, and European carmakers are showing, I think this time may be different.
There have been two major barriers for widespread consumer acceptance—price and “range anxiety”—and the trends are both good, and accelerating, on both. First, costs are falling. Yes, subsidies are still important; when Denmark cut back on its support, sales plummeted. But much more important is that the underlying costs—specifically, of batteries—are coming way down. Battery-pack costs have fallen from about $1,000 per kilowatt hour in 2010 to $230 in 2016, according to McKinsey research. That is not enough to make EVs comparable in price to conventional cars, but it’s getting closer. There could be price parity with gas-powered cars by the early to mid-2020s, says Barron’s. (Of course, that is the kind of prediction that has been wrong before …)
Second, the “range anxiety” issue—people worried being stranded when the power runs down—is much less acute. The Bolt gets close to 240 miles per charge, the long-range Tesla 3 more than 300, and most other models around 150. People still might fret at using an EVs on cross-country road trips, but at those ranges, they can be comfortable using them for commuting and shopping. And again, improvements can be readily anticipated, even assumed, as we have already seen in terms of performance. EVs are much quieter than conventional cars; require less maintenance; and now deliver a really good driving experience. In Los Angeles, Jaguar showed off the I-Pace, which goes 0 to 60 in less than four seconds, and will hit the road next year. “It’s amazing how much fun EVs are,” notes one car writer, “when you’re not worried sick about running out of juice.”
Which brings us to “Amara’s law,” which states that “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run." I think that when it comes to EVs, we have certainly seen the overestimation phase, and we might be edging closer to the disruptive one.
None of this is inevitable, of course, and there will be speed bumps along the way. It’s worth noting that making an EV has above-average environmental costs, because of the need to mine the elements required by the battery, such as lithium and nickel. Its environmental benefits are less (but still exist) if it is charged using coal. And if there is a big shift to EVs, countries are going to need to build new power capacity. In many developed markets, getting permission to build new plants is not easy, and in less developed ones, there are shortfalls already. Finally, charging needs to improve, in terms of both speed (it takes about an hour for conventional charging stations to provide power to go 25 miles) and availability.
But the larger point is that EVs are becoming normal, no longer oddities favored by the greener-than-thou. And the problems named above are far from insoluble. The dynamism of the market economy is such that it is easy to imagine that alternative components will be discovered; that the supply of infrastructure will meet demand; and that technology will improve. Optimistic? Yes. Realistic? I think so. That was the message in the air in Los Angeles and Tokyo.
