Electric Vehicles: Imminent Breakout or Breakdown? – Forbes

Posted: Monday, July 17, 2017

The media flavor of the day is “Peak Oil Demand” seen as likely due to plummeting battery costs for electric vehicles, which are on the verge of reaching a point where electric vehicles become competitive with internal combustion vehicles and oil consumption drops.  Bloomberg New Energy Finance believes they will be as cheap as gasoline cars by 2025, and the New York Times says “Electric Cars’ Breakout Could Be Near.”

But wait, there’s more. The leading entrepreneur has been “appearing on TED talks, being featured in the New York Times, on the cover of Wired Magazine…”  He has deals in Australia, is working with major electronics companies, and has been raising huge amounts of funds while promising to make “electric vehicle grids a reality” and “to sell electric cars like cell phones.”

Better Place founder and chief executive officer Shai Agassi (3rd R) along with Nihon Kotsu president Ichiro Kawanabe (L), Ministry of Economy, Trade and Industry’s Energy Agency manager Minoru Nakamura (2nd L), Better Place Japan president Kiyotaka Fujii (3rd L), Better Place chairman of the board Idan Ofer (2nd R) and Ambassador of Denmark to Japan, Franz-Michael Skjold Mellbin (R) cut a ribbon celebrating the lauch of the world’s first switchable-battery electric taxi in Tokyo on April 26, 2010. Better Place demonstrated the taxi with the Japanese Ministry of Economy, Trade, and Idustry, and Tokyo’s largest taxi operator Nihon Kotsu. AFP PHOTO/Kazuhiro NOGI (Photo credit should read KAZUHIRO NOGI/AFP/Getty Images)

Oops, my bad.  I used a perverse search engine called “Gargle” and the previous paragraph is about Shai Agassi, founder of A Better Place, which proposed to build stations that would robotically swap out vehicles’ battery packs instead of recharging them. His effort was widely heralded in the media, notwithstanding the obvious, and enormous, challenges. Its failure despite the optimism of so many goes to show that a large grain of salt should go into reviewing press reports and corporate aspirations.

Of course, skeptics abound (including on Bloomberg), but they are derided as resembling the 1980 report that predicted there would be only 900 thousand mobile phone subscribers by 2000.  Which is a good point, although the analogy is a bad one.  (Phone technology, in terms of memory, technology, and price, has advanced by orders of magnitude, while the 12 volt battery in the average car is only marginally improved from three decades ago.)

But that doesn’t mean that past failures and irrational exuberance prove this episode of enthusiasm for electric vehicles is just as irrational and likely to fail.  Electric vehicles are much improved in the past decade and batteries have become much cheaper.  Much is a key word, and all too vague while “cheaper” leaves unsaid “but still expensive.”

There are some metrics available, including the recent report that GM is paying only $100/kwh for the batteries for its new Bolt.  Except that is apparently the cost per cell, not the battery pack, and it hasn’t been confirmed.  Other manufacturers are said to be paying $195/kwh and Elon Musk allegedly promised a price of $250/kwh for a large utility scale battery installation in South Australia, but, as Forbes’ Rod Adams notes, that probably translates into a total cost of $500-600/kwh. (Several writers have also argued Musk appears to be overstating the savings from his just-announced solar shingles.)

Battery costs have certainly fallen, if as reported they are $195/kwh and that isn’t another misreading of the evidence.  Because while there are sources that show precise battery costs over the past decade or so, most reports give a broad range.  In a 2015 Nature article, Bjorn Nykvist and Mans Nilsson found that estimates for battery costs in 2012 were from $300-$1100/kwh, depending on the source.  Because there isn’t an open market for battery packs, most of the “data” is from media reports.

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