Nothing new in a recent article in Forbes ("Global Electric Vehicle Market Looks To Fire On All Cylinders In 2018"), but a nice summary of the state of the EV market. It also repeats the estimate that electric cars will reach price parity with the internal combustion engine (ICE) by 2020 (vs. other estimates that center around 2023-2025).
Predictions around price parity of EV’s to ICE’s have been focused largely on the upfront purchase price of EV’s versus ICE’s. An interesting article in the FT, however, suggests that the automobile leasing market is creating a more competitive environment. EV’s have a better second-hand value than ICE’s. As ICE’s become less attractive, the value of the car at the end of the lease (the residual value) falls. Accordingly, lease companies need to increase the monthly lease payments to compensate for the greater depreciation in value during the term of the lease. In comparison, the Tesla S has one of the highest values in the second-hand car market, i.e. it has a higher predicted residual value. The lease company can, therefore, reduce monthly lease payments, betting that the car will be worth more at the end of the lease. As EV’s become increasingly popular, their second-hand value continues to rise and the value of ICE’s fall, creating a cascade effect. FT ("Costs, not the environment, will drive switch to electric cars".) Effectively, this is a futures market—car buyers are sending a message on where they think EV demand will be, relative to ICE’s, in three years’ time.
EPA Administrator, Scott Pruitt’s, announcement last week that the EPA intends to roll back emissions standards for automobiles continues to receive a lot of press analysis. A particularly scathing article in the The New York Times pulled apart the EPA’s justification for rolling back the rules. The article goes on to say that the EPA’s analysis is so lacking in scientific groundwork that it is unlikely to survive court challenges. NYT ("in His Haste to Roll Back Rules, Scott Pruitt, E.P.A. Chief, Risks His Agenda".) Green Car Reports ("EPA does not set fuel-economy limits: get this right, journalists!".) The bottom line is that this is going to be tied up in rule making and court proceedings for years.
An interesting report is out by McKinsey analyzing the current EV market. They conclude that an EV range of 200 miles is the point at which people feel comfortable driving EV’s. Now that the race for range is concluded, “the race for mass market electric vehicles has begun.” They conclude that, with average battery range exceeding customer expectations and with decreasing prices, EV’s may be close to a commercial tipping point. Read the McKinsey Report ("What a teardown of the latest electric vehicles reveals about the future of mass-market EVs".) Reading this report, it is clear that the growth of the market is being driven by the fact that consumers see electric cars as a significant technological improvement over ICE’s.
Finally, while much of the press is filled with the excitement of new EV model announcements and launches, it is important to watch the geekier world of battery technology. Most of the news on battery tech has also been focused on the solid-state batteries and the inherent benefits they offer. However, in the shorter term, it seems that there is more life yet to be wrung out of the lithium-ion battery. Emerging from the shadows, Sila Technologies announced a partnership with BMW to develop lithium-ion batteries with a significant improvement to the negative electrocute. Without going down a rabbit hole of the chemistry (or is it physics?) of how lithium-ion batteries work, the impact could be a 10-15% and as much as 40% improvement in the amount of energy that a battery can store. MIT Technology Review ("This battery advance could make electric vehicles far cheaper".) These are big numbers in the battery world where improvements are generally measured in a few percentage points at a time.