Oasis Charger Corporation EV Market Update 060118

Release Date: 06/01/18

New Bullish Forecasts on EV Sales.
A lot of important news in the electric vehicle market this week.  Top of my list, is a new report out by Bloomberg New Energy Finance (BNEF) predicting a 20-fold increase in electric vehicle (EV) sales by 2025, reaching 55% of new car sales by 2040.  This would mean that by 2040 about a third of the cars on the road will be powered by battery—displacing about 6.9 million barrels of oil per day.  Importantly, they forecast that battery costs will fall to $70 per kWh by 2030, well below the $100 per kWh that analysts equate to the point at which the price for battery operated cars falls below the internal combustion engine (ICE).  For comparison, battery costs in 2010 were $1,000 per kWh.

One note of caution that caught our eyes: they predict a tapering of growth in EV sales in the mid-2020’s due to the fact that the charger infrastructure may not be able to keep up with this growth (the other factor potentially slowing growth being potential shortages in key minerals such as cobalt). Bloomberg New Energy Finance ("Electric Vehicle Outlook: 2018".)
The International Energy Agency (IEA) also came out with predictions on the growth of the EV market this week.  They believe that there will be 125 million cars on the road by 2030 (circa 10% of all cars).  They claim that the number could be double that if countries take a more aggressive and proactive approach to climate change and reducing air pollution.  CNBC  ("Electric vehicles will grow from 3 million to 125 million by 2030, International Energy Agency forecasts".)  An example of that latter point is Norway, with strong tax incentives for EV’s, where EV’s accounted for over a third of new car sales last year. 

Axios and Survey Monkey released a poll this morning on consumer attitudes to EV cars.  It shows that 23% of respondents are “somewhat likely” to purchase an EV car as their next car, with 14% “extremely likely” to make that purchase.  This is largely consistent with the AAA’s survey we discussed in the May 11 blog.  That survey found 20% of consumers are likely to buy an EV as their next purchase.  EV sales currently run at around 1% of new car sales.  These survey numbers (quoting BNEF’s Salim Morsy from BNEF)  “… actually tell us that, given the level of education of the market as it is now, there is still quite a lot of space to grow for electrification.”  

The Axios/Survey Monkey poll also gives some interesting data on the consumer hurdles to purchasing an EV, breaking down the reasons why 62% are “unlikely” to purchase an EV as their next car.  Nearly half of respondents cite lack of charging stations as the reason why they are unlikely to purchase an EV and 41% citing initial cost. AXIOS ("Exclusive poll: Electric cars show growth potential despite doubts".)  These numbers are in line with the EV sales growth predictions and findings by BNEF, the IEA and others—the initial cost concerns will largely disappear as battery costs continue to fall with the main issue being whether the charger infrastructure can keep pace with the growth in the EV market.  Interestingly only 9% mentioned range as an issue, which indicates that the automakers view that circa 250 mile range vehicles are a suitable standard is right.

While we continue to see bullish forecasts on the EV market, one note of caution from several surveys about the attitudes of salespeople in dealerships in the US, China, and in the Nordics to EV cars.  These reports show salespeople discouraging consumers from buying EV cars.  One of the surveys from Consumer Reports, however, found that, where the automakers have made a big investment in EV cars, dealers were more likely to support EV sales.  Green Car Reports ("Car dealers push buyers away from electric cars worldwide, not just U.S., studies find".) The results of these surveys are not altogether surprising given the challenge that EV’s pose to dealership economics.  Margins on new car sales are pretty slim and dealerships tend to make more money in the service department.  With their relatively low maintenance requirements (anecdotally there are early Prius buyers who are still on the first set of brakes after 70,000 miles), EV’s pose a challenge to the auto dealer’s profits.
More News on Solid State Batteries
An important announcement out of Woburn, Massachusetts—the Detroit of the EV market?  A report in Wired claimed that Ionic Materials has developed a solid state battery that can withstand higher temperatures and offers higher capacity.  While a number of companies have claimed breakthroughs in solid state batteries, they have stumbled in creating a battery that remains stable under charging and discharging and can be scaled to production levels. Green Car Reports  ("Battery tech may be getting a big solid-state boost soon".)
Oil Prices—the end of “lower for longer”?
Bloomberg reports that some options traders are betting on $100 oil over the next 12 months—equivalent to circa 93 million barrels of oil.  Crude oil futures have also hit 3-year highs with December 2020 crude hitting $70 a barrel, signaling that the period of “lower for longer” oil prices may be at an end.  Bloomberg.com ("The $100 a Barrel Oil Wager Comes Back to the Options Market".)

We love to showcase some interesting early runs at the EV market.  Mike Corbin, whose name will be familiar to those who ride motorcycles for his saddles, designed a bubble electric car in the 1990’s.  The Corbin Sparrow had a 40 mile range, a 26-hp electric motor that could go 70 mph and cost $14,000: