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Electric Cars: Massive Hype, Limited Value

Highlights

  • Electric cars are generating an enormous amount of hype which attracts a lot of direct and subsidized investment
  • But an optimistic estimate of the potential value of broadly deployed electric cars is less than $400/car/year
  • This is about one third of the cost disadvantage of a future electric car with an 80 kWh battery pack costing $100/kWh
  • Several more practical pathways to electric car advantages exist

Introduction

In this article, the term “electric car” will refer to a 100% electric battery-powered car. Hybrids, plug-in hybrids and small electric vehicles (all of which I think have more potential than electric cars) as well as fuel cell vehicles (still too early to call) are not included.

My general concern with electric cars is that they will end up with a very low value to hype ratio compared to other pathways towards a sustainable future. Cars have always been able to stir emotions and electric cars can further augment this natural emotional response with all the emotion involved in the green movement. The result is an enormous amount of hype which attracts a lot of attention, initiative and investment. Given our massive 21st century sustainability challenge of quadrupling the size of the global economy without killing our planet, we simply cannot afford misplaced hype on such a large scale.

For further clarity, this article will assess the advantages of electric cars, estimate the value of these advantages and discuss alternative pathways to achieve these advantages.

Direct advantages of electric cars

Compared to gasoline-powered cars, the only unquestionable direct advantages of electric cars are a reduced dependence on oil and lower (non-CO2) tailpipe emissions in cities. It is often stated that electric cars are cheaper to fuel and emit fewer greenhouse gasses than regular cars, but this is not generally true.

As calculated in this article, the actual fuel costs of future technologically mature electric cars will be similar to that of gasoline cars. The article also pointed out that the electricity mix of the largest car markets is such that efficient gasoline cars emit similar or less CO2 than electric cars. For example, the figure below implies that the new 55 MPG Prius would be a 2x better environmental choice than an electric car in China or India.

Emissions-Equivalent-Petrol-Car

In the longer term, electricity carbon intensity in the largest car markets will have to reduce, but so will the fuel consumption (and associated emissions) of regular cars. The actual costs of extracting oil will also rise steadily over coming decades, but so will the cost of electricity from a greener generating fleet. It will therefore be a long time before electric cars are generally cheaper and less carbon-intensive to fuel than gasoline-powered cars.

Quantification of direct advantages

Displacing a gasoline car with a 100% electric car will prevent uneconomical wealth transfers from oil importers to oil exporters during oil price spikes. Of course, if all oil exporters invested these windfall profits efficiently (e.g. the Norwegian petroleum fund), the global effect of oil price spikes would be limited or even positive. Unfortunately, this is generally not the case and such large oil profits often finance wasteful extravagance, especially in OPEC nations.

It should also be mentioned that electricity consumed by electric cars can also be import-dependent. Regions such as Europe and Japan with a large share of electricity from imported natural gas, coal or uranium will therefore derive limited energy security benefits from electric cars.

A conservatively high estimate of the oil price buffer effect can therefore be made by subtracting the oil price that would result from an ideal market from the actual average oil price. The difference represents the uneconomical wealth transfer from oil importers to oil exporters due to the imperfect oil market. Based on historical data (below), this difference is about $20/barrel. If we assume a new electric car will displace 10000 miles/year (typical EV mileage) of 30 MPG gasoline consumption, this value comes to $159/year.

EIA oil price chart

The value of zero tailpipe emissions comes in lower ($71/year) given the $9/barrel local air pollution oil externality estimated in a recent IMF working paper. However, this assumes that the electricity consumed by the electric car is completely clean, thus also making this a conservatively high estimate. In fact, debate is now intensifying in China about whether electric cars may actually worsen air quality. Recent research also suggests that particulate matter emissions from EVs are similar to those from gasoline cars due to their higher weight and the importance of non-exhaust emissions.

Alternative pathways to direct advantages

The direct advantages of electric cars mentioned above can arguably be achieved more efficiently through different pathways. Oil dependence (sensitivity to oil price spikes) can be reduced through changes in driving habits, efficiency and a wide variety of alternative fuels. As an example, stricter efficiency standards (or increased gasoline taxes) raising average fuel economy of new vehicles from 30 to 31 MPG would lead to an 8x greater reduction in oil consumption than current US sales of electric cars (below).

BEV market share US

Local emissions can be reduced by the same factors and by implementing tolls or even car-free zones in selected areas. Such measures to reduce traffic volume would also address important external costs such as traffic accidents, congestion, road damages and non-tailpipe emissions which, in combination, are substantially more damaging than tailpipe emissions.

In the longer term, several pathways towards carbon neutral synthetic fuels exist. These fuels can be produced from excess electricity, various kinds of biomass, fossil fuel processing with CCS, or synergistic combinations of these fuels. They also offer cleaner combustion than conventional fuels and are much better suited for international trade than electricity. Efficient internal combustion engines (including hybrids) and fuel cells (if they can be made cheaply enough) can then power a carbon neutral transportation system across all transportation networks.

Battery electrics can make a great contribution in the form of small electric vehicles as discussed here, bringing a wide range of highly attractive benefits such as enhanced mobility to billions of poor people, much-reduced congestion and great improvements in health. High market penetration of 100% electric cars will probably be restricted to the high-cost-low-volume luxury/performance segment where the costs of a large battery pack contribute a relatively small fraction of the total vehicle cost.

Indirect advantages of electric cars

Electric cars form an integral part of the future green energy vision where almost all energy comes from renewable sources (primarily intermittent wind and solar). Such an energy system will need a lot of energy storage and/or demand response which can then be partly done through smart charging of EVs.

People also generally associate the potential economic benefits of autonomous vehicles with electric cars. As mentioned in the earlier article, however, gasoline-powered cars will derive similar, if not greater, advantages from a fully autonomous vehicle fleet.

Quantification of indirect advantages

One way to estimate the advantage of smart charging is based on savings from time-of-use charging schemes. Such schemes offer rates which are typically about 60% of the average for off-peak (night) electricity usage. Of course, on-peak rates are then higher, cancelling out some/most of these savings, but this will be ignored for the time being to get an optimistic estimate.

Assuming that all charging happens during off-peak hours, the average electricity price is $0.13/kWh and 10000 miles are covered per year at an efficiency of 300 Wh/mile, savings amount to $156/year.

Alternative pathways to indirect advantages

Smart charging of electric vehicles will be complex and costly when balancing wind and solar power where the electricity price is not necessarily lowest during a fixed time-window at night. Such a scenario will need very smart systems which can charge electric cars based on electricity price forecasts and vehicle usage patterns without causing any inconvenience to the driver. This will also require many additional public smart chargers to capitalize on times when electricity prices are lowest during the day when cars are not plugged in at home. Furthermore, for systems with a lot of solar PV in particular, the total system peak load will increase, thus requiring transmission and distribution upgrades.

As an alternative, the synfuel pathway described earlier can shave wind/solar peaks in a simple centralized manner. Particularly windy/sunny nations will also be able to conveniently export excess synfuels to other nations. There will be no need for complex smart charging networks and markets and also no need to build out costly additional distribution networks for distributed peak shaving through electric cars.

Conclusions

An optimistic estimate for the potential advantages that 100% electric cars can bring to the global economy is about $386/year per car. For perspective, this is about one third of the cost disadvantage calculated earlier for a future mass-market electric car with an 80 kWh battery pack costing $100/kWh (fully installed).

It is therefore clear that, on a global scale, the potential positive impact of electric cars is marginal at best. Alternative technological pathways also exist through which this positive impact can arguably be achieved in a cheaper and much more practical manner.

The enormous hype surrounding electric cars and the associated initiative and investment it consumes are therefore quite worrying. We simply cannot afford to invest so heavily in technological pathways which are fundamentally unable to alleviate our 21st century sustainability crisis.

Schalk Cloete's picture

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Discussions

John Miller's picture
John Miller on Jul 25, 2016 8:48 pm GMT

Schalk, you make some very good arguments as to the highly questionable and feasibility benefits of 100% EV’s. When you take into account other constraints such as limited power access in Developing Countries, the costs of needed new infrastructures and the full costs of variable wind & solar PV power sources (including peaking power generation capacities and/or storage), the economic benefits continue to decline substantially. What many Supporters of 100% EV strategies most often overlook is the fact that the benefits are maximized in Developed Countries’ urban settings. In more rural settings and colder climates found in many Developed and Developing Countries, EV’s face additional limitations and constraints in addition to those you have covered. These include lack of rural recharging infrastructures and extremely higher costs building recharging infrastructures compared to higher population density urban settings.

Other factors that substantially reduce the economic values/benefits of EV’s are batteries’ lives; a function of driving habits, frequency-depth of routine charging cycles, available recharging voltages and the ambient temperatures. Yes, you are not likely to see many EV’s in the winter snow since the freezing temperatures can significantly damage (reduce the charge capacities and lives) of state-of-art batteries. The solution is some form of battery heaters, which of course increases the operating costs and further reduces the EV’s overall benefits.

Leo Klisch's picture
Leo Klisch on Jul 25, 2016 10:07 pm GMT

I agree that the benefits of EV’s are limited at this time,however it probably is one of the only markets that will continue to drive down the cost and density/kWh of batteries for future potential. So maybe the investment is worth it. At their present stage, Hydrogen or synfuels are possibly even more iffy if the goal is a very low carbon driven personal transportation system. Whether the future is renewables or nuclear or some combination thereof, I think EV’s have the same chance or better as hydrogen,synfuels,etc. of using excess electricity.

Jesper Antonsson's picture
Jesper Antonsson on Jul 25, 2016 10:22 pm GMT

I like this approach, in general, but think there are some omissions or weaknesses that might underestimate the value of BEVs:

* Synfuel production is fairly expensive, to the point that BEVs cost advantage should soar appreciably in comparison. As is hydrogen fuel cells and so on. BEVs are arguably the simplest and least expensive pathway to carbon-free transport.

* The purely electric drivetrain is very simple, which will both help to somewhat offset the battery cost and drive maintenance costs down. Also, the value of less downtime on the road and at repair shops is unaccounted for.

* There is great value to the superior driving experience of electric vehicles. They are fairly easily eclipsing the performance of current premium cars in terms of acceleration, responsiveness, vibrations and noise levels. There are positive externalities, btw, in terms of less noise pollution.

* The BEV is simpler and less error-prone to drive for humans and software alike. A straight-line acceleration curve and no gears is simply better and easier to learn and work with. For autonomous vehicles, this should be an enabler that shortens time-to-market and reduces costs. The simpler drive-train will in general continue to enable disruptors and enhanced competition in the vehicle market, especially as it will likely remove engine power as a consideration and price differentiator among cars.

* Given a transformation to an autonomous vehicle fleet, I’m assuming that one would be able to optimize for a lower average battery size than 80 kWh.

Also, I’d like to mention that nuclear is in general the way to go, so we should probably disregard the idea that BEVs will be helping intermittent renewables. A single reactor will easily provide power for some 3 million cars, so the current US nuclear fleet should suffice to power a fully electrified US passenger car fleet.

Rick Engebretson's picture
Rick Engebretson on Jul 26, 2016 12:50 am GMT

John, as you say “batteries’ lives” is an important issue rarely examined. Recently, a Korean research team found a cellulose layer supplemented battery design for similar reasons as you say.

In the early 2000’s cheap electrolytic capacitors were used instead of more expensive Japanese patented electrolytic capacitors on expensive electronic hardware. They worked OK until they puked on the circuit board, damaging expensive components and failing the user. Cheap electronics can be very expensive.

I entirely agree with Schalk’s concern about hype, suggestions for hybrid drive-trains and fuels, and recognition of the Prius as a proven success.

Nathan Wilson's picture
Nathan Wilson on Jul 26, 2016 2:30 am GMT

Schalk, I think your BEV concerns are very valid. I suspect that the reason that American greens like BEVs so much is because BEVs are the only low emission transportation solution that deliver benefits to the buyer (not just society).

In the 1970s, when the government forced us to buy smaller, more efficient cars, we had no choice but to comply. More recent attempts by the government to tightened fuel economy standards have been less successful (because of work-arounds like exempting pickup trucks and SUVs from the rules, or awarding extra credit for E-85 compatibility).

If BEVs don’t solve the low emissions vehicle problem here, other solutions will have an uphill battle as well.

Engineer- Poet's picture
Engineer- Poet on Jul 26, 2016 3:27 am GMT

The infographic at the top is, I think, the most important part of this posting.  It shows just how much the source of electric power affects the net emissions from an EV.

EVs like Teslas are, like Priuses before them, goods intended to show one’s intentions.  That they don’t do very well climate-wise in Singapore (where they receive a climate penalty tax) isn’t the fault of the car, but the characteristics of the local electric supply.  Someone who throws a bunch of PV on their roof and nets out at zero electric consumption can at least deceive themselves that they’ve made good on their climate sins (even if that’s far from actually true).

But look at the figures for France, Sweden and Iceland.  These countries get almost all their electricity from nuclear and hydro, and this electricity is extremely clean.  In these countries, a Tesla is multiples of times better than a Prius for GHG emissions.

Why can’t we make all electricity as clean as it is in France, Sweden and Iceland?  That doesn’t just fix the “EV problem”, it fixes a whole lot more too.

Schalk Cloete's picture
Schalk Cloete on Jul 26, 2016 1:43 pm GMT

Yes, 100% electric cars are much better suited to the developed world as you pointed out. Another important point is that cars in the developed world are generally super cheap and contain only the bare essentials. In such a car, a sufficiently large battery pack may well make up half the car’s cost even in a future scenario where batteries are very cheap. The more “luxuries” are added to a car (luxuries are in inverted commas because we developed world citizens see many of these luxuries as standard), the better the economics of the 100% electric car becomes.

Bob Meinetz's picture
Bob Meinetz on Jul 26, 2016 2:16 pm GMT

Schalk, you make an enormous number of claims in your article which contradict established data from even a decade ago.

If you want to claim the Sun revolves around the Earth – fine, I’m open to that possibility. You’ll need to reference it copiously for those of us who know better. Any scientist can see that “Sources: DEFRA, GHG Protocol, IEA, GREET, LCA Literature”, tossed into a blender for 30 seconds, could be interpreted to prove Mars revolves around the Earth. From someone who has attended a workshop on GREET at Argonne National Laboratory, conducted by the developers themselves, and spent many hours tweaking parameters in Excel myself (anyone can download it) – nitty, gritty details make all the difference.

As Engineer-Poet points out, the real problem is making all electricity as clean as it is in France, Sweden, and Iceland. Your contention that’s a pathway which is “fundamentally unable to alleviate our 21st century sustainability crisis” is entirely unsupported, and your migration from “massive hype, limited value” to “it will therefore be a long time before electric cars are generally cheaper and less carbon-intensive to fuel” tells me you’re more interested in validating your suspicions than getting at the truth. You seem like a nice guy, but honestly – who really cares about your suspicions?

Schalk Cloete's picture
Schalk Cloete on Jul 26, 2016 2:19 pm GMT

Sure, I agree that EVs are an important part of the general all-of-the-above strategy. However, they are very far from the lowest-hanging low-carbon fruit. Light duty vehicles emit only ~15% of global CO2 compared to ~75% for electricity and industry. Even optimistic projections from BNEF say that 25% of cars on the road will be electric by 2040 with growth flattening out. If we optimistically assume that electric cars emit half the CO2 of gasoline cars by that time, it would mean that electric cars would avoid 1.87% of global emissions by 2040. This is just not worth the massive hype and investment we are currently seeing.

To me, the primary reason to find an alternative to oil is to be able to move around when the oil runs out. This is a long-term issue which will be solved by natural market forces (where electric drive will play an important role). However, pushing EVs as a climate change solution as is currently done is just not pragmatic at all. We are going to need all the pragmatism we can get if we are to overcome the 21st century sustainability crisis.

Bob Meinetz's picture
Bob Meinetz on Jul 26, 2016 2:37 pm GMT

Rick, it was at a similar stage in their development (2004) that the CEO of General Motors, Bob Lutz, made the statement “Hybrids don’t make environmental or economic sense,” adding:

“For Toyota, it was a huge, huge, immeasurably valuable PR coup,” said Lutz. GM’s decision not to pursue a hybrid car “was a mistake from one aspect, and that’s public relations and catering to the environmental movement.”

http://money.cnn.com/2004/01/06/pf/autos/detroit_gm_hybrids/

In other words: “massive hype, limited value”.

Schalk Cloete's picture
Schalk Cloete on Jul 26, 2016 3:13 pm GMT

I would certainly become more positive about electric cars if the future was nuclear instead of wind/solar + balancing. A baseload dominated electricity system would make it simple to charge electric cars at night at home, thus keeping the demand profile relatively flat. This would also make the synfuel pathway less attractive since there would be essentially no times where the electricity price is very low or even negative (except maybe in weekends). Synfuels from electricity make sense if the electricity price often becomes very low as would be the case in a high wind/solar scenario.

Currently, wind/solar have much, much more momentum than nuclear. Rationally, I also prefer nuclear in most regions, but, since politics often trump logic, we need to prepare to accommodate lots of intermittent wind/solar in our decarbonization efforts. But let’s not allow this thread to turn into a typical TEC nuclear vs wind/solar debate…

About the other EV cost considerations, I discuss this in my previous article. Basically, lower drivetrain costs are cancelled out by extensive charging infrastructure costs and lower maintenance costs are cancelled by higher ensurance costs. Depreciation may also be an important factor, depending on battery longevity.

I think electric cars will do well in the luxury/performance segment. Here, the battery pack is a relatively small fraction of the cost, the EV driving experience is valued more highly, and a powerful electric motor starts to become much cheaper than a powerful ICE. However, the vast majority of miles are covered in budget cars where these factors don’t count for much. Relatively low EV loyalty data also suggests that we do not have a case for “once you go electric you never go back”, not even among the small current group of EV-loving early adopters.

If people manage to pull off the fully autonomous vehicle fleet, I think controlling a ICE autonomous vehicle should be childsplay in comparison. In fact, autonomous driving is one of the main reasons why I expect ICEs to experience great gains in fuel efficiency and longevity in an autonomous vehicle fleet. Much smoother traffic flow and optimized acceleration/deceleration will do wonders for the performance of any internal combustion engine.

Engineer- Poet's picture
Engineer- Poet on Jul 26, 2016 3:28 pm GMT

I agree that EVs are an important part of the general all-of-the-above strategy. However, they are very far from the lowest-hanging low-carbon fruit.

EVs are one of the enabling technologies for decarbonization of the electric grid.  Around the turn of the 21st century, AC Propulsion demonstrated that EVs were an adequate source of capacity for grid regulation services and could generate considerable value in that role.

ACP showed that it would only take a modest EV fleet (100k vehicles) to supply all of California’s regulation requirements.  At that point the market for regulation would be saturated and the market value would fall steeply.  However, a fleet of EVs which mostly charges overnight and can charge in considerably less than the time available can be used to flatten the overnight load slump and increase the fraction of generation from always-on base load generators like NPPs and, to a lesser extent, from CCGTs.  Shifting generation away from the least-efficient combustion systems (simple-cycle gas turbines) by reducing load variability is one of the lowest-hanging fruits on the tree.

Rick Engebretson's picture
Rick Engebretson on Jul 26, 2016 4:35 pm GMT

Perhaps the statement reflects the GM culture of the time that sought bankruptcy and bail-out protection soon thereafter. The Bush era culture of the time that ignored oil and economic issues left an impression not yet forgotten.

IMHO, the biggest issue EVs will face is most batteries contain both reactive oxidant and reactive reductant. Ever more powerful, ever cheaper, ever more numerous batteries is a lot of explosive devices moving around at high speed. The ICE might cheat and use atmospheric oxidant, but 80 mpg biofuel blend electric drive vehicles are not unlikely.

When you have nuclear power plants, grids, batteries, charging facilities, and EVs around the world you let us know. Until then many of us see some urgency to simply take doable steps forward.

Bob Meinetz's picture
Bob Meinetz on Jul 26, 2016 8:20 pm GMT

Rick, I’m not disagreeing with you that the Prius is a proven success. The point was to show that a GM CEO thought they were a fad and was wrong (although to Lutz’s credit, GM’s serial-hybrid Volt was the result of him realizing how wrong he was not long after he made those comments).
Explosive batteries? Tesla’s Model S has already proven its robo-driver is more dangerous than its batteries. As capacity increases there probably will be some battery explosions. Just like nuclear energy, if you put lots and lots of energy in a small space, you gotta be careful.
I keep suggesting my renewables friends start a remote commune where they can have all the renewable power they want in safety, but none have taken me up on it. With abundant energy comes responsibility.

Jesper Antonsson's picture
Jesper Antonsson on Jul 27, 2016 12:54 am GMT

Schalk, thanks for your thoughtful reply. I would disagree that solar and wind has that much better momentum. Actually, nuclear build rates are better than solar so far this year, adjusted by capacity factor. But I agree that we should probably leave that for now.

You compare the tax free US residential cost of electricity including transmission with the gasoline extraction and distribution costs and find them fairly equal after adjusting for efficiency. To me, this is sensitive to, among other things, the model with which utilities charge for transmission. I’m assuming that utilities may shift transmission costs to fixed as a response to residential solar power.

Anyhow, to me, from a societal perspective and as a first order approximation, ICE are run by oil and BEV are run by coal, wind, nuclear or hydro. Those are a lot cheaper than oil and thus that’s a big win.

However, the disruptive potential is determined by consumer prices, and if governments and utilities doesn’t adjust, it seems your article shows that BEV isn’t cheaper to run in the US. I’m a Swede, though, and my Nissan Leaf runs 10 kilometers on 1.6 kWh with might cost me 1.7 SEK including transmission and taxes (excluding the fixed costs that my utility is charging me). A comparable ICE would use 0.5 litres at 12 SEK/litre, so 6 SEK. So in Sweden, ICE fuel is currently more than 3 times as expensive.

I’m unconvinced that lower drivetrain costs will be cancelled by charging infrastructure. Gas station infrastructure has costs too.

I’m a bit puzzled as to why lower maintenance costs would be cancelled by higher insurance costs. Because the car is more expensive to replace? Possibly, but since it is more robust, the part of the insurance that covers drivetrain problems will be lower. Also, it should be cheaper for the manufacturer to provide a guarantees, and that should also translate to a downward pressure on price.

The low EV loyalty data was new to me, but I think we need to see how that plays out with the 48+ kWh models of the next generation non-luxury electrics (the Leaf, the Bolt and so on). Such battery sizes would convince me, I think.

Wouldn’t the autonomous vehicles bring better fuel efficiency to EVs as well? Perhaps more, when regenerative breaking is used more extensively. Your other article mentions higher utilization for ICE since they don’t need to stop as often for charging, but I don’t think that will be that much of an issue. There will be distinct utilization peaks and EVs will have plenty of time to charge in off-peak hours.

Rick Engebretson's picture
Rick Engebretson on Jul 27, 2016 1:28 am GMT

Bob, nor would I ever disagree with your efforts to advance quality nuclear power and other advanced energy solutions.

My food science wife and I just watched a U of MN. video about fruits farming. A speaker rightly said nobody who has ever done it thinks it’s easy to grow perfect apples. Same with making great music. Or engineering new energy solutions.

All I know was 50 years ago (gulp) I built an electric car from junk and an old washing machine motor, I think 1/2 horsepower, and that thing was fast. At the same time we built a mini bike with a junk lawn mower engine. The mini bike lost the front wheel on my test drive, and was tricky to throttle and steer. Even old tractors are amazing working machines.

I just think fun innovation is seriously lacking today and replaced by toxic politics. It threatens both your high level technology and my backyard hacks.

Roger Arnold's picture
Roger Arnold on Jul 27, 2016 5:24 am GMT

The natural contrarian in me would like to find some points to knock down in what you wrote. However, the best I’ve been able to come up with are minor quibbles along the lines that others have already mentioned. So, “good article!”.

I agree that the real promise of battery electrics is in small vehicles better matched to the single-driver trips that dominate most driving. I think a trend toward that will be given a big boost by the arrival of autonomous vehicles;

– when it’s no big deal to call up just what you need for a particular trip, there’s no longer much incentive to own a vehicle large enough to cover all contingencies. (Ranchers, farmers, and exurb residents excepted.)

– when accident rates plunge and one can venture out on a bicycle or scooter in relative safety from negligent drivers, a lot more of us will use them for short trips in decent weather.

I suspect that autonomous taxi vehicles are likely to become a new vehicle class unto themselves. They may be pure BEV’s with rapid battery swapping, or serial hybrids with small engines optimized around constant output.

I hope they’re not parallel hybrids like the Prius. I regard the Prius as an almost conventional ICE vehicle that has a clever electronic CVT and automatic low speed shutoff and automatic restart. The way it’s designed, you can have a seriously degraded main battery, and all you’ll notice is a drop in mileage as the engine continues running when it should be off.

Maybe that’s a feature, not a bug. However, I don’t think most people grasp just how much of the cost and complexity that goes into a modern IC engines is dedicated to delivering decent performance at a range of speeds and power levels. A constant speed, constant power engine can be smaller, simpler, cheaper, and more efficient. A parallel hybrid throws away all those advantages.

Schalk Cloete's picture
Schalk Cloete on Jul 27, 2016 8:38 am GMT

Sure, as I pointed out in my reply to Jesper yesterday, I would be more positive about electric cars if we were clearly moving towards baseload rather than intermittent renewables. In such a scenario, I think the small-but-significant $156/year/car value I calculate in the article becomes quite a lot more realistic.

About the grid regulation services, the paper you cited shows that the market for ancillary services varies over an order of magnitude from year to year, but averages around 390 million $/year. If we are only talking about home charging, the accessible value might be half this number. When spread over all of California’s vehicles, this amounts to a negligible value of $7/year/car. Then we of course have the costs in terms of battery depreciation and the installation of smart charging systems which may well exceed this small value.

Besides, there are better ways to do this than batteries. See Figure 3 in this recent article for example.

Schalk Cloete's picture
Schalk Cloete on Jul 27, 2016 9:41 am GMT

You make a good point about the electricity market structure. If T&D costs are fixed, the value of night-time EV charging will increase (while the case for rooftop solar will become much weaker). In an ideal nuclear-dominated future where all vehicles have a plug, this may allow the baseload slice of the generating fleet to be increased from, say, 50% of electricity to 80% of electricity. If we assume that baseload electricity costs about $60/MWh and the mid-load generators it replaces costs about $80/MWh, the average electricity price paid by society would reduce by $6/MWh. In the US, the ratio of yearly total electricity consumption over the number of registered light duty vehicles is 4303 million MWh/year over 187 million cars = 23 MWh/year/car. For a value of $6/MWh, the yearly value per car amounts to $138/car/year. This is just a little lower than my optimistic estimate of $156/car/year in the article, but I think it is more realistic.

Interestingly, as long as oil markets are functioning properly, oil is not that much more expensive than gas per unit energy. The problem comes when oil markets are not functioning properly as discussed in the article.

Yes, it is certainly true that gasoline prices are currently much higher than electricity prices in most places, especially Europe. However, as more electric cars take to the roads, ways will have to be found to tax them as well in order to pay for roads and to limit congestion/accidents. I’m investigating mass-deployment scenarios here and therefore ignore transient issues like subsidies and taxes.

I’m really looking for good data on ICE and EV drivetrain costs. I only found that one article which I referenced in my previous article. According to that data, the cost advantage of future Leaf-type EV is only about $1500 (even though this difference would increase for more powerful cars). This will be cancelled out by the combined costs of home and public charging infrastructure. Gasoline filling station costs are already included in the gasoline distribution cost. Higher ensurance costs are presumably due to the higher capital costs of EVs.

Sure, automonous driving would help EVs too, but the electric motor is much more efficient at part-load than a heat engine like an ICE, so the benefits would be much larger for the ICE. The new Prius engine has a peak efficiency of 40%. A good electric motor will be around 80% efficient after battery charge/discharge losses are accounted for. Completely smooth traffic flow would therefore result in 2x advantage for the electric motor, making the ICE quite attractive even without additional costly elements such as hybridization.

How are electric cars doing in Sweden at the moment? I was there fore a conference about 2 years ago and couldn’t spot a single EV. This was at a time when more than 10% of Norwegian sales were EVs due to massive incentives.

Schalk Cloete's picture
Schalk Cloete on Jul 27, 2016 9:56 am GMT

I’ve always thought that the idea of parallel hybrids like the Prius is to use the electric motor during times when the ICE would be highly inefficient (e.g. stop/go traffic).The city economy of the new eco Prius is only just under half that of the Leaf, showing that this is working pretty well.

However, I fully agree with the potential benefits that ICEs can achieve if we manage to achieve smooth autonomous vehicle traffic flow in cities. This will make the efficiency of a simple ICE with no fancy and expensive stop/go features or hybridization very attractive.

Jesper Antonsson's picture
Jesper Antonsson on Jul 27, 2016 1:28 pm GMT

I don’t follow entirely. Why do you divide the total amount of US electricity with the total amount of cars? And then multiply the result with electricity price excluding distribution?

I’d think like this: Gas at $1.83/gallon and 30-40 mpg and 10,000 miles/year gives a fuel cost of $458-610/year. Electricity at $0.06/kWh, 34 kWh/100 miles (Leaf numbers) and 10,000 miles/year yields a fuel cost of $204/year. By that calculation, the fuel cost advantage of EVs is roughly $250-400/year, given current fuel prices.

Alternatively, we might want to compare oil prices with coal prices and gas prices directly. It seems coal is at $2.2/MMBtu and natural gas is at $2.6/MMBtu, whereas oil is some $9/MMBtu. I would put energy efficiency from fuel to wheels as roughly the same whichever fuel is used. So just looking at societal fuel costs, we get some 75% cost savings by switching from oil, assuming the oil price stays in mid-range like this.

Subsidies and taxes might be considered transient, but I’m assuming electric drive will always be favoured politically, at least in net oil-import countries, so they might prove not very transient. EVs will likely continue enjoying preferential treatment above and beyond what would be calculated just from avoided externalities.

In Sweden, we have a roughly $4600 subsidy for purchasing pure EVs. Sales was 0.8% of total in 2015, and that rate has roughly doubled every year. PHEV sales were at 1.6%. First half of 2016, however, EV are down to 0.7% and PHEVs are up to 2.3%, so it seems EV sales won’t double this year.

I’m speculating that Nissan ending the really nice lease program for its Leaf early this year might be partly responsible. Also, the anticipation of the Bolt, the Model 3 and the next gen Leaf might serve to postpone purchases. It seems some 8600 has paid to reserve the Model 3 in Sweden, which is quite a lot considering just under 3000 BEVs were added in Sweden during 2015.

Bob Meinetz's picture
Bob Meinetz on Jul 27, 2016 2:03 pm GMT

Rick, bravo on your washing machine / car. I had forty years of additional technology from which to benefit when I built my electric car in 2007, and it still took me two years and $15K. Long ago, I also built minibikes from Briggs and Stratton 1.5 HP engines, but we digress…

EIther fun innovation is seriously lacking, or I’m out of touch with the people who are doing it. That seems more likely. My son is doing some fun innovating at SpaceX, very hands-on, non-theoretical engineering to which we both would relate. I’m sure there are millions more like him in various technologies, but most are outside my sphere in 2016.

Bob Meinetz's picture
Bob Meinetz on Jul 27, 2016 2:27 pm GMT

Roger, without engaging on the subject of “autonomous taxi vehicles”, which have been ten years away for the last fifty, and require the unacceptable acceptance of autonomous responsibility, I’ll instead reach out to your appreciation of efficiency.

What makes the cost and complexity of modern IC engines more appealing than the modern EV’s delivery of excellent performance at a range of speed and power levels? Than a smaller, cheaper (except for batteries, working on that one) and more efficient power train? A modern IC engine throws away all those advantages.

michael pettengill's picture
michael pettengill on Jul 27, 2016 5:14 pm GMT

In a world with high unemployment, I see you believe that the most important thing needed is preventing large investments of labor in green energy production because burning fossils more efficiently keeps unemployment high.

After all, fossil fuels have only cost a lot when scarce and high prices can be charged that are much higher than labor costs producing massive profits at big oil companies like ExxonMobil. Note that ExxonMobil was not the leader in technology for horizontal drilling and fracking because, first, scarcity means high prices, and second, investment in technology requires paying lots more workers.

Now that fossil fuel production, especially methane, has exploded, the low prices and zero profits is leading to slashing jobs which cascades through the economy killing jobs.

You are making the case that going green and paying tens of millions of workers is harmful to the economy because paying workers is a burden on the economy and working people who are better off with job killing cheap fossil fuels.

Hey, I’m from the 60s when economists had two hands.

On the one hand it’s bad that paying lots of workers to produce something, say energy, makes the price of energy higher, but on the other hand, lots of costly workers are very happy to have lots of money to spend paying lots of other workers for food, clothing, houses, cars, green energy, and those other workers are happy that they have jobs selling to happy workers building the green energy system.

Other that taxes and welfare, who pays the workers who are not working because you want cheaper stuff like energy which requires lots of unemployed workers?

michael pettengill's picture
michael pettengill on Jul 27, 2016 5:48 pm GMT

Why do you think paying workers to make batteries is such a bad idea?

Who do you think paying $100 a barrel for oil with only $20 to $70 going to pay workers in the ideal fossil fuel market for Saudi Arabia and Venezuela and many dictators is so great? A story about Venezuela on how low oil prices are causing lots of pollution in a lake with oil production because the oil price is too low to pay workers to produce repair parts and maintain the decades old oil production equipment (much older than when Chavez took power and used oil profits to pay people to work as teachers and constructing infrastructure and to produce stuff in Mexico and China to sell to Venezuela. And to come from Cuba to provide healthcare in Venezuela.

Critics of nations like Venezuela are attacked by “capitalists” because they pay workers with mining profits instead of putting the money in banks and big corporations focused on paying workers the least possible while using the rest to bid up asset prices “creating wealth”.

I grew up when capitalists thought paying workers to build the most productive capital possible to produce the maximum possible leading to so much stuff the price fell to the total labor cost and zero profit. Except they found new ways to profit from some new idea for a product he could sell to the high income workers to eek out just a bit of profit for a year or two.

How much profit is Jeff Bezos and Elon Musk generating? Is it bad for them to keep paying more and more workers to build ever more productive capital assets, warehouses, data centers, auto factories, battery factories, solar panel factories, rocket factories, rocket launch and landing pads? Should they stop building more productive capital and just reap high profits by paying fewer workers and not growing?

On the other hand, why has the coal and oil industry stopped expanding their production capacity rapidly? Why isn’t the coal industry employing twice as many as the 100,000 workers circa the 40s? Is job losses good for working people?

Are working people too big a burden on the economy?

Mark Heslep's picture
Mark Heslep on Jul 27, 2016 6:37 pm GMT

…If BEVs don’t solve the low emissions vehicle problem here, other solutions will have an uphill battle as well….

Yes, though this from Schalk

…As an example, stricter efficiency standards (or increased gasoline taxes) raising average fuel economy of new vehicles from 30 to 31 MPG would lead to an 8x greater reduction in oil consumption than current US sales of electric cars…

indicates the slope of the hill for high efficiency combustion vehicles is several times more shallow than for BEVs

Schalk Cloete's picture
Schalk Cloete on Jul 27, 2016 7:53 pm GMT

I tried to quantify the fundamental economic advantage that night charging of EVs in a baseload-dominated power system can bring: more electricity from cheap baseload plants and less from more expensive mid-load (load-following) plants.

But you are right, I did leave out the effect of increased utilization of T&D infrastructure. If we assume that all light duty vehicles are 100% electric running at 300 Wh/mile and 10000 miles/year, the 187 million cars will add 561 TWh of electricity demand which will be distributed through the same T&D infrastructure. This will reduce the T&D costs per unit electricity in the US by 13%. If T&D costs about $50/MWh, this implies an addtional saving of $6.5/MWh, bringing the total up to $12.5/MWh or close to $300/year/car. This is certainly a significant benefit.

I think that this type of calculation gives a fundamental indication of the benefit of EVs flattening the demand profile through night charging. The $300/year/car estimate represents the maximum benefit if we have a baseload-dominated system and all EV charging happens during off-peak hours. It also indicates that the effective EV electricity price is only about $0.03/kWh – roughtly the variable costs (mostly fuel) of power generation. At such very low electricity prices, however, the case for synfuels from electricity also becomes quite compelling.

In theory, electricity should actually be priced with both T&D and fixed power plant costs levied as a fixed monthly rate, while only variable power plant costs get charged per kWh. The problem with this is that it will be difficult to determine the fixed monthly rate (which will be by far the biggest part of the monthly electricity bill). This should ideally be determined according to the consumption of each customer during peak times, but this will be difficult or even impossible to implement in an efficient and fair manner. The more practical solution of simply charging a fixed rate to every customer connected to the grid would strongly disincentivise efficiency. Around 80% of electricity costs would now need to be paid regardless of how much electricity is used, and this will obviously lead to lots of wasteful electricity consumption.

I think that time-of-use plans charged per kWh are probably the best solution to incentivise some demand-response, while preventing blatant inefficiency and remaining practical to implement. As stated in the article, it turns out that off-peak rates are generally about 60% of the average on such schemes. Using the US example, this would amount to an electricity price of $0.078/kWh.

In the previous article, I followed EIA projections for future efficiencies: 52 MPG for ICEs and 130 MPG (260 Wh/mile) for BEVs. Using these numbers, the ICE would cost $352/year to fuel and the BEV would cost $203/year – roughly the same $150 advantage as found earlier. Sure, currently you need a hybrid to achieve 50 MPG, but the Prius is still quite a bit cheaper than the Leaf (and will probably remain so as the Leaf’s battery capacity is increased with falling battery costs).

Sorry, when referring to natural gas prices, I was referring to the global average, not the special case of the US. Natural gas is also much more expensive to transport/distribute than oil. In my previous cost assessment work, I found the global average internalized costs of oil to be $35/barrel ($6.3/MMBtu) and gas to be $7/MMBtu (which includes $2.5/MMBtu for transport).

It will be interesting to see what happens to incentives going forward. The energy security benefit quantified in this article is not so large, although the term “energy security” still carries lots of political weight. I also expect this issue to become smaller as various kinds of alternative fuels (including electricity) eat into oil’s monopoly. Even a small amount of alternative transportation fuel supply would greatly increase the price-elasticity of oil demand, implying that oil demand would quickly drop whenever the market is setting up for another uneconomic price spike. Unconventional oil has also proven itself to be a good market stabilizer. The recent rig count increases at current price levels tell me that oil price volatility will be less of a concern over coming years. I just hope that governments can keep efficiency standards up while preventing a mass migration towards SUVs…

Schalk Cloete's picture
Schalk Cloete on Jul 27, 2016 8:10 pm GMT

Well, the theory is simply that the “job killing cheap fossil fuels” will free up more labour to focus on higher level stuff like improved healthcare, higher education and arts/culture. But this is the developed world. Of much greater importance is the developing world where “job killing cheap fossil fuels” must free up lots of labour to actually industrialize – a tremendously energy and labour intensive undertaking. We cannot expect the ~5 billion (and counting) poor people on this planet to start seriously caring about sustainability and family planning before they reach a comfortable material standard.

Sure, oil market failures sending massive profits to oil majors and Saudi kings are terrible, but it is a price we need to pay. This article also demonstrated that the value of EVs negating such market failures is relatively small at $156/car/year. As discussed in a previous comment, I also expect such uneconomical oil price spikes to become less of a concern as more alternatives to conventional oil come to market.

Mark Heslep's picture
Mark Heslep on Jul 27, 2016 8:19 pm GMT

Real jobs are created by investing in the most productive activities, not necessarily the most labor intensive. If the point were only to increase the number of jobs, then digging trenches with spoons would be preferred to the use of heavy equipment.

Rick Engebretson's picture
Rick Engebretson on Jul 27, 2016 8:39 pm GMT

I’ve been looking for green energy working people for 30 years and can’t find any. Just this morning at daybreak I was out on the road cleaning up trees downed from a storm last night. Trees are growing too fast with all the new CO2 few others will use, and trees tend to fall in empty spaces like roads. I was lucky my neighbor needed to get to work and my tractor started. My neighbor left saying “we need to build a gassifier.”

My first year up here working as a biophysicist on “homogeneous ratiometric chemiluminescent immunoassays” for a cancer screening research company I got yelled at for spending time hiring kids to remove fire danger around the big old creamery building.

This discussion board is full of city desert non-experts who don’t know green energy jobs until it burns up their homes or blocks their roads or cuts their power. Even then they can’t answer what to properly do with all the growing biomass. Just accuse and insult.

Jesper Antonsson's picture
Jesper Antonsson on Jul 28, 2016 11:40 am GMT

Good points. However, gas prices might be higher internationally, but I guess coal is more evenly priced. Also, wind is becoming fairly cheap and so is nuclear and hydro, so I think overall, the electricity mix is cheaper than oil in the approximate proportion I mentioned. Sure, oil might give higher average profits, which means that globally, BEVs doesn’t save humanity as much as the oil price would indicate. But as you mention, many oil nations squander profits, and also, the case could be made that a lot of driving is a fairly low-worth activity anyway (set for early demand destruction), and for that the marginal cost of oil is a better guide. So I wouldn’t put the comparison oil cost at $35.

Regarding efficiency standards and SUVs, I think EVs contribute. The EV tech is appealing and pulls in many buyers that would otherwise have bought much more thirsty vehicles. As range is costly, EVs are made smaller and more efficient, and that’s a trade-off buyers seems willing to make and there are positive externalities to that. That’s one reason I think my mpg figures of 30-40 are more interesting than the speculative 52 mpg one.

Helmut Frik's picture
Helmut Frik on Jul 28, 2016 12:51 pm GMT

The astonishing thing I found in developing countries is, that people there, within the limits of thir knowledge, do care about sustainability and family planning at least as much as people in developed countries.

Daniel Duggan's picture
Daniel Duggan on Jul 29, 2016 7:43 am GMT

The 1st realistic electric car article I have read on Energy Collective website. Well written Schalke.

Mike Barnard's picture
Mike Barnard on Jul 29, 2016 4:45 pm GMT

Not satisfied by the debunking of his pessimistic and simplistic view of electric cars in his original article, and certainly not taking the criticism to heart, the author bases this analysis on his own work and extends it to inanity.

This reminds me strongly of his writing a couple of years ago on carbon capture and sequestration, in which he defies all logic to assert that that failed approach is essential, renewables won’t work and nuclear is much faster to install.

As the reality of that argument is borne out in the market with massive global growth of renewables, only 15 CCS sites in partial production, 33 CCS sites abandoned and nuclear continuing to slow in every country except China, so too are the author’s arguments about EV missing many of the points in a complete discussion.

This author is very useful to pay attention to if only to get a good reading on what won’t be true. It’s unclear why he’s attracted to incorrect conclusions which he then wraps in arguments which support his bias, but between CCS, renewables, nuclear and EV, it’s clear he has a blinkered view of the world.

My previous experience in discussions with the author on his other peculiar perspectives as well as my review of his responses to his first article make it clear that he’s uninterested in useful discussions and changing his opinions as facts change. I won’t bother to list all of the assumptions he has wrong and all of the factors he leaves out of his analysis related to electric vehicles. That information is easy to find from multiple sources which do much better and more robust analyses than this one

Is there a non-hyperbolic perspective on electric cars? Yes, absolutely. But a hyperbolic assertion of failure and lack of usefulness is not that perspective. This is just a contrarian rant wrapped in poor assumptions, narrow data choices, misinterpretation of data and unjustifiable conclusions.

Roger Arnold's picture
Roger Arnold on Jul 30, 2016 8:13 pm GMT

A parallel hybrid does use the electric motor during times when the ICE would be highly inefficient. That’s at idle, or any time when the power demand is very low or negative (i.e., coasting or braking). It’s more efficient than a straight ICE, no question about that. However, the main engineering reason to favor the parallel hybrid design over the serial option is that it reduced the size and power level required from the electric motors and power control unit.

Those reductions are possible because in high power demand situations, the power will be delivered predominantly by the ICE.It’s a design that made sense for the Prius in its early years. But minimizing the size and power ratings of the electrical components meant that the ICE was left to do all the heavy lifting. It still had to operate over broad power and speed range.

What battery EVs have since proved is that electric motors and power control units are now up to the job of delivering the maximum power the vehicle needs for passing or for holding speed on an uphill grade. So there’s no need for an electrically boosted mechanical drive system — which is what the Prius has. A serial hybrid like the Chevy Volt is a “full authority” EV whose battery pack is only about a quarter as large as the 200-mile range pack that’s commonly assumed to be the threshold for consumer acceptance. In place of the other three quarters, it has a small but very efficient ICE-generator.

That’s really the only design that makes sense to me — assuming we insist on sticking with the privately owned family car model of transportation that Henry Ford and successors bequeathed to us.

Rick Engebretson's picture
Rick Engebretson on Jul 31, 2016 2:10 am GMT

Interesting information, Roger. Optimizing hybrid cars’ ICE, battery, efficiency, braking, cost, etc. is an important conceptual exercise.

Perhaps many of the developers’ projects using such simple micro-controller kits like the Arduino Uno would surprise us all. The single core micro-controller chip on the Uno can process input, output, digital and analog, modulation, communication, and logic stored in flash memory. Millions of these systems are part of standard educational training around the world. Motor, battery, and speed control are standard examples in the kit. As an oldster, I’m happy with the blinking LED example program.

Many on the TEC discussion board think they’re pretty smart, but might not look that way to some kids in China.

Schalk Cloete's picture
Schalk Cloete on Aug 2, 2016 8:11 am GMT

From an efficiency point of view, the primary problem with the serial hybrid is of course that mechanical energy from the ICE must first be converted to electrical energy, then to chemical potential energy, then to electrical energy again, and finally to mechanical energy to actually drive the car. Even though all of these conversions are quite efficient, there is a substantial efficiency loss compared to simply sending the mechanical energy from the ICE straight to the wheels. This is why the Volt gets 42 MPG when running on the generator compared to the 55 MPG of the Prius.

It will be interesting to compare the price and performance of the new 2017 Prius Prime to the Volt. Initial information states that all electric range will be about half that of the Volt, non-electric efficiency will be about 30% more and MRSP will be about $4000 less. Based on these numbers, it appears to me that the parallel hybrid is holding its own quite well. If Toyota chose to put another $4000 of batteries in there, the electric range and price would be about the same, with the primary difference being the non-electric efficiency of the Prius being 30% higher.

Engineer- Poet's picture
Engineer- Poet on Aug 5, 2016 5:13 am GMT

None of the Volts have been series hybrids.  They have all been some sort of series-parallel system, and all have sent engine torque straight to the wheels.

The Volt gets worse highway mileage than the Prius because it’s bigger, not as aerodynamic, and carries about a 16 kWh battery compared to maybe 1.4.  The Volt is also much more powerful.  The 2016 Volt goes 0-60 in 7.1 seconds; the Prius takes between 9.4 and 10.5.

If you are trying to save gasoline on long-distance cruises, the Prius will serve better.  If you are trying to eliminate gasoline in every-day use, the Volt is your car.

Darius Bentvels's picture
Darius Bentvels on Aug 5, 2016 9:56 am GMT

Thank you for the article, especially the study showing the relation between car weight and non-exhaust PM emissions. Those shorten the life of people in busy city centers and along busy highways substantially.
So the electric bike revolution here in NL, should be stimulated more. Good quality bicycle paths in cities, priority at busy crossings (push a button and the traffic light goes green for cyclists), separate bicycle highways between cities & villages, etc.

Only this assumption regarding electricity seems wrong:
… costs of extracting oil will also rise steadily … so will the cost of electricity from a greener generating fleet.“.
The futures at e.g. the German electricity market show lower electricity prices in coming years.

Which trend may continue due to the continued fast price decrease of renewable (especially PV-solar and batteries with 8%-16%/a, though also wind) during next decade. We can expect that electricity will become cheaper and cheaper, in the end driving classic power plants off the market. A trend supported by Germany’s major utilities who now try to get rid of those power plants (especially baseload plants).

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