Guest post by By Craig Shields, Editor, 2GreenEnergy.com
As I told the audience in my recent presentation at the Electric Vehicle Summit, I actually see this subject as one of very few bright spots happening in the world today. In particular, it appears that the divorce between Big Auto and Big Oil will be a messy and ugly affair, but one that will, in fact, culminate in the end of the Age of Oil. In this short piece, I’d like to provide my reasoning.
First, let us acknowledge the obvious: gas prices cannot go back up through the roof right now, as economic conditions would prohibit that. We also need to admit that politics and technology have conspired to create cars and trucks that are far more fuel-efficient than ever. While we’re at it, let’s throw in the concepts of range anxiety, and the inadequacy of the current charging infrastructure.
Yet I’m predicting a massive upheaval in transportation, in which EVs come to great prominence — not the slow and steady curve that the great industry analysts are calling for. At the risk of appearing rude, have you noticed that Deloitte, Bain, Accenture, Booz-Allen, etc. are almost never right in their long-term views? Who predicted there would be 5 billion cell phones? Was the Internet adoption smooth?
Here’s a laundry list of reasons that the EV sector will boom in the next 10 – 20 years, and that companies that have aggressive EV programs (e.g., Nissan) are better bets than those that don’t.
With very few exceptions, energy consumption is closely correlated to GDP, and, since we’re running out of cheap oil, we have no choice but to find a substitute; there are no other options. And there are no worthy competitors to electricity. Hydrogen, CNG, compressed air, etc. call for a fuel delivery infrastructure that does not – and will never – exist. Electricity, while not fully ubiquitous in the levels of power required today, is much closer than its would-be competitors.
Those honestly concerned about national security, with the strength to stand up to the oil industry, will eventually decouple the survival of the US from oil. The US Army is one such group; they’re deploying electric vehicles in Iraq and Afghanistan as quickly as possible. Why? Security. Lives are at stake.
As far as the importance of the other externalities of oil are concerned, I make no prediction. Will we eventually lose our appetite for shelling out $250 billion per year to deal with the asthma, lung cancer, etc. caused by the aromatics of oil and coal? Will we decide that we really do need to do something about global climate change and ocean acidification? In all honesty, I don’t know. But for the reasons discussed above, it doesn’t matter.
Once the EV industry has offered the consumer an effective value proposition, the game is over. And that can happen in two ways:
The first and most important is savings. Peak oil has assured us that the price of gas cannot come down. At the same time, the cost-effectiveness of batteries (the gating factor in all of this) is just about to blow the game wide open. A company called Eos Energy Systems, headquartered in New York City with manufacturing facilities in Easton, PA is soon to release its rechargeable zinc-air solution at $165 per kilowatt-hour – about one-quarter of the current price for lithium ion. That, IMO, is the end of the line for the internal combustion engine.
Here’s something else to consider. There is a scenario in which consumers are motivated by things outside of their wallets. I remind the reader of what happened to the mink industry in the 1960s. At one point it was fashionable for ladies to wear mink coats and stoles. Within about a year, you couldn’t find a mink coat. The sensibilities of a modern generation had changed hard and fast, and the people of the day simply refused to countenance a practice of raising and slaughtering innocent animals for their fur. Bang! The industry died – virtually overnight.
Could this happen here? You bet it could. I can’t say when it will happen, any more than I predicted 5 billion cell phones. But it’s perfectly possible that people are going to wake up one day and say: you know what? Green is cool. And what’s not cool? Rape our Earth, ruining our oceans and skies, and destroying any chance for future generations to have a decent life.
And there are a host of other reasons why this will happen that have nothing to do with either of the above:
- By 2030, smart grid and energy storage will soon be very big industries. The fact that 200,000 EVs on the roads will provide 5 gigawatt-hours of storage for the grid will not go unnoticed.
- The utilities, that, for some reason have shown astonishingly little interest in and involvement with EVs will change their approach when they realize that with electric transportation, “it’s all good.” The surge of EVs means steady, long-term growth, as electricity replaces oil, and the sales of massive amounts of off-peak power, which presently has very little value. EVs also mean a considerable change to the nature and shape of load peaks – again a considerable bonus.
- There are 25 million multi-car households in single-family dwellings, with at least one car used for local commuting. That’s a lot of low-hanging fruit.
So here are my predictions:
From now until 2015, EVs will be consumed by early adopters, while sales to corporate fleets like FedEx, Verizon, and Frito Lay will show the rest of the world that EVs are ready to go.
In the five years that follow, you’ll see the pragmatists getting onboard, and hard-core evidence of a solid growth curve
From 2021 to 2030, we’ll experience rapid and smooth EV adoption, deployment of fast-charging, adequate range for virtually all driving needs, and features that consumers simply can’t live without – not unlike cool new apps for today’s smart phones.
A few years later, my grandkids will be asking me, “Grandpa, what’s a piston?”
In the spirit of offering a specific stock pick, readers may want to check out the Yulon Group out of Taiwan, traded on the Taiwan Stock Exchange. While Yulon is certainly not a pure-play EV company, I have friends at San Dimas, CA-based AC Propulsion who have been working on an EV project within Yulon’s LUXGEN brand for almost three years, and I believe the effort will become strategic to the company’s growth and profitability going forward. I’m not privy to the details of the project, but I consider it quite exciting.
Disclosure: The author owns no stock in any of the companies mentioned in this article.