The transition from ICE vehicles to Electric vehicles

As it stands today, August 2019, the percentage of electrified vehicles to ICE (Internal Combustion Engine) vehicles is quite small - like 1% if that. But the tide is turning and somewhere down the line the reverse figures will prevail. Someday we will live in a world of 99% electric and 1% ICE vehicles. Will that be by 2030. I think not. But the transition has begun and it will not stop.

The compelling factors include cleaning up the environment, far more reliable cars, the convenience of charging at home, more cargo space, faster acceleration, dramatically less maintenance, and more creature comforts.

The barriers are general acceptance; humans are slow to change, cost, recharge time (note I didn't say range), and battery life.

Cost is going to be the controlling factor for at least the next 10 years. And the biggest cost factor is the cost of the batteries. That cost is slowly coming down but not sufficiently to lower the vehicle cost enough for the high volume middle income buyer market.

Manufacturers have a huge problem. The transition to electric cars is going to happen. If they stick with ICE cars they will fall behind eventually. So they must participate in electrification. But for the next set of years they will lose money on every BEV (battery electric vehicle) they make unless they only want to tap into the high price market where volumes are low. They know they can't survive unless they find ways to cut the cost. This is why we see partnerships being formed like never before.

Ford and VW have already agreed to build a certain number of For cars on the VW production line. this will increase volume and reduce cost. Still not enough I'm afraid.

Hydrogen fuel cell cars have not shown they can compete with BEV yet. There is the cost and long process of creating filling stations. People are much more reluctant to buy a fuel cell car than a BEV. Fuel Cell cars are presently very expensive. Perhaps the biggest hurdle for the fuel cell market is people quickly learn to like charging at home. Fuel cell cars are like ICE cars in that one has to pull into a refueling station to fill up. I believe being able to charge at home, on a standard 110V outlet or a 220V high current station is much more desirable than most would think. In our own personal case it takes less than 10 seconds to both push the button to open the charge door, and insert the power cable. The car is always "full" when we begin a trip around town. I believe hydrogen fuel cell cars will pick up a small percentage of the market and it may even continue to increase that percentage slowly over a couple of decades, but it is not going to overcome the barriers and squash the BEV market.

So the outlook is actually quite challenging for both the ICE market and the BEV market. What's going to happen to the cost of ownership of these vehicles.

It's interesting to project what will happen to the petroleum market and gas prices. As BEV cars bite off more and more market share the demand for gas will slowly decrease. This will create a glut in the petroleum market and the price per gallon will drop. This will cause some people to hang onto their ICE cars. Fuel for a BEV is already cheaper than an ICE car but if gas prices decline enough they can become equal in some cases. But the desire to do more and more about pollution will impact ICE sales as governments continue to create restrictions. Already parts of London will not allow ICE vehicles. Other large cities are creating similar zones. This will be an increasing incentive to buy a BEV over and ICE car.

Now throw in the rapidly approaching autonomous car factor and things become very muddled. If one can't normally afford a BEV they might be able to afford one if level 5 autonomous capability is built into that car and it can be released from private use for certain hours of the day. The car is yours to drive anytime you wish but instead of sitting in the company parking lot all day, or garage all night, it goes off and behaves like a driver-less taxi and you derive income from it. This scenario has the potential to completely disrupt the car market.

Battery technology is feverishly being worked on by many companies around the world. So far not much has changed after many years of trying. There are many promises and I certainly hope some technology will give us longer range, lower cost, longer life, faster charging batteries. Lets hope. But the other major thing going on, autonomous car technology, is rapidly improving and is going to be possible much sooner than most believe.

When we reach level 5 autonomous capability there will be less cars sold, but more cars on the road. However traffic will flow more smoothly. Why? Because today you drive from home to work, the car is parked all day, and you drive from work to home. If you later let the car go to become a driver-less taxi it will be back on the road, not sitting in the parking lot. As the number of driver-less (DL) cars increases less people will buy cars (they are still too expensive for most) and will make use of the DL cars. That puts more cars on the road and less sold. Organizations like Hertz will buy DL cars and run them 24 hours a day. People will rent fewer cars and just make use of DL cars.

Why will there be less traffic if there are more cars on the road? Because they will communicate with each other. Traffic signals and stop signs won't be needed. Cars will merge into moving streams of cars rather than sit at red lights.

The bottom line is we are at the beginning of a major transition. Some years down the line the whole automotive industry as we know it today, and private ownership, will be mostly a thing of the past for the history books.