Testing Tony Seba’s EV Predictions 20 (The Conclusion: Is It “Boom, Over” for the Internal Combustion Engine?)

Here we go. Tony Seba declares it’s “boom, over” for the internal combustion engine (ICE).

In this series of posts, I’ve tried to provide some metrics to measure whether Tony could be right. Central to my thesis is that when electric vehicles (EVs) match or exceed ICE vehicles on every criteria then “yes” it will be “boom, over”. Let’s revisit the criteria from post number 13 in this series. The sources of utility derived from a car can be thought of as threefold:

  1. Mobility
    • Acceleration
    • Top speed
    • Handling
    • Internal volume
    • Configuration
    • Off-road and specialist capabilities
  2. Aesthetic
  3. Status signalling

With respect to mobility, EVs are already superior to ICE vehicles in terms of acceleration and top speed. With their low centre of gravity (governed by the battery), their handling characteristics are also very good. Moreover, the small size of EV motors means that ultimately we can have motors front and rear, or, indeed, on each wheel. With each such modification, EV handling will pull away from that of ICE vehicles.

The powertrain of an ICE vehicle is a lot bigger volume-wise than that of an EV. It’s only through taking into account the big battery that the entire drivetrain of an EV matches, or possible exceeds, an ICE in volume. Here again, however, technology favours the EV. Batteries are getting smaller. The internal combustion engine has been around for 100 years. It won’t get much smaller. So, in time, the entire drivetrain of the EV will be smaller than that of an ICE, freeing up space in the rest of the car.

The fact that EV motors are so small and don’t require gear boxes, exhaust systems and other ancillary equipment means that they already favour creative configurations. At the minute, the size of the battery is so big that it limits flexibility provided by the smaller electric motors, even though we could chop up the battery and put it in different places. Distributing the battery around the car though is currently not an efficient thing to do since it adds complexity to the electronic control panel and heating systems regulating the battery. But as the size of individual battery cells come down, the battery can be placed within the required form factor of the overall car just as it is in a lap-tap computer. Ultimately, we will move to a designer-led car rather than an engineer-led car, as with smart phones.

With the independent control of each wheel and a freehand regarding configuration, designers can also dream up the perfect MPV, SUV or pick-up truck. Dropping the tyranny of the big engine, gear box, crankshaft, and exhaust system means that future EVs will be able to cope with challenging terrain or complex pulling and carrying requirements far better than ICE vehicles.

Now we get to aesthetic and status signalling. The rush by high-end German auto makers (such as Mercedes, BMW, Porsche and Audi) to roll out EVs in response to Tesla shows that EVs are soon going to dominate high-end auto sales. Indeed, Jaguar‘s top management is now debating whether to transform the brand into an only-EV one near term (here). The strategy of other top-end makers like Porsche is to offer a full-range of EVs alongside the old ICE vehicles. But the key point here is that all the luxury brands now see no contradiction between a car with an  electric drivetrain and a car that conveys high status.

True, for those ICE aficionados, the sound of an ICE engine and the steam punk-type glory of lifting a bonnet to see a V8 will never be eclipsed by an EV. But the new Tesla Roadster will place all of these vehicles in the rear-view mirror. So there will remain an aesthetic and status-signalling rump demand for ICE vehicles, but this will be the same rump demand as exists for Swiss mechanical watches. Demand for Swiss mechanical watches exists but its irrelevant in terms of aggregate revenue for the watch industry.

But now we come to the chink in the EV armour: price. As pulled out in previous posts, affordability is a temporal constraint: it stretches from the present to the future. So the purchase decision is not just bounded by the current available budget available to buy a car now, but also by the budget you will have to run the car through time and, ultimately, replace it. Restated, the purchase decision takes into account the sticker price and future costs captured by fuel, maintenance and depreciation.

EVs are already ahead of ICE vehicles with respect to fuel costs, maintenance and depreciation. And if something costs less in the future, theoretically you should have more money to buy it now (financing and credit facilities allow one to push payments for a car from the present to the future). In other words, if we can lessen future costs, we have more money to buy a more expensive car today.

So to repeat: given EVs are superior to ICE vehicles with respect to mobility functions, and can be at least as good with respect to aesthetic and status-signally, once their price approaches that of ICE vehicles, looked at in terms of the aggregate purchase price and future running costs, the market will tip. That is, sales of EVs will grow exponentially and ICE sales will collapse.

At this juncture, we should emphasise that the car market is not one amorphous mass. It is highly segmented with the vehicles in each space having a particular combination of mobility, aesthetic and status-signallying functions and price points. Thus, we are not really talking about a single tipping point, but a series of rolling tipping points as EVs meet the required sales take-off criteria in each segment one by one. To get a sense of the segment breakdown in the US,  2016 sales by type are given here:

US Auto Segment Sales 2017

Next question: “Are EVs at the tipping point in any of the above segments?”. Twelve months ago, the answer to that question would have to be ‘no’. But you are lucky to be living at a unique point in history. As of the third quarter of 2018, the answer must be “yes”, and that is down to Elon Musk and his Model 3. The rise of Model 3 sales over the course of 2018 has been nothing short of stupendous despite all the much-reported production issues.

Top 10 Luxury Cars US

The Model 3 is leaving its rival brands in the dust:

Sep 18 Luxury Car Sales

The next segments up for attack by EVs are luxury mid-size and large SUVs and crossovers. Here, the incumbent brands look like they will get to market first since Tesla has its hands full fulfilling its Model 3 order book before it can move on to its crossover Model Y.

At the top end, we have the Jaguar i-Pace, soon to followed by the Audi e-Tron and the Mercedes EQC. The adage “build it and they will come” appears to be holding true again, as the i-Pace has a full order book and Jaguar has hopelessly limited capacity to meet demand. In short, we have evidence that when an EV offering is at a similar price point to incumbent ICE vehicles, you will be able to sell all the EVs that you are able to make.

Luxury Crossovers

To repeat: what the sales data are starting to show is that if an EV is offered at a similar price point to an ICE vehicle, the public will buy the EV since an EV is a better transport alternative in terms of performance. Basically, the meme that the pubic don’t want EVs appears total rubbish. Given this state of affairs, what are we to make of these two charts. The first is from a Citibank report on EV penetration rates, and the second from an article by David Roberts of Vox.

EVPenetrationCiti

EVForecastsBNEF

In the top chart, the high-end 70% sales penetration rate by 2030 forecast is predicated on a breakthrough in technology (probably a commercial solid state battery). Personally, I don’t think that will happen until a decade later, so can put that forecast aside.

Based on lithium-ion technology, we are really looking at 2030 sales forecasts by every single forecasting entity of less than 50% of total vehicle sales. One of the most bullish forecasts is Bloomberg New Energy Finance (BNEF). This company’s latest Electric Vehicle Outlook 2018, which forecasts forward to 2040, was published in August and can be found here. The headline quote for the report:

BNEFOutlook18

And from inside the report a percentages sales penetration number:

BNEFNumbers

So the bullish BNEF suggests we need another 20 years at least before EVs overtake ICE vehicles in total sales. Keeping that in mind, Tony Seba’s belief that the EV sales penetrations will be over 95% in 2030 is not just an outlier compared with other forecasts but on a completely different planet (my graph based on Tony’s statements):

Seba Central Scenario

The disconnect is massive. In effect, BNEF, one of the most bullish mainstream forecasters of EV sales, sees a penetration rate a lot less than half of that of Tony Seba in 12 years’ time.

Nonetheless, as one of the first vindications of Tony’s theory,  in the small- to mid-sized luxury car segment Tesla alone was around one third of total sales in September 2018!

TeslaShare

Moreover, with a slew of new entrants, the luxury crossover and SUV segments is going to experience an identical attack by EVs on ICE vehicles as the cost and performance metrics are basically the same as the luxury car segment. Accordingly, the only way that BNEF and all the other companies and organisations that forecast total penetration rates well below 50% in 2030 can be right if one or both of two conditions are fulfilled:

  1. EVs can’t get down to cost parity in the mass market car, SUV, crossover and pick-up segments, or
  2. The demand exists across all segments for a Seba style 90%-plus penetration rate, but not enough batteries can be produced and/or EV production lines put in place to fulfil demand.

Now if you listen through Tony’s presentations, he claims that battery-price falls have accelerated from 14% to 20% per annum. He then projects these trends forward and sees EVs being chapter than ICE vehicles across the board in a few short years.

The head of BNEF‘s team Colin McKerracher has some rude things to say about this. From his Twitter account,

ColinMcSeba1

And in response to Seba a short Twitter spat ensued:

ColinMcSeba2

Mckerracher’s argument is that as the price of the battery comes down, in percentage terms it will become less dominant in the overall price of the car. I agree with this argument, but I don’t think it is enough to knock Seba’s huge EV penetration number out of the ring.

As I have argued throughout these posts, EV’s are superior to ICE vehicles in a number of domains like performance, running costs and so on. Accordingly, they don’t need to be cheaper than ICE vehicles to replace them. All they need to do is reach price parity. And we are witnessing real time what happens when EVs match ICE vehicle in a particular segment with respect to price: in the small- to mid-size US luxury car market we are seeing the market tip toward EVs in a matter of months.

In the same Twitter exchange, another poster put up a helpful chart to show the price fall dynamics of a 16% battery price decline with the price of the rest of the vehicle’s main components kept static. The battery is very much the swing component.

Cost Split .jpeg

In my last post, I did some rough, back-of-the-envelope calculations so as to determine what the battery price needed to get down to in order for a mass market EV to sell at parity to an equivalent segment ICE vehicle. Look at the post for details, but the bottom line is that the battery needed to be produced for $2,500 for a 2017 US average sticker price model of $37,500.

From Electric Vehicle Outlook 2018, BNEF sees battery pack prices at $70 per kWh in 2030. Further, given the almost daily advances in battery charging speeds taking place at present (we seem to be on a through train from 100kW to 350kW and beyond), a mass market vehicle should be able to get away with a 50 kWh battery (which with a 350kW  charging station will recharge in a little over 8 minutes, assuming that battery chemistry and control will have advanced to a stage that can cope with that speed of charge in 10 years’ time).

Seventy times 50 is $3,500 dollars. So let’s say that this makes the EV $1,000 more expensive than ICE vehicle or 2.7% more. As I mentioned above, the aggregate cost of a car is the price of purchase plus running costs. Given EV running costs are lower, a slightly higher EV sticker price of purchase is completely compatible with my concept of total cost parity.

As a reality check, even today we are seeing the first stirrings of proper EV offerings in the smaller vehicle segments. The Hyundai Kona, a small SUV, boasts a 64kWh battery and a range of around 300 miles. Just launched in the UK, it sells for around £25,000. Add back in the government subsidy of £5,000 and the total comes to £30,000 or about $40,000. By comparison, in a similar segment in the US the Honda CR-V and the Toyota RAV 4 sell for around $30,000.

Hyundai uses the LG Chemical NCM 622, which has a relatively high cobalt content compared with Tesla‘s battery. Consequently, I would guess that the Hyundai Kona battery costs around $200 per kWh, or $12,800 for the 64kWh battery overall. If we could get the kWh cost down to $70 in line with the BNEF forecast, the battery would come in at $4,420, for a saving of $8,320. At that price, the Hyundai Kona would sell for about $1,500-$2.000 more than the RAV 4 or CR-V. Basically parity given that the Kona will be cheaper to run.

True, getting the battery cost well below $100 is a challenge. There are two opposing forces we should consider in the declining battery cost trajectory. BNEF rightly point out that Tony’s per annum price decline forecasts are less useful that an experience curve approach (in economics we talk about economies of scale and learning-by-doing effects). What this means is that price declines are not a function of time but rather how many batteries you produce. Thus, if the volume of batteries produced goes up exponentially, the price of the batteries comes down exponentially.

And if you want to get a sense of how fast battery capacity is being ramped up, then you should follow this link and read the  article by Simon Moores of Benchmark Mineral Intelligence. Moores notes that existing and announced battery factories will have the capacity to produce 1.1 TWhs of batteries per year. That is over a 10-fold increase over existing production. The scale of this application of capital and innovation should reap huge cost-cutting rewards.

The major impediment preventing batteries costs coming down well-below BNEF‘s forecast of $70 kWh in 2030 is the price of the raw materials that go into a battery. Very roughly, 0.8kg of lithium goes into a 1 kWh battery, and that amount of lithium currently costs about $10. The most expensive metal used in current generation lithium-ion batteries is cobalt, which at one stage got as high as $90 per kg, but is now around $62. From the chart below you can see that different battery technologies use different amounts of cobalt. The NMC 811 battery, viewed as one of the most advanced battery chemistries in terms of energy density, is eight parts nickel to one part cobalt to one part manganese). A 50 kWh battery uses 4.5kg of cobalt or about 0.1kg cobalt per kWh. That is worth about $6. Nickel current trades at about $13 per kg. So for an NMC 811 battery we are looking at about $10 per kWh for the nickel. Thankfully, manganese is relatively cheap, so isn’t a big swing factor in battery pricing.

CobaltUseBatteries

Nevertheless, if you add the three most costly metal components together, we have a floor cost of $25. And these are the raw materials for just one component in the battery: the cathode! You then need to complement the cathode with a graphite anode, an electrolyte and a separator.  Then these components have to be combined into cells, which are linked into battery modules, and finally fabricated into battery packs. And the whole system requires a very sophisticated charge management and heat control system. In sum, getting battery prices below $100 per kWh with current lithium-ion technology will be tough.

With that caveat in mind, I will ask the following question to finish this series of 20 blog posts on the future of EVs:

“Is Tony Seba delusional in seeing EVs totally displace ICE vehicle sales by 2030?”.

My answer to that would have to be “no’. Ninety-five percent plus penetration is certainly a stretch goal since it would require current lithium-ion battery technology to be pushed right up against the boundary of what is possible in terms of price and performance. But I feel it is just about doable.

Does that mean that I think it will likely happen? That is a different question. I’m a probability guy and prefer thinking about the range of possible outcomes as opposed to giving one point estimate. For me, saying EV penetration will definitely be X percent in 2030 when looking at such a dynamic industry is a meaningless thing to do. My own guesstimate is that the EV penetration rate will likely be somewhere between 60-80%, which still puts me completely outside of the mainstream.

Nonetheless, in the spirit of Tony Seba hyperbole, I am happy to go out on a different type of limb. So in my words (rather than Tony Seba’s):

“All those who think EV sales penetration will remain down at around 30% in 2030 (the consensus view) are completely, utterly and certifiably crazy!”

For those of you coming to this series of posts midway, here is a link to the beginning of the series.

 

 

Testing Tony Seba’s EV Predictions 19 (How Low Could Battery Prices Go?)

As discussed in my last post, the price of an electric vehicle (EV) battery will play a central role in determining EV sales versus internal combustion engine (ICE) vehicle sales through to Tony Seba’s forecast horizon of 2030.

In that post, I also noted that the average sales price of a vehicle in the USA was $36,113 in 2017. Further, I roughly estimated that the cost of an ICE powertrain plus fuel tank was in the order of $3,400 in that year, or roughly 9.5% of the retail sticker price for an average car. Finally, I made the heroic assumption that an EV powertrain without the battery would cost about $1,000. Accordingly, if the powertrain plus battery of an EV is to come down to the cost of an ICE powertrain plus fuel tank, then the battery most come down to $2,400. Is that possible?

To have an EV completely without range anxiety, and given current miles per kilowatt hour (kWh) of battery efficiency, I speculated in another post that a 100 kWh battery would be required. Based on these assumptions, we can back out the target price of the battery (measured per kWh) in order for EVs to match ICE vehicles in price; in other words, $2,400 divided by 100 kWh, or $24 per kWh.

As mentioned in my last post, Bloomberg New Energy Finance (BNEF) estimated that the weighted average cost of an EV battery in 2017 was $209 per kWh. BNEF analysts estimate that this number will come down to $100 by 2023 and Tesla believes that it can hit the $100 number in 2020. But how much lower that $100 per kWh can a battery pack go? Is $24 a possible 12-year target?

Before we get too despondent over hitting the $24 figure, it should be noted that the industry has, in general, been far too pessimist about the speed of cost reductions with respect to battery-pack pricing. The chart below was taken from a September 2017 article titled “Cost Projection of State of the Art Lithium-Ion Batteries for Electric Vehicles Up to 2030” by Berckmans et al in the academic journal Energies. As of 2018, Tesla is already well below $200 per kWh. So those past predictions have turned out far too pessimist.

Sales Price Prediction Lithium-Ion

Nonetheless, while Tesla/Panasonic, the market leaders in battery technology are still securing both technology-driven cost savings and economies-of-scale related cost savings, there are limits as to how far they can go in battery cost reductions.

The most important limiting factor is raw material costs. The table below gives a breakdown of the cathode component alone in a battery pack as provided by Total Battery Consulting’s Dr. Menahem Anderman in a Seeking Alpha article. So the cathode materials alone come to $46 per kWh before we add in the anode, electrolyte, separator and then all the battery management software and hardware required to stop the battery overheating and to maintain the battery’s life.

Cathode Cost

True, the most costly material used in a Tesla battery is cobalt, and the use of cobalt has been on a declining trend.

Cobalt Usage

Moreover, Elon Musk made this statement in the company’s 2018 Q1 conference call (a Reuters article on this theme can be found here).

“we think we can get the cobalt to almost nothing”

Yet even if we near eliminate cobalt, the lithium and nickel alone will prevent the battery pack price getting anywhere close to $25 per kWh.

More realistically, it may be possible to achieve a $50 per kWh battery sometime after 2025. For a 100 kWh vehicle, $50 per kWh gives a total battery pack cost of $5,000, yet we are trying to seek parity with ICE vehicle pricing by producing a battery pack for around $2,500. What is to be done?

There are two possible solutions. First, a leap in battery chemistry could be achieved such that both energy density (kWh per litre) and specific energy (kWh per kg) jump higher without the need for more raw materials. Solid-state batteries appear the lead contender to become the next generation commercial battery technology some time in the mid-2020s. Apart, from eliminating cobalt, solid-state batteries would boost both energy density and specific energy and, once the technology beds down, these batteries have the potential to push battery costs much lower.

Tony Seba, however, is not looking for a technology breakthrough. A major component of Seba’s EV thesis relates to technology cost curves, and his presentations frequently feature the slide below (for example here). The curve is exponential and shows a 16% decline in costs per annum. Moreover, the technology cost curve is really an amalgam of cost-cutting achieved through economies of scale and through ‘learning by doing’. In short, these are incremental cost savings, not revolutionary cost savings.

Projected Battery Cost

For existing lithium ion technology, there are theoretical reasons why both energy density and specific energy cannot go above certain levels that we are fast approaching. Further, while we may be able to eliminate certain battery materials we cannot eliminate all the expensive battery materials. The only way we can stay on this 16% per annum downward-sloping exponential curve is for us to jump into a new generation of battery technology. This may, or may not, happen within Tony’s 2030 forecast horizon, but it is certainly not a given.

OK, let’s assume that we don’t get solid state out of the lab and into the factory in the forecast time horizon and we can’t get battery pack costs down to $25 per kWh. The Tony Seba thesis is that EVs will rule the world by 2030. Should we laugh at that goal? Not quite. It is possible that if we loosen our battery size condition at which range anxiety is eliminated, we may still get there. And one way this could be done is through introducing dynamic charging, or charging in motion.

Currently, the 75 kWh battery in a Model 3 can keep the car on the road for 310 miles. Accordingly, a 50 kWh battery will keep it on the road for around 200 miles. But to eliminate range anxiety,  I posited in a previous post that we needed a car to go 450 miles on one charge. One way we can square this particular circle is to charge a car while it is moving, and Qualcomm is developing a dynamic vehicle electric charging (DEVC) system called Halo that does just that.

The Halo system can charge your car at a maximum rate of 22 kilowatts. Therefore, if you travelled over this system for one hour continuously you theoretically could charge your car by 22 kWh. Do that a number of times over a long distance journey, say for 3 hours in total, and that would add 66 kWhs. So now our 50 kWh EV can more than double its range to above 400 miles and bye bye range anxiety. Of course, assuming your EV driver is doing 60 miles per hour, three hours of driving translates into roughly 180 miles, or 290 kilometres. That is considerably longer than the Qualcomm 100 metre DEVC test track. And, of course, we haven’t considered the cost of the required infrastructure.

The other alternative is to bring your car to a stop, but have access to a mega super charger such that an extra 100 miles could be added in minutes. If our 50 kWh Tesla Model 3 can do around 200 miles on one charge, then to add 100 miles you would need a charger to add 25 kWh. A new charger by ABB boasts a charge rate of 350 kW. At that rate, 100 miles could be added in about 5 minutes. Such mega fast charging rates provide further challenges for battery technology, since they have the potential to severely damage a battery if not managed properly. Indeed, no existing EVs on the road could currently cope with such charge rates. Nonetheless, the next generation of high-end German EVs appear to be designed to take advantage of a new generation of super chargers, with Porsche first to market with its Mission E vehicle to be launched in late 2019. Given time, this technology is likely to trickle down to mid- and low-end EV models.

In conclusion, getting the price of a battery down to a point where EVs can blow away ICE vehicles on price is not a given. Indeed, it is very difficult to see how incremental improvements in current battery technology alone can vanquish the internal combustion engine. Nonetheless, it is just possible that the combination of a slightly smaller battery coupled with new charging technology could do the job. At that point, EVs should match or exceed ICE vehicles in every area of the car purchase decision, so setting up the possibility that the market will tip and EV domination was arrive at an unprecedented pace.

Finally, the word ‘unpredicted’ could perhaps substitute for the word ‘unprecedented’ since no mainstream organisation or company is forecasting EV sales to vanquish ICE vehicle sales by 2030. The differing EV sales scenarios will be the subject of my last post in this series.

For those of you coming to this series of posts midway, here is a link to the beginning of the series.

 

 

 

 

 

 

Testing Tony Seba’s EV Predictions 18 (It’s the Price of the Battery, Stupid)

A few posts ago, I looked at the reasons why we buy a car and highlighted mobility, aesthetics and status-signalling as key factors. Those are the ‘wants’ in the purchase decision. But the purchase decision is also determined by ‘constraints’, the most important of which is cost. At the time of purchase, we have a current budget constraint, which is the sum of money available to buy a car, and a future budget constraint which is the sum of money we have available to fuel it, maintain it and, ultimately, replace it as it wears out.

I also stated that for Tony Seba to achieve the penetration rates shown in the chart below (culminating in 95% of auto sales being electric vehicle, EV, by 2030), the EV must match or excel the internal combustion engine (ICE) vehicle in every category of ‘wants’ or ‘constraints’. In this post, I am going to focus on an auto buyer’s current budget constraint: price. So if you have a choice between buying an EV or an ICE and the EV matches or exceeds the ICE in mobility provision, aesthetic, status signalling, fuel costs, maintenance and depreciation, you almost definitely will buy that EV if it also matches the ICE in price.

Seba Central Scenario

This post in some ways mirrors the previous one as, in effect, we are comparing the EV powertrain plus battery against the ICE vehicle powertrain plus fuel tank. Previously, the comparison was mostly with respect to weight, but also considered volume. This time we are focussed on cost. Note, however, that for all those parts of the car that don’t relate to the powertrain or energy source, we should have near parity. True, the structural integrity of an EV must be designed to protect the battery and this may uplift costs. But, similarly, the cradling of a large internal combustion engine at the front or back of a car will also pose challenges for a designer and have its own expense. For the sake of simplicity, I am viewing those EV versus ICE costs as a wash. So really this is a competition between a battery plus electric motor and a internal combustion engine plus all its complementary parts including the fuel tank.

Let us start with the most expensive component within the EV: the battery. Again, we have to very careful over what we are comparing here: the battery cell, battery panel or battery pack? I prefer to focus on the ‘all in’ battery pack cost, which includes the heat regulating materials, battery management control panel, ancillary wiring and everything else that is required to connect the battery cells to the electric motor.  As stated before, the battery pack size is determined by the number of  kilowatt hours (kWh) of energy that can be stored.

In a prior post, I speculated that to almost completely eliminate range anxiety, our next generation EV would need to increase its range from the current Tesla Model 3’s 310 miles to around 450 miles. Note again that I am talking here about an EV range that will in effect eliminate range anxiety for almost all drivers, so allowing new sales of EVs to reach a penetration rate of 95% by 2030. Most drivers will likely be happy with any range north of 300 miles, but this series of posts is setting a much stricter criteria of not ‘most’ drivers but ‘nearly all’ drivers.

We are now ready to start applying some numbers. Let us start with the average battery pack cost per kWh. The most authoritative figure for this cost is provided courtesy of Bloomberg New Energy Finance (BNEF)’s annual survey of battery pack costs. At the end of 2017, this figure had fallen to $209 per kWh.

Battery Pack Costs

In my last post, I suggested that in order to get an initial range of 450 miles, a 109 kWh battery would be required. At $209 per kWh,  a 109 kWh battery pack would cost $22,781. That is a lot of money for just one component of a car. BNEF analyst James Frith predicts, however, that battery pack costs will fall to $100 or below by 2025. At that price, a 109 kWh battery will cost $10,900. What does that look like as percentage of the total cost of a car?

Although China has overtaken the US as the largest market globally for new car sales, I am just going to run the numbers for US auto sales since granular data is unavailable for China. According to the Kelly Blue Book, the average cost of a new car in the United States was $36,113 as of end 2017.

Kelly Blue Book

So a 109 kWh battery is 30% of the price of the average new car sold in the USA. To give us some further perspective, Tesla aims to sell an entry level Model 3 with a 50kWh battery at a price of $35,000. At a cost of $100 per kWh, the battery in that particular Tesla would be around 14% of the cost of the car (and we haven’t added in the electric motor yet). How do these numbers compare with an ICE powertrain? Let us drill down into the cost of a car a bit further.

From the average new automobile transaction price of $36,113, we need to subtract dealer gross margins on new car sales. These average around 6% (source: here). Accordingly, the manufacturer’s average auto sales price pre dealer mark-up comes in at roughly $34,000.

New Vehicle Gross Margin

Next, we need to subtract the manufacturers operating profits to get the cost to manufacture a car. PWC has the average operating profits at the manufacturers at around 6%. Subtracting these margins, the average cost to manufacture an average car comes down to around $32,000.

Surprisingly, I really struggled to find a good breakdown of physical materials and components as a percentage of the cost of a car. The best I could find is the chart below.

Auto Cost Breakdown

Forty-seven percent of the post dealer and manufacturer profit figure of $32,000 gives a rough figure of $15,000 for the physical material that makes up a car.  A 2012 report by McKinsey that forecasts through to 2020 suggests that this figure of $15,000 is about right. In the graph below, the total vehicle parts cost given by McKinsey is $13,400. That, however, is for 2012.

Assuming the percentage breakdown of different categories of parts is the same now as 2012, we can see that the internal combustion engine powertrain accounts for 22% of total parts, or $3,300 out of $15,000. I’m going to add on to that $100 for the fuel tank to give a total of $3,400 for powertrain plus fuel source.

Auto Component Breakdown

Following this line of thought, we next need to price an electric motor, the principal powertrain of an EV. That task is even more difficult as the manufacturers appear loathe to disclose any pricing information on the two main EV drivetrain technologies: AC induction motors or permanent magnet motors. We do know, however, that the number of components that go into these motors is vastly fewer than go into an internal combustion engine. Further, an EV powertrain does not need a gear box, exhaust system and so on. As a heroic assumption, I will assume that the EV drive train costs a little less than one third of the ICE drive train, or $1,000.

With all these numbers, we are now in a position to compare an ICE powertrain plus fuel tank with an EV powertrain plus battery. The former costs $3,400 now against a 109kWh EV power train plus battery costing $11,900 in 2025. That suggests that a mid market EV with a long range will still sell at a 25% premium to its ICE counterpart even after battery pack prices have halved. And to repeat again, for EVs to do to ICE vehicles what digital cameras did to film cameras, EVs need to either match or exceed the old technology in every category of consumer preference. A 25% price premium is not matching.

Nonetheless, all is not lost for Tony’s 2030 prediction of total dominance of EVs over ICE vehicles by 2030. First, the application of lighter weight materials in car manufacturing should allow auto makers to eke out more miles per kWh, so allowing a smaller battery. Second, more dynamic charging methods could also permit ‘on the go’ charging tops-ups that would also allow the battery size to shrink.  Third, 2025 is not 2030, so the battery price will have further to fall. Fourth, the Bloomberg prediction of $100 per kWh for the battery pack price in 2025 relates to a waited average price across all EV makers. Market leader Tesla is looking at a battery pack price of $100 per kWh by 2020, giving that firm another 10 years of falling battery costs before the 2030 prediction deadline arrives.

In my next and penultimate post of this series I will look at the question of how low battery prices could go and whether dynamic charging developments could allow EVs to get away with smaller batteries yet still banish range anxiety.

For those of you coming to this series of posts midway, here is a link to the beginning of the series.

 

Testing Tony Seba’s EV Predictions 17 (More about Batteries)

In my previous post, I suggested that we are on the cusp of putting electric vehicle (EV) range issues behind us. Two distinct technologies are overcoming the range problem: the growth of fast charging networks and the rise in the energy capacity of EV batteries. In this post, we are going to drill further down into the energy capacity issue.

In the past, the battery constraint has been size and weight. Producing a battery that can deliver 400 or 500 miles of continuous driving is relatively easy: you just make the battery ever bigger. The problem has been delivering the required energy capacity within a sensibly sized and weighted unit. The Tesla Model 3 battery comes in at 478 kg, contains 75 kilowatt hours (kWh) of energy and can propel the car 310 miles between charges according to the US Department of Energy. In the Tesla Model 3, for every 1 kg of battery we get 157 watt hours (Wh). This is called the specific energy of the battery, or the gravimetric energy density, and is measured in watts-hours per kilogram.

I mentioned that the Model 3 has a 478 kg battery. We are really talking about the battery pack here, which incorporates a number of battery modules, which in turn incorporate a number of battery cells. As is the case of many things EV, we are frequently faced with the problem of comparing apples and pairs. That is, if we want to compare specific energy figures between vehicles, we need to compare like with like: battery pack with pack, module with module or cell with cell. The building of a battery, from components, to cells, to modules, to the pack can be seen in the illustration below (source: here):

ValueChainEVBatteries

The combination of the battery elements is a complex interlocking process involving a lot of different disciplines such as chemistry, electrical engineering and mechanical engineering. And it also involves trade-offs. Securing specific energy gains in one area can result in losses in another.

BatteryProcess

For example, the Tesla Model 3 uses state-of-the-art Panasonic ‘2170’ battery cells that are likely the highest specific energy battery cells deployed in mass production cars. (Note that the 2170 number represents the dimensions of the battery cell not the battery chemistry; 21 mm is the diameter and 70 mm the length.) But the battery chemistry employed in these cells is quite difficult and requires a sophisticated cell management and heat control system to prevent thermal runaway; i.e., the battery catching fire. Obviously, the more sophisticated and complex the cell management system, the more the overall battery pack is bulked up.

Of course, by definition, battery cells have a far greater specific energy (gravimetric energy density) than the battery pack since all the battery pack parts surrounding the cells have zero specific energy. In the Tesla Model 3 tear down that I referred to in a previous post, Jack Rickard extracted the four modules that go into the Tesla Model 3 battery pack. They are slightly uneven in size. Two of the modules contain 1,058 cells and two contain 1,150 cell, so the overall battery pack has 4,416 cells in total. Jack also weighed the modules: in total they came to 362 kg. So with usable energy of 75 kWh, the modules alone have a specific energy of 75 kWh divided by 362 kg, which translates to 207 Wh/kg (Jack blogged about this tear down here). From the top of the post, remember that the specific energy of the battery pack in its entirety was 157 Wh/kg.

We can go even further down to the specific energy of the individual cells. Before we do that, here is a short video of a Tesla Model 3 ‘2170’ cell being dissected:

Surprisingly, I’ve struggled to find an official weight for each individual battery cell. From a Tesla forum conversation, I have seen a figure of  66 grams quoted, but I can’t verify this. Until I get a definitive number, however, I will run with 66 grams as it likely to be only a few grams out. So if we have 4,416 cells each weighing 66 grams, that gives us a total weight for the cells alone of 291 kg. This time, let’s divide the total energy of the battery pack, 75 kWh, by this new figure. The results is that each cell has a specific energy density of 257 Wh/kg. Compared with the theoretical maximum specific energy density of around 400 Wh/kg, you can see that there is the potential for some future efficiency gains but not transformational ones.

BatteryMooresLaw

In the Model 3, Tesla has a car that can compete with ICE rivals such as Audi, BMW and Mercedes, but for Tesla to utterly dominate all its competitors it would be helpful if we could get its driving range even higher than 310 miles between charges. How easy is it for Tesla to do that within the existing battery chemistry limitations highlighted above?

First, let’s focus on the non-cell components in the battery pack. We already established that the battery cells weigh 291 kg in total. If we take that number away from the overall battery pack weight of 478 kg, then the non-cell components weigh 187 kg. Let’s say that through mechanical and electrical engineering incremental improvements, we reduce the non-cell weight of the battery by 12% per annum for three years; in other words by roughly one third. That will free up about 65 kg out of that 187 kg.

Next we allocate that 65 kg to install more cells. So the cell weight goes from 291 kg to 356 kg. That’s a 22% increase. If we hold the specific energy of the cells constant at 257 Wh/kg, we now have a 91.5 kWh cell pack that should give us a range of 378 miles.

Turning now to the battery chemistry, we recognise that specific energy improvements are harder to achieve in this area than improvements in electrical or mechanical engineering. So for the cells, let’s assume Tesla and Panasonic improve the specific energy by 6% per annum for the next 3 years. That will result in specific energy going from 257 Wh/kg to 306 Wh/kg, an improvement of 19%. With our 19% improvement, the battery now goes from 91.5 kWh to 109 kWh and range improves from 378 miles to 450 miles between charges. At a 450-mile range, I declared in my previous post that all worries over EV range would disappear.

In a perfect world, I would like to not only get up to a 450-mile range but also shrink the battery weight and size. But for that, we probably need to wait for a jump in battery technology that delivers specific energy north of 500 Wh/kg. There are a variety of advanced batteries in the pipeline that aim to do just that as can be seen below. Nonetheless, we have yet to see any that are close to commercial production.

FutureBatteryChemistry

The conclusion of this post, nonetheless, is that even with only incremental improvements in existing technology, EV powertrains (plus their batteries) are getting very close now to matching or exceeding ICE powertrains (plus their fuel tanks) in every single area of performance. Throughout this discussion, however, I have left out one critical parameter: cost. That will be the subject of my next post.

For those of you coming to this series of posts midway, here is a link to the beginning of the series.

 

 

Testing Tony Seba’s EV Predictions 16 (Range Anxiety and the Need to Wee)

When Jack Rickard pulled the battery out of a wrecked extended range Model 3 in a previous post, it weighed in at 478 kg. We are talking here of a 75 kilowatt-hour (kWh) battery. If you have a high tolerance for ‘slow video’ then you can see Jack, together with Bill from Ace Hardware, Linden, Tennessee, extract the battery from a Model 3 (I rather like Jack’s vlogging style, but then perhaps I should get out more).

Let us put this battery into some kind of context. If we divide the energy storage of the 75 kWh Tesla battery Jack Rickard extracted by its weight of 478 kg we get 0.157 kWh per 1 kg of weight. Let’s change our unit from kilowatts to watts: so we get 157 watt hours (Wh) per kg. Note we are talking about the entire battery here, not the battery cells.

The measure of the amount of energy per unit of weight is referred to as the specific energy or gravimetric energy density. If you are building EVs you want to have as high as possible specific energy for your battery. Each technological advance then allows you to either store the same amount of energy for less weight, or store more energy for the same amount of weight.

When you compare EVs with internal combustion engines (ICEs), the EV basically wins hands down with respect to the delivery of power. So boosting the specific energy of the battery is about having more energy in your battery (rather than power). This, in turn, gives your car more mileage range. Indeed, a critical goal in battery development is to boost specific energy to such an extent that mileage range becomes a non-issue. Nonetheless, even if your battery can deliver all the possible miles that an owner could wish to drive in one sitting, an incentive still exists to boost specific energy even further because that would allow you to continually shrink the battery.

Keep in mind that the Model 3 Tesla battery Jack extracted weighs 28% of the overall vehicle weight. So let’s do a thought experiment and imagine that Tesla doubles the specific energy of the battery to 300 watt hours per kg (wh/kg).

The current Tesla Model 3 has a range of 310 miles according to the US government’s Environment Protection Agency (EPA); pretty good, but I should think the consumer is greedy for more. Let’s decide to increase the mileage range by 50% to around 450 miles between charges. With our new 100% specific energy improved battery we could deliver 450 miles plus shrink the battery by 25% to about 325 kg. We are, in effect, lightening the car by over 100 kg. And, if we are lightening the car by 100 kg, we are making it more efficient.

The extended-range Model 3 weighs in at 1,730 kg; if we drop 100 kg in weight, that translates into a weight saving of around 6%. And given a chunk of the battery’s energy is used up lugging the battery itself around, every time we shrink the battery we release energy that can be used for moving the rest of the vehicle and its occupants. This, in turn, allows us to shrink the battery further. In other words, we have a nice little positive feedback loop emerging here.

Specific energy is not energy density. The term energy density, or volumetric energy density, refers to the energy stored per unit of volume, or watts per litre (wh/l). In an ideal world, I would have loved it if Jack had also taken the dimensions of the extracted Tesla battery as well. Then we could have worked out a real-time energy density number for the Model 3 battery. In the chart below, however, you can see that a linear relationship exists between specific energy (termed here gravimetric energy density) and volumetric energy density. Therefore, as we achieve specific energy enhancements, we generally get energy density improvements as well.

SpecifiEnergyVEnergyDensity

Put another way, as you lighten the battery you will also reduce its size. And every time you do that, the size of the total drivetrain, including energy source, gets more competitive versus the ICE drivetrain plus fuel tank. Note that the EV has already won in the configuration competition with an ICE vehicle. You have far more latitude in arranging your drivetrain components with an EV since you are just connecting them up with wires. No crankshaft or gear box required.

Let’s talk a bit more about range. We’ve established that the extended range Tesla Model 3 can drive around 310 miles on a fully charged battery according to US government statistics. So we get 3.85 miles per kWh. Speed limits in the USA vary by state, but the highest speed limit is found in states like Texas and comes in at 75 mph. So our 310 mile range for the Tesla translates into roughly 4 hours 10 minutes of driving time in the high-speed-limit states, and that is assuming the entire journey is at the maximum speed limit.

Given the average motorist doesn’t wear adult diapers while driving, he or she will periodically need to get out of the car to urinate or defecate. Moreover, I propose that the need for a wee is the limiting factor here, so the act of urination is our boundary constraint (apologies to irritable bowel sufferers). According to WebMD, the average adult urinates between once every two to four hours. So I will take an ‘iron bladder’ as my example Tesla driver. Bottom line, the car will not run out of energy before the girl or boy has gotta go.

Nonetheless, we have to think about how long it takes to charge the car up again. And then we need to plug that number into an equation that also incorporates the time it takes to exit the car, hook it up to a recharging source, walk over to the toilet facility, urinate, walk back to the car, unhook the car from the charger and then drive off.

So does time to wee equate to time to charge? Curiously (at least for me), the “Law of Urination” states that mammals in general take 21 seconds to pee. So the actual act of urination is not the limiting factor here, rather accessing a place to urinate is the issue. For argument’s sake, I will assume that the toilet break is limited to 20 minutes since we need to walk to and from a toilet cubicle.

Next we need to know how long it takes to charge the Tesla. There are a lot of factors that come into play here including the starting charge of the battery, the desired ending charge of the battery and the quality of the charger. Given we are interested in the dynamics of a long road trip here, the driver is going to be using some kind of supercharger network. To get a sense of the charging experience at a Tesla Supercharger, check out the video here:

In the video, you can see a top charging rate of 100 kW, which translates into 375 miles added per hour. The theoretical top charging rate at a Tesla Supercharger is actually 115 kW, but as the battery gets close to being fully charged, the rate of charging drops off.

ChargingRateTeslaModel3

 

What can we deduce from all this? Well, if a long distance driver wants to do two back-to-back journeys of around 300 miles each at the top speed limit allowed in the USA and only needs one toilet break of 20 minutes, then the Model 3 can’t deliver that kind of range performance (but an ICE vehicle can). You currently need a good hour of charging in that scenario for your Model 3, even assuming access to the best possible charging rate at a Supercharger.

At this stage, you may point out that the vast majority of car journeys don’t include driving 600 miles straight in two back-to-back sessions with a 20 minute break in between. But that is not really the point. In an earlier post, I established the conditions needed for the auto market to tip between being ICE dominated and EV dominated. The condition was that an EV needed to match or exceed an ICE vehicle in every car attribute. So if an ICE vehicle is superior for long distance marathon driving, EV penetration will be slower.

Nonetheless, it is only the year 2018, and Tony Seba’s 95% EV penetration-rate target by 2030 is still 12 years away. Further, I think the EV is not that far away from matching an ICE for long-distance driving already for two reasons.

First, as the battery capacity gets bigger, the battery will still have a lot of juice when the driver reaches the first toilet stop. With a 50% bigger battery and a 450 mile initial range (achieved through charging overnight), 150 miles will be left in the battery at the first stop. So for leg number two of the journey, only half the charge time is required since we are only topping it up and not starting from zero. (Yes, we could talk about three back-to-back stages amounting to 900 miles, but the driver will eventually have to eat, and, as we get beyond the 99.9% percentile of typical journeys taken, I think we can view these as true outliers.)

Second, as each Supercharger generation is rolled out, the rate of charging will go up. Tesla has already flagged that the V3 Supercharger will arrive this summer and the rate of charge is likely to be between 200 kW and 250 kW, so a roadmap exists toward halving the best current charging time.

Beyond Tesla, two open standards exist that allow shared usage by vehicles produced by different auto makers. These are the CCS standard (backed by the CharIn consortium) and the CHAdeMO standard. CCS, promoted by the German auto makers amongst others, is working toward a charging rate of 350 kW as well as inductive wireless charging stations. The CHAdeMO consortium, which is principally composed of Japanese automakers and electric power companies, is aiming for a rate of 400 kW in the coming years. A good primer on fast-charging protocols can be founder here.

Both CCS and CHAdeMO are having to play catch-up with Tesla’s Supercharger network, which has just reached 10,000 sites worldwide. Undoubtedly, Tesla’s strategy of “build them and they will come” appears to be far superior to the opposition’s strategy of “we will build them when they ask for them”. You can check out Tesla’s global Supercharger network here.

TeslaSuperChargerNetwork

Summing up, while I think access to fast charging facilities will become a non-issue in a few years time, the need for batteries to get better with respect to specific energy and density is still a pressing need if EVs are going to unseat the current dominance of ICE vehicles. Further, to get the required improvement, do we need a John Goodenough-style leap in battery technology or will a Tesla-style incremental improvement in existing technology suffice? That will be the subject of my next post.

For those of you coming to this series of posts midway, here is a link to the beginning of the series.

 

 

 

 

 

Testing Tony Seba’s EV Predictions 15 (Three Nominations for Nobel Prizes)

About a 10 minute walk from my home in Oxford can be found the University of Oxford’s Inorganic Chemistry Laboratory. From my photo below, you can see that the building sports a series of blue plaques commemorating the laboratory’s greatest achievements.

IMG_1360

The bottom one reads as follows:

Here in 1980, John B. Goodenough with Yoichi Mizushima, Philip C. Jones and Philip J. Wiseman identified the cathode material that enabled the development of the rechargeable lithium-ion battery. The breakthrough ushered in the age of portable electronic devices.

Goodenough, now aged 95, is still actively researching battery technology to this day. An affectionate review of Goodenough’s extraordinary career by the journalist Steve LeVine can be found here and an article on a controversial new claim by Goodenough here.

What Goodenough and his team managed to do was create a battery cathode stable enough to act as a source of lithium ions without collapsing in upon itself. This allowed a battery to be charged and discharged, yet hold its energy in-between. The team did this through experimenting with a variety of metal oxides until they came across a lithium-cobalt-oxide combination that provided power with stability. To complement this great leap forward in the cathode, progress was required in the anode, and that came in the mid-1980s through the work of Akira Yoshino in Japan.

LithiumIon

Yoshino’s genius was to match graphite in the anode with Goodenough’s lithium-cobalt-oxide in the cathode. On top of the basic battery chemistry, Yoshino also pioneered a number of fabrication techniques that eventually took the lithium-ion battery out of the laboratory and into commercial production by the Sony Corporation. In short, the Goodenough-Yoshino insights produced a dramatic leap in deliverable power and energy storage.

Lithium-Ion Battery

Although the lithium-ion battery revolution of the 1980s ushered us into a world of ubiquitous mobile electronics, it was initially not sufficient to beget the transport and energy storage revolutions Tony Seba talks about in his presentations. Part of the problem here is that the battery makers face an optimisation problem with 6 variables. They need to look at all of the following:

  1. Safety and maturity on the battery cell level
  2. Power capability and charge/discharge characteristics
  3. Energy contents of the battery cell
  4. Cycling efficiency and self-discharge
  5. Degradation and aging phenomena
  6. Material and battery cell cost

The battery chemistry required is a perpetual trade off between these six. A push for power can compromise safety, and so on it goes. A second problem is that a battery is a multi-component mechanism. You have a cathode, an anode, an electrolyte and a separator. As you tweak the chemistry of one, it will have a tendency to produce unintended consequences in the chemistry of another.

LithiumIonBatterySchematic

Finally, and perhaps most importantly, a battery is not subject to Moore’s Law: it is subject to Faraday’s First Law of Electrolysis. This states that the amount of current passed through an electrode is directly proportional to the amount of material liberated from it. In other words, there is a linear relationship between electrical current and material. You may be able to increase the amount of material liberated from an electrode through using a different kind of material, but what you can’t do is increase the electrical current with the same amount of material.

 

This is a very different relationship from that referenced in Moore’s Law (which is really an empirical observation not a physical law). I blogged on this same topic three years ago (here) and at the time referred to the original 1965 article by Gordon Moore that ushered in Moore’s Law entitled  “Cramming more components onto integrated circuits.”  In the original paper, Moore referred to a doubling of the number of transistors on an integrated circuit board every year, which he later modified to every two years. Either way, the only way you can display that kind of growth on a graph is through using a logarithmic scale as can be seen with what actually happened:

Moore'sLaw

And let’s contrast and compare the Moore’s Law dynamic against battery advances (from here):

BatteryMooresLaw

Nonetheless, you can see that considerable progress has been made. Note that the progression from Goodenough’s lithium-cobalt-oxide combination to a nickel-magnesium-cobolt-oxide combination is an advancement of the same type of chemistry, not a new technological leap. Interestingly, Goodenough himself is rather dismissive of such incremental moves, feeling that they won’t be sufficient to supplant the internal combustion engine. From the Steve LeVine interview:

The stakes are high, and Goodenough dismisses a lot of the competing approaches he sees—Tesla’s Elon Musk, for instance, who he says is content to “sell his cars to rich people in Hollywood” while waiting for scientists to create a battery that will power a middle-class electric car. That is not precisely fair—Musk is obviously selling his $80,000 to $100,000 cars to an elite niche, but by 2018 he vows to have a roughly $35,000 model for a broader slice of the market. He is getting there through agile engineering that has provided incremental improvements to his battery.

But Goodenough is equally dismissive of such tinkering and its measly 7% or 8% a year in added efficiency. “You need something that will give you a little bit of a step,” he says, “not an increment.”

By chance, when I blogged about the state of batteries in March 2015, I came to a similar conclusion (even though I hadn’t read the LeVine article at the time):

Tony Seba, Ray Kurzweil and other assorted techno-cornucopians achieve almost instant doublings by assuming growth rates in the high teens or better. Unfortunately, much science progresses in the low to mid single digits, so change is measured in decades–not years.

The distinction is important. Under the Kurzweil logic, we don’t really need to tackle climate change or resource depletion because technology is on the case. Just go about your business as usual, tuck up your kids in bed at night, and scientific innovation will do the rest.

But unless Argonne Laboratory‘s battery guys and their peers step up the pace (which looks exceedingly difficult), electric vehicles will not replace conventional internal combustion engines for a couple of decades or more. That translates into no natural near-term carbon emission mitigation in the field of motor transport. And unless we get very lucky with climate sensitivity to CO2, that also means we will get a lot closer to exceedingly dangerous climate change.

It now appears that I (and Goodenough) could have been wrong: “such tinkering” has managed to deliver double-digit efficiency gains. These gains have, in turn, allowed Telsa to start tipping the market toward EVs at the luxury end with the Model S. And Elon Musk now appears to be doing the same with respect to more compact cars with the Model 3.

If Tesla keeps going into more and more segments (and drags the entire auto industry along with it), then through mitigating (but perhaps not eliminating) the risk of dangerous climate change, Musk, along with Goodenough and Yoshino, will have had more impact on the planet than any human being who has ever lived. We define the Anthropocene as the geological period over which human activity has had an appreciable impact on the environment and climate. Should Tony Seba’s transport and energy revolutions come to pass, it is extraordinary to think that the actions of Goodenough-Yoshino-Musk will have shaped how the Anthropocene unfolds.

I believe that Goodenough and Yoshino certainly deserve to be awarded the Nobel prize for chemistry. Further, should battery efficiency continue to progress at its current pace such that fossil fuels are removed from the transport and energy storage equation, then the role of all three in preventing dangerous climate change will have been immense. Indeed, I can’t think of any three more fitting recipients of the Nobel Peace Prize in such a situation.

Nonetheless, I have got a little ahead of myself in handing out Nobel prizes. While I am far more confident than three years ago that we are close to an EV tipping point, we are not quite there yet. So in my next post we need to dig still deeper into battery efficiency and cost to see whether battery technology can advance just that little bit further to push ICE technology to one side.

For those of you coming to this series of posts midway, here is a link to the beginning of the series.

 

Testing Tony Seba’s EV Predictions 14 (Deconstructing the Car)

In my last post, I set the conditions that determine whether the auto market tips from internal combustion engine (ICE) vehicles to electric vehicles (EVs). EVs need to either match or exceed ICE vehicles with respect to every car ‘attribute’ at an equivalent cost. Then it’s game over for ICE vehicles.

The attributes of a car give a consumer happiness. That utility comes from a) the mobility a car provides, b) the aesthetic of the car (the pleasure the owner gets in owning the car that is not related to other people) and c) status-signally through displaying ownership of the car to other people (such status signalling is not restricted to investment bankers and their Ferraris; it also covers hippies in their Citroen 2CVs and Green Party members in their Nissan Leafs).

The purchase decisions of consumers are based on their current budgets and future budgets. Current budgets determines how much they are able to pay for cars and future budgets determine how much they can afford to run their cars (fuel, maintenance, depreciation).

If EVs are better with respect to some of these aspects of the purchase decision but worse in others, then taking market share from ICE vehicles will be an uphill slog. That is what Exxon Mobile believes as illustrated in this chart from its latest “Outlook for Energy: 2018”:

ExxonMobileEV Forecast

If such a projection is correct, around 50 million EVs will be on the road (which includes pure battery and plug-in hybrids) in 2030. That compares with the Tony Seba S curve view of 130 million EV sales alone in that year.

To tease out who is likely to be right, let us think of the physical limits auto makers have to work with. Basically, a car is a three dimensional irregular cuboid shape constrained by such external factors as lane width and parking space size. Certain things are then put into this irregular cuboid shape to provide the mobility, aesthetic and status-signalling attributes we identified before.

Lots of car ‘stuff’ is not a function of whether it is an ICE vehicle or EV. For example, the headlights, wing mirrors, windscreen wipers and so on. We can exclude such items from our analysis since an EV can match the ICE vehicle in these domains. Moreover, there is no reason why an EV can’t match an ICE in terms of aesthetic or status-signalling should its design be good enough and its ability to fulfil the mobility criteria.

The main differentiator between an EV and ICE vehicle when it comes to mobility relates to the drivetrain. Taken, holistically, we can think of this as encompassing a store of energy and a means of converting that energy into motion. We can now compare EVs against ICE vehicles in respect of this broadly defined drivetrain across a series of factors, most importantly:

  • Weight
  • Volume
  • Efficiency
  • Flexibility

Given its position as the undoubted pacesetter in cutting edge EV design, performance and production numbers, Tesla’s Model 3 is a worthy champion for the EV camp. The standard Model 3 has a curb weight of 1,610 kg, while the extended range version is 1,730 kg. The crotchety Jack Rickard did a tear down of a wrecked extended-range Tesla Model 3 (warning: it is a long video) and extracted the battery, which weighed 478 kg. So that means the battery weighs roughly 28% of the car.

Let’s choose the BMW 330i Sedan as a typical ICE competitor for Tesla; its specifications taken from BMW’s USA site can be found here. This sedan comes in at 1,610 kg, so the Tesla is 7.5% heavier. Curb weight generally includes a full tank of fuel, which in the BMW’s case is 15.8 gallons or about 45 kg in weight (you can see here the extraordinary energy density of fossil fuels).

So that in a nutshell is the handicap of the battery as an energy source: more than 400 kg of extra weight. On the other side of the ledger is the fact that you wonder where the engine has gone in an EV. Here is the schematic for the Model 3:

Model3Schematic

First, you notice the radical shrinkage of the actual engine itself. An internal combustion engine is a system of controlled explosions that first translate into lateral movement of the pistons, which in turn has to be translated into circular movement to the wheels. That requires a complex multipart machine.

The video below compares and contrasts the Tesla drivetrain with a traditional ICE (but note it highlights the induction motor in the Model S; the Model 3 motor and electrical motors in other automakers EVs are somewhat different) and emphasises the fact that the electrical engine has radically fewer parts.

And here is a couple of minutes on the Model S engine showing its intrinsic simplicity:

The key differentiator, obviously, is the disappearance of a bunch of ICE components: transmission, exhaust system, fuel pump, fuel injection and spark plugs. An EV does need some kind of cooling system for both the motor and the battery, but this is relatively modest in both weight and volume.

Overall, if we take out the gas tank and the battery from the equation then we get this:

EV drivetrain weight <  ICE drivetrain weight

EV drivetrain volume < ICE drivetrain volume

But through adding the battery and gas tank back in, these inequalities reverse:

EV drivetrain weight >  ICE drivetrain weight

EV drivetrain volume > ICE drivetrain volume

Now, it’s very difficult to put numbers into these inequalities. But the interesting thing about Tesla’s Model 3 is that it incorporates a large battery in terms of kilowatt hours (kWh) but the car is still in the same ball park weight category as its ICE competitors. Moreover, we are currently going through a period of rapid battery cell shrinkage (weight and volume per kWh). Let’s say Tesla can shrink the 479kg battery that Jack Rickard extracted from the wrecked Model 3 by 25%; that would give a weight saving of 120kg. We are now getting into matching territory. And remember the conditions for tipping. EVs don’t need to exceed ICE vehicles for the market to tip: they just need to match in most areas and excel in a few.

Next we come to flexibility, which really relates to the configuration in our irregular cuboid. So yet again putting the battery to one side, the EV has an instant advantage. The drivetrain units can be arranged more flexibly as they are linked principally by wires, not by a complex transmission mechanism.

Even with the battery, the possibilities of dividing it up and distributing it around the car have yet to be explored. Safety and cooling issues not withstanding, the overall battery is cellular and is just composed of thousands of small batteries. We talk of form factors with mobile phones, and this is ultimately where we will move with cars. With an ICE, you have to design around the drivetrain, with an EV the drivetrain can become subservient to the design.

So then we move to efficiency, with respect to which the EV wins hands down. An electrical motor can deliver instant power and torque. In the US context with imperial units we have this equation.

PowerEquation

Which translates into this chart:

TorqueRPM

As a result of the dynamic in the above chart, Tesla is currently able to deliver supercar type performance at a fraction of the cost of the likes of Porsche, Bugatti or Ferrari (source: here). Note that Tesla’s new Roadster due to be released in 2020 will have a base model that delivers zero to 60 in 1.9 seconds; that will be the first production car ever to break two seconds.

CarAcceleration

Moreover, such high-end, halo EV performance profiles will trickle down. Ultimately, taking price to price comparisons, the EV will leave the ICE car in the dust when the stop light turns green. For those of a non-macho disposition, you may not care. But to repeat (again) if the EV is equal on all metrics but ahead on just one that you care about (all at an equivalent price), then you will buy the EV.

And yes we still have the constraint of range and price. And yet again this takes us back to the battery. Indeed, the EV battery is like the little Dutch boy Hans Brinker whose finger in the dyke is the only thing stopping the entire neighbourhood being flooded and his family and friends being drowned. But once the battery gets down to a price and efficiency point not far from now, that dike will go and the ICE industry with it. The battery is the subject of my next post.

HansBrinker

For those of you coming to this series of posts midway, here is a link to the beginning of the series.