Elec­tric cars’ break­out could be near: re­port

Plug-in ve­hi­cles will go main­stream as soon as bat­tery costs hit sweet spot, re­search group pre­dicts

The Hamilton Spectator - - BUSINESS - BRAD PLUMER New York Times

As the world’s au­tomak­ers place larger bets on elec­tric ve­hi­cle tech­nol­ogy, many in­dus­try an­a­lysts are de­bat­ing a key ques­tion: How quickly can plug-in cars be­come main­stream?

The con­ven­tional view holds that elec­tric cars will re­main a niche prod­uct for many years, plagued by high sticker prices and heav­ily de­pen­dent on gov­ern­ment sub­si­dies.

But a grow­ing num­ber of an­a­lysts now ar­gue that this pes­simism is be­com­ing out­dated. A new re­port from Bloomberg New En­ergy Fi­nance, a re­search group, sug­gests that the price of plug-in cars is fall­ing much faster than ex­pected, spurred by cheaper bat­ter­ies and ag­gres­sive poli­cies pro­mot­ing zero-emis­sion ve­hi­cles in China and Europe.

Be­tween 2025 and 2030, the group pre­dicts, plug-in ve­hi­cles will be­come cost com­pet­i­tive with tra­di­tional petroleum-pow­ered cars, even with­out sub­si­dies, and even be­fore tak­ing fuel sav­ings into ac­count. Once that hap­pens, mass adop­tion should quickly fol­low.

“Our forecast doesn’t hinge on coun­tries adopt­ing strin­gent new fuel stan­dards or cli­mate poli­cies,” said Colin McKer­racher, head of ad­vanced trans­port anal­y­sis at Bloomberg New En­ergy Fi­nance. “It’s an eco­nomic anal­y­sis, look­ing at what hap­pens when the up­front cost of elec­tric ve­hi­cles reaches par­ity. That’s when the real shift oc­curs.”

If that pre­dic­tion pans out, it will have enor­mous con­se­quences for the auto in­dus­try, oil mar­kets and the world’s ef­forts to slow global warm­ing.

Last year, plug-in ve­hi­cles made up less than one per cent of new pas­sen­ger ve­hi­cle sales world­wide, held back by high up­front costs. The Chevro­let Bolt, pro­duced by Gen­eral Mo­tors, sells for about $37,500 in the U.S. be­fore fed­eral tax breaks. With gaso­line prices hov­er­ing around $2 per gal­lon, rel­a­tively few con­sumers seem in­ter­ested.

But there are signs of a shift. Tesla and Volk­swa­gen each have plans to pro­duce more than one mil­lion elec­tric ve­hi­cles per year by 2025. Last week, Volvo an­nounced that it would phase out the tra­di­tional com­bus­tion en­gine and that all of its new mod­els start­ing in 2019 would be hy­brids or en­tirely bat­tery-pow­ered.

Skep­tics ar­gue that these moves are mostly mar­ginal. Exxon Mo­bil, which is study­ing the threat that elec­tric cars could pose to its busi­ness model, still ex­pects that plug-in ve­hi­cle sales will grow slowly, to just 10 per cent of new sales in the United States by 2040, with lit­tle ef­fect on global oil use. The fed­eral En­ergy In­for­ma­tion Ad­min­is­tra­tion projects a sim­i­larly slug­gish uptick.

The Bloomberg forecast is far more ag­gres­sive, pro­ject­ing that plug-in hy­brids and all-elec­tric ve­hi­cles will make up 54 per cent of new light-duty sales glob­ally by 2040, out­selling their com­bus­tion en­gine coun­ter­parts.

The rea­son? Bat­ter­ies. Since 2010, the av­er­age cost of lithi­u­mion bat­tery packs has plunged by two-thirds, to around $300 per kilo­watt-hour. The Bloomberg re­port sees that fall­ing to $73 by 2030, with­out any sig­nif­i­cant tech­no­log­i­cal break­throughs, as com­pa­nies like Tesla in­crease bat­tery pro­duc­tion in mas­sive fac­to­ries.

For the next decade, the re­port notes, elec­tric cars will re­main re­liant on gov­ern­ment in­cen­tives and sales man­dates in places like Europe, China and Cal­i­for­nia. But as au­tomak­ers in­tro­duce a greater va­ri­ety of mod­els and lower costs, elec­tric cars will stand on their own.

Still, this out­come is hardly guar­an­teed. Gov­ern­ments could scale back their in­cen­tives. Bat­tery man­u­fac­tur­ers could face ma­te­rial short­ages or pro­duc­tion prob­lems. And an un­fore­seen tech­nol­ogy fail­ure, such as wide­spread bat­tery fires, could halt progress.

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