Shift to electric picking up new speed
WASHINGTON — One of the questions that has long plagued automobile executives was whether motorists — after a century of pulling into gasoline stations for a near instant fill up — would be willing to switch to electric vehicles typically requiring hourslong charges.
With electric vehicles constituting less than 3 percent of the global auto sales, that question remains unresolved. Governments and automakers, however, are not waiting for the answer. Confident technological advances will ease consumer concerns, they are forging ahead with plans to convert the majority of new car and light truck sales to electric by the 2030s in an effort to avoid the worst consequences of climate change.
Within the next two de
cades, new cars buyers may not have any choice but electric vehicles, much as Americans in the 1970s had no choice but to buy cars with smaller, less powerful engines after the federal government imposed fuel efficiency standards following the Arab oil embargo, said Devin Lindsey, an automobile analyst with the research firm IHS Markit.
“Everyone wanted a large engine,” he said. “But they had to buy the cars. That’s all there was.”
With China, Europe and states such as California and Massachusetts imposing electric vehicle mandates, the transition from petroleum vehicles has gained momentum in recent years. That has only accelerated with the election of President Joe Biden. Since taking office, he has ordered the EPA to work on tougher car emissions standards and federal agencies to start buying electric vehicles en masse.
Auto manufacturers are rushing new electric pickup trucks and sports cars to showrooms, eager to establish footholds in what is expected to be the market of the future — whether they like it or not. The transition gained more speed recently when General Motors announced it would produce only electric vehicles by 2035.
At the Classic Chevy dealership in Sugar Land, owner Jeff Sebastian, said the shift was “a scary thing” for dealers given the low demand for electric vehicles now, but he was confident demand would grow.
“Manufacturers want to be on the forefront,” he said. “The batteries are so much more efficient and there’s so many less moving parts, which means less maintenance and repairs. The only thing that holds it back is people afraid they can’t take long road trips. But once they shorten the charge to minutes and not hours, that’s game-changing.”
Impact on oil
Such a shift to electric vehicles would have long-term consequences for an oil industry that currently provides more than 90 percent of the U.S. transportation sector’s energy needs, raising questions about the future of oil drillers and refineries across Texas.
Were governments to institute policies in line with the Paris agreement on climate change, electric cars would reduce oil consumption
by 4 million barrels a day by 2030, according to the International Energy Agency. And as more gasoline-powered vehicles came off the roads, the shift would increase exponentially.
The goal of many governments is to bring the global vehicle fleet to net-zero emissions by midcentury to avoid the worst outcomes of climate change. If new vehicle sales become all electric by the 2030s, the thinking goes, that should be enough time for petroleum-powered vehicles to cycle off the road and into junkyards.
That shift offers opportunity for Texas, which has already secured the construction of Tesla’s new gigafactory outside Austin. And there is hope among civic leaders that Texas’ existing energy expertise could be counted on to attract more manufacturers, including those of wind turbines and solar panels.
But for now, Biden’s moves on electric vehicles are drawing intense opposition from oil and gas executives, as well as Republicans in Congress, who argue they represent a forced technological shift that is likely to end in economic disaster.
Following GM’s announcement last week, Tom Pyle, president of the American Energy Alliance, which represents oil and gas and other energy companies, said, “In no way should any taxpayer be responsible for GM’s ability to achieve — or fail to achieve — their corporate goal of an all-electric light duty fleet by 2035.”
The task of overhauling the transportation sector is rife with logistical challenges in line with the shift from the horse and carriage a century ago. But they are eminently solvable, experts say.
Worth it
Producing vehicles that run on batteries and not internal combustion engines will require expensive overhauls of traditional car assembly lines, with Ford alone estimating it will spend $11.5 billion on that effort by next year.
Auto executives are calculating the investment is worth it. With battery prices falling 80 percent since 2012, according to the research firm Bloomberg New Energy Finance, the production costs of electric vehicles are close to those of gasoline-powered vehicles,
and could go even lower.
“The biggest barrier has been the battery for a long time. And now we’re at the tipping point,” said Huei Peng, an engineering professor at the University of Michigan. “(Shifting the assembly lines) is going to be very hard, no doubt about it. But in the long run, the number of parts in an electric vehicle is dramatically reduced, and it’s easier and cheaper to assemble.”
Once electric vehicles begin rolling off factory floors in large numbers, the transition faces another challenge: charging millions of vehicles day in and day out.
Biden pledged on the campaign trail to install 500,000 chargers along U.S. roads and highways. With new fast chargers, an electric vehicle can be fully charged in 10 minutes — about the time it takes to “stretch your legs and get a cup of coffee,” said Nat Kreamer, CEO of the clean energy group Advanced Energy Economy.
Replacing the nation’s more than 160,000 gas stations won’t come cheap. The fast chargers can cost $100,000 each. In addition, upgrading the power grid to handle the increased demand from electric vehicles is likely to be costly.
In a recent study of California’s plan to eliminate petroleum-powered vehicles, that state’s energy regulator estimated power demand would increase 15 percent during the night — when the power supply drops because solar panels are not generating electricity.
Biden’s $2 trillion climate plan includes investments in modernizing the power grid and advancing battery technology so solar power, for example, could be stored during the day and used at night. Kreamer said there is time to solve such issues.
“The transition time for fleets and passenger vehicles to electric, it’s a long enough duration,” he said. “The grid is going to be ready.”
Wall Street buy-in
Analysts estimate that car manufacturers in North America will produce nearly 1.4 million electric vehicles by 2025, quadruple what they produce now and more than 8 percent of total production, according to IHS Markit.
“Automakers were determined this is going to be our strategy regardless of who is in the White House,” said Lindsey, the IHS analyst. “They were saying, ‘We know where the automotive industry is going around the world, and it’s only a matter of time before the U.S. goes the same way.”
Wall Street is buying into that strategy, too. The share price of Tesla, the world’s largest electric vehicle manufacturer, is more than $850, up from $62 two years ago, helping make founder Elon Musk the world’s wealthiest individual.
Over that same period, shares in Exxon Mobil, the largest U.S. oil company, fell more than 40 percent, leading Exxon to be dropped from the list of 30 blue chip stocks in the Dow Jones Industrial Average.
Sebastian, the Chevy dealer in Sugar Land, acknowledges that for some of his customers, pickup truck owners who don’t care much about fuel efficiency, electric vehicles smack of the underpowered cars of the 1970s.
But he says he’s not all that worried. It comes down to the vehicles’ performance, he explained, whatever they’re powered by.
“If you ask the truck buyers now, they’ll say, ‘Hell no.’ But when the product is out there and in their neighbor’s driveway, they’ll change their minds,” he said. “When you have a truck that goes zero to 60 in 2.8 seconds, and can tow 7,000 pounds, people will adapt real quick.”
“The only thing that holds it back is people afraid they can’t take long road trips. But once they shorten the charge to minutes and not hours, that’s game-changing.” Jeff Sebastian, owner, Classic Chevy dealership in Sugar Land