Photo: Tuomas Katainen/Pommijatkat
The stock market considers Tesla the most valuable car company in the world. Governments in most developed countries are making ICE vehicles illegal to sell starting in 2030 (some even earlier). It is only natural that several carmakers decided to follow Tesla’s steps and started committing to becoming fully electric soon. However, all that rush demands a simple but crucial question: what if we are wrong about electric cars?
There is no doubt that the combustion engine is practically dead for personal transportation. First, because it is extremely inefficient. In the best-case scenario, it may convert into movement only 40% of the energy it gets from fuels – some promise to take it to 50%, but that’s it. Secondly, it will always do that while generating pollutants such as carbon monoxide and nitrogen oxides, among other substances – even while burning synthetic fuel or hydrogen. Finally, fossil fuels are running out.
According to the 2021 BP Statistic Review of World Energy, the world had a proven oil reserve of 1,732.4 thousand million barrels at the end of 2020. With a world oil consumption of 91,297 thousand barrels per day in the same year, these reserves could last approximately 52 years. In other words, they may end by 2072 if no new oil reserves are discovered. Even if they are, they will cost a lot more to explore. At this point, the world just wants to leave them where they are: under the ground.
Summing up, cars will have electric motors as their main propulsion system, but how they should obtain the electricity that powers them is still subject to debate. When Elon Musk says hydrogen is a waste of time, that is just expected: his only profitable company was based around that bet, but it does not mean that batteries are the final solution. It is pretty concerning that many people just agree with that without making a more careful analysis.
When Tesla started selling the Roadster in 2008, that sports car was seen as a way to prove the battery technology at the time could allow for a modern electric vehicle. In a way, it did, but nobody considered waiting to see what would happen ten or fifteen years down the road with the Roadster. On the contrary: Nissan followed suit in 2010, and Tesla doubled down when it revealed the Model S in 2012. Soon after that, it deployed its Supercharging network to promote fast chargers as the leading solution for electric cars.
To be honest, Tesla also proposed battery swapping in June 2013, but that was apparently just to earn more carbon credits with the Model S. Edward Niedermeyer revealed that in his book “Ludicrous: The Unvarnished Story of Tesla Motors.” According to the author, California started issuing almost twice as many credits for long-range EVs that could fully charge in less than 15 minutes. By stating the Model S could swap batteries, Tesla theoretically met that target and started earning seven carbon credits for each EV it sold instead of four. Tesla’s battery swap pilot program never worked, but that’s another story.
The hype around the Model S led several other carmakers to also bet on BEVs. Politicians and governments got convinced these cars were the way to go, and several automakers just complied, even under protests. Ten years after Tesla presented its electric sedan, the path to electrification is not as bright as Tesla investors want everyone else to believe – both for customers and car companies.
Hansjörg von Gemmingen was brave enough to drive his 2014 Model S P85+ for one million miles (1.6 million km). His experience showed he had to replace “11 or 12” motors along the way. Gemmingen also used three different battery packs in his electric sedan. While they are under warranty, that’s Tesla’s problem. When they no longer are, customers will have to pay around $20,000 for these new battery packs – or blow their vehicles with TNT and film the whole thing, as Tuomas Katainen did in Finland. If he wanted to repair the car, he would have had to pay €20,000 ($21,108 at the current exchange rate) for a new battery pack.
That’s not exclusive to Tesla. Nissan Leaf owners have also received invoices of up to $35,000 to replace their battery packs. The explanation for that is simple: while EVs naturally depreciate with use, battery packs retain their value or even appreciate due to the higher demand. Although Tesla claims to have massive profits with each car it sells, some EVs are sold at a loss only to allow their manufacturers not to pay fines for carbon emissions.
Ultimately, we are building unrepairable machines. With the current tech, it makes no financial sense to replace the battery pack of a used electric car that will be worth less than the component alone. It would be programmed obsolescence at its best if it were planned. As far as I know, it is only a technical and commercial obstacle.
There are companies trying to fit the gap by offering more affordable battery pack replacements. The problem is that most of them depend on crashed EVs whose high-voltage energy storage components can still be saved. We have never heard of any enterprise trying to offer these battery packs made from new cells, and there’s probably a good reason for that: none of them found an economically feasible way to do so.
What if all the electric cars have motors that will last less than 100,000 miles (160,000 km) each, like those in Gemmingen’s Model S? Even if you do not plan to drive an EV for one million miles, it is concerning to imagine it may need a battery pack replacement after 333,333 miles (536,000 km). To be clear, the German driver did not replace the battery packs in his electric sedan at those mileage intervals: the original one failed when the car had 290,000 kilometers (180,198 miles).
For new car buyers, that is hardly a concern: when their EVs start to age, they will just buy a new one, and that’s it. Used car buyers are the ones who should beware. And not only because they may have a financial ticking bomb in their hands: they will also be left without more affordable new car options.
Carlos Tavares warned that electric vehicles would make automobiles more expensive goods, unattainable for most people. If the battery pack alone costs around $20,000, there is no way any car will ever cost less than that, as some do today. For that to happen, they would have to have smaller battery packs, but that would restrict their ranges.
A way to solve that would be to have components just enough to cover the daily driving needs of most customers. The problem is that all car buyers would need to be able to charge at home, but doesn’t that also apply to current EVs? People will refuse to buy electric cars with short ranges, as Mazda learned the hard way with the MX-30. The solution is to give them range extenders for these vehicles to be more versatile: not everyone has money to buy one automobile for the city and one for road trips. Extended-range electric vehicles (EREVs) already offer that possibility. A good alternative is plug-in hybrid electric vehicles (PHEVs), which also have combustion engines powering their wheels.
However, EV advocates loathe them and defend we should have only BEVs. They do not seem to care about how much their battery packs cost, where all the raw materials for all these batteries will come from, or how much heavier EVs are with them.
If all car companies followed that drive, some would shrink, surviving on a reduced scale, but many could disappear. Vehicles would turn into luxury products, which would make it easier for car detractors to kill personal transportation for the masses once and for all – while traveling in their private jets. Maybe that’s why Akio Toyoda said he loves cars when he was explaining why Toyota is not all-in on EVs.
Some took his words as an empty attempt to please Toyota’s shareholders, but you must give some credit to the man who wanted his company to sell fun-to-drive vehicles. It was that desire that gave us the GR Yaris and turned the Corolla into a more engaging machine. What if Toyota invested everything it has in the BEV path, and that led us to have fewer car options? Used vehicles that nobody in their right mind would risk buying?
We are already seeing that happening. Ford killed the Fiesta, and Volkswagen is saying that Euro 7 may kill the Polo because its price would rise more than €3,000. Fiat said it would seize the opportunity to sell its own superminis, but it may also eventually decide it is not worth it. As Alfred P. Sloan used to say, automakers’ business is not to make cars: it is to make money making cars. There is no point in selling something that is not profitable.
These financial questions surrounding large battery packs should be enough for more extended discussions about the best way to electrify cars. Still, more aspects need careful consideration before setting this in stone. I’ll discuss them in other texts with the same fundamental question I am asking here: what if we are wrong about electric cars?
According to the 2021 BP Statistic Review of World Energy, the world had a proven oil reserve of 1,732.4 thousand million barrels at the end of 2020. With a world oil consumption of 91,297 thousand barrels per day in the same year, these reserves could last approximately 52 years. In other words, they may end by 2072 if no new oil reserves are discovered. Even if they are, they will cost a lot more to explore. At this point, the world just wants to leave them where they are: under the ground.
Summing up, cars will have electric motors as their main propulsion system, but how they should obtain the electricity that powers them is still subject to debate. When Elon Musk says hydrogen is a waste of time, that is just expected: his only profitable company was based around that bet, but it does not mean that batteries are the final solution. It is pretty concerning that many people just agree with that without making a more careful analysis.
When Tesla started selling the Roadster in 2008, that sports car was seen as a way to prove the battery technology at the time could allow for a modern electric vehicle. In a way, it did, but nobody considered waiting to see what would happen ten or fifteen years down the road with the Roadster. On the contrary: Nissan followed suit in 2010, and Tesla doubled down when it revealed the Model S in 2012. Soon after that, it deployed its Supercharging network to promote fast chargers as the leading solution for electric cars.
To be honest, Tesla also proposed battery swapping in June 2013, but that was apparently just to earn more carbon credits with the Model S. Edward Niedermeyer revealed that in his book “Ludicrous: The Unvarnished Story of Tesla Motors.” According to the author, California started issuing almost twice as many credits for long-range EVs that could fully charge in less than 15 minutes. By stating the Model S could swap batteries, Tesla theoretically met that target and started earning seven carbon credits for each EV it sold instead of four. Tesla’s battery swap pilot program never worked, but that’s another story.
The hype around the Model S led several other carmakers to also bet on BEVs. Politicians and governments got convinced these cars were the way to go, and several automakers just complied, even under protests. Ten years after Tesla presented its electric sedan, the path to electrification is not as bright as Tesla investors want everyone else to believe – both for customers and car companies.
Hansjörg von Gemmingen was brave enough to drive his 2014 Model S P85+ for one million miles (1.6 million km). His experience showed he had to replace “11 or 12” motors along the way. Gemmingen also used three different battery packs in his electric sedan. While they are under warranty, that’s Tesla’s problem. When they no longer are, customers will have to pay around $20,000 for these new battery packs – or blow their vehicles with TNT and film the whole thing, as Tuomas Katainen did in Finland. If he wanted to repair the car, he would have had to pay €20,000 ($21,108 at the current exchange rate) for a new battery pack.
That’s not exclusive to Tesla. Nissan Leaf owners have also received invoices of up to $35,000 to replace their battery packs. The explanation for that is simple: while EVs naturally depreciate with use, battery packs retain their value or even appreciate due to the higher demand. Although Tesla claims to have massive profits with each car it sells, some EVs are sold at a loss only to allow their manufacturers not to pay fines for carbon emissions.
Ultimately, we are building unrepairable machines. With the current tech, it makes no financial sense to replace the battery pack of a used electric car that will be worth less than the component alone. It would be programmed obsolescence at its best if it were planned. As far as I know, it is only a technical and commercial obstacle.
There are companies trying to fit the gap by offering more affordable battery pack replacements. The problem is that most of them depend on crashed EVs whose high-voltage energy storage components can still be saved. We have never heard of any enterprise trying to offer these battery packs made from new cells, and there’s probably a good reason for that: none of them found an economically feasible way to do so.
What if all the electric cars have motors that will last less than 100,000 miles (160,000 km) each, like those in Gemmingen’s Model S? Even if you do not plan to drive an EV for one million miles, it is concerning to imagine it may need a battery pack replacement after 333,333 miles (536,000 km). To be clear, the German driver did not replace the battery packs in his electric sedan at those mileage intervals: the original one failed when the car had 290,000 kilometers (180,198 miles).
For new car buyers, that is hardly a concern: when their EVs start to age, they will just buy a new one, and that’s it. Used car buyers are the ones who should beware. And not only because they may have a financial ticking bomb in their hands: they will also be left without more affordable new car options.
Carlos Tavares warned that electric vehicles would make automobiles more expensive goods, unattainable for most people. If the battery pack alone costs around $20,000, there is no way any car will ever cost less than that, as some do today. For that to happen, they would have to have smaller battery packs, but that would restrict their ranges.
A way to solve that would be to have components just enough to cover the daily driving needs of most customers. The problem is that all car buyers would need to be able to charge at home, but doesn’t that also apply to current EVs? People will refuse to buy electric cars with short ranges, as Mazda learned the hard way with the MX-30. The solution is to give them range extenders for these vehicles to be more versatile: not everyone has money to buy one automobile for the city and one for road trips. Extended-range electric vehicles (EREVs) already offer that possibility. A good alternative is plug-in hybrid electric vehicles (PHEVs), which also have combustion engines powering their wheels.
However, EV advocates loathe them and defend we should have only BEVs. They do not seem to care about how much their battery packs cost, where all the raw materials for all these batteries will come from, or how much heavier EVs are with them.
If all car companies followed that drive, some would shrink, surviving on a reduced scale, but many could disappear. Vehicles would turn into luxury products, which would make it easier for car detractors to kill personal transportation for the masses once and for all – while traveling in their private jets. Maybe that’s why Akio Toyoda said he loves cars when he was explaining why Toyota is not all-in on EVs.
Some took his words as an empty attempt to please Toyota’s shareholders, but you must give some credit to the man who wanted his company to sell fun-to-drive vehicles. It was that desire that gave us the GR Yaris and turned the Corolla into a more engaging machine. What if Toyota invested everything it has in the BEV path, and that led us to have fewer car options? Used vehicles that nobody in their right mind would risk buying?
We are already seeing that happening. Ford killed the Fiesta, and Volkswagen is saying that Euro 7 may kill the Polo because its price would rise more than €3,000. Fiat said it would seize the opportunity to sell its own superminis, but it may also eventually decide it is not worth it. As Alfred P. Sloan used to say, automakers’ business is not to make cars: it is to make money making cars. There is no point in selling something that is not profitable.
These financial questions surrounding large battery packs should be enough for more extended discussions about the best way to electrify cars. Still, more aspects need careful consideration before setting this in stone. I’ll discuss them in other texts with the same fundamental question I am asking here: what if we are wrong about electric cars?
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