Here’s How Electric Cars Will Cause the Next Oil Crisis

[dixonge]

"A shift is under way that will lead to widespread adoption of EVs in the next decade."

An analysis from Bloomberg New Energy Finance

Here?s How Electric Cars Will Cause the Next Oil Crisis

I think the headline is a bit over the top, but there are some pretty thorough numbers in that article.

 

[Walt34]

Interesting. Short range and no rapid recharge on electrics is still a deal-killer for me for the foreseeable future. But it looks good for a city car or suburban second car.

 

[Nodak]

Another problem with EVs is climate. where I live it can hit -40 and at that temperature any battery loses a great deal of it's current generating capability. When it has to drive a vehicle as well as heat the interior I don't see an EV as a viable alternative to gas or hybrid.

 

[folivier]

When we travel we typically drive 8 hours which is about 600 miles. So until EVs can match the range I'm not interested.

 

[Gone4Good]

"A shift is under way that will lead to widespread adoption of EVs in the next decade."

I'd say that widespread adoption will only happen when EVs become clearly better products. That certainly could happen. It was Tesala, after all, that broke Consumer Reports car rating scale by scoring 103 out of a possible 100.

And if it does happen, it could take a bunch of people (i.e. investors) by surprise. You can see a scenario where today's low gasoline prices persist for a number of years. Low prices keep EV penetration rates low, but the technology keeps chugging down the cost curve. New charging stations pop up here and there but mostly go unused.

Then gasoline prices start to rise again. People respond as they always do, by b!tching about gasoline prices. But this time they have a real alternative. And all at once everyone realizes that EVs have arrived and the technology has it's iPhone moment.

 

[foxfirev5]

Yep. the market will balance it all out. Unless all of us want to mess with it.

 

[NW-Bound]

Yes, we touched on this subject in the "I like oil" thread, and I mentioned the same article.

EVs which are hopefully fed from solar will make a dent in oil consumption for personal transportation, but not eliminate it in 25 years.

To reharsh,

A recent Bloomberg article makes the case that more EVs will be in circulation, and that will cut into oil demand further.

See: Here's How Electric Cars Will Cause the Next Oil Crisis

I like EVs, except for their cost. The drive train is simpler, and requires less maintenance. The only hangup is with the battery, both regarding cost and longevity. We need lithium batteries to come down in price, and if they are cheap enough the longevity problem goes away too. I don't know about the progress on that front.

Currently, 70% of oil usage in the US is for transportation, so this is where EVs can help. The cost of solar power keeps coming down, but we have no place to store the production excess of the day. An EV is just as good a place as any to store the excess energy captured daily.

However, with oil price so low, that makes it more difficult for the EV to compete. It is interesting to see how it will play out.

I read the Bloomberg article predicting 50% of cars will be EV by 2040 and the source material is from "Bloomberg New Energy Finance (BNEF)".

Not entirely sure how Bloomberg expects to make money off of this.

Home | Bloomberg New Energy Finance

Anyway, both the IEA and OPEC predict that EV will make up around 1% of cars by 2040...

The Bloomberg article I referenced says EVs will comprise 35% of new car sales by 2040, not 50%. So, perhaps they are still tweaking their forecast. I am no expert, but think the other guys' 1% in 2040 is way too low.

By the way, that Bloomberg article also claims that lithium battery cost dropped 35% last year. Could it be like LED lights, where they are suddenly so cheap now at Home Depot and Lowe's? No wonder CFLs are now dead.

Perhaps it will take a long time to have enough solar to really get excess electricity. But if solar installation grows in parallel with EV growth, such that the popularity of EVs does not cause additional stress to the electric grid, that helps already.

About how much of the 70% oil usage is for automobiles, it is true that it would be tough to eliminate the need for diesel for long-distance trucking; batteries to run an 18-wheeler would be so expensive nobody even thinks about it right now.

So, how much of the oil is used for personal autos? A source I saw said about 9 million barrels/day. That's 47% out of 19 million barrels/day total consumption. So, if 1/3 of the cars do not use oil, that would reduce demand by 3/19 = 16%. It's significant.

To have a feel for the 3 million barrels/day in oil saving by EVs, we can look at the extra oil produced by fracking. Fracking has increased oil production from 5 million barrels/day in 2008 to 7.4 million barrels/day in 2014.

 

[ERD50]

Yeah, the headline is over the top, but that seems to be par for the course these days (and probably past days as well!).

But the article is still a mess, IMO. They jump around from 2020 and 2040, mention the 35% decline in batteries (source please?) in one year, and extrapolate that out for many years, and do that with other things as well. It doesn't work that way - geometric growth hits 100% pretty quickly.

And if their 35% number is correct for decline in 'battery prices', it appears to be for the cells themselves, but cells need a whole lot of support stuff to make them reliable, safe power packs for cars.

The article says that 1/3 of the cost of an EV is the batteries - hmmm, so a $60,000 EV has $20,000 in batteries, so if the battery cost is cut in half it's still a $50,000 car. As incentives drop (only for the first X cars from a manufacturer), that's not a big delta.

And they make the oft repeated claim that EVs will get cleaner because the grid is getting cleaner. But that ignores some very important stuff. From the thread NW-Bound referenced:

.... EVs will add demand to the grid, and as long as renewable electricity is less than 100%, those EVs are tapping into the dirty electricity. It's a matter of marginal generation, averages don't matter much.

Another point they made - I took as a negative, rather than a positive. They said more people will be using Uber-like alternatives, so more miles/vehicle means you amortize the EV cost faster. OK, but then you need range - you can't be a car for hire if you have to stop and recharge for hours. And increasing the charge/discharge cycles lowers the life of the battery. Many ICEs can be expected to go 200,000 miles or more with no major engine work, but battery packs are unlikely to last that long.

And then....

we calculated the effect of continued 60 percent growth. We found that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023. That would create a glut of oil equivalent to what triggered the 2014 oil crisis.

Ummm, no. If we pull 2MBB/day out due to EVs, it will happen gradually and predictably.

Predictions like these are tricky at best.

But that won't stop us!

A couple other things to consider, that I've mentioned before - the rise in numbers of EVs won't match the miles directly. Long distance drivers, sales-people, and others need the range. EVs will be bought mainly be low-mile drivers.

And not everyone has access to 220V plugs. 110V isn't enough to fully charge overnight, many people park on the street, or in parking lots with no access to a cord. In Chicago, the single family homes have detached garages, connected to the alley. They might have a single 15 A circuit for a light/opener. That's a lot of places to convert to 220V hi-amp.

And all these articles act as if the ICE/hybrid are standing still. They are not. And battery price reductions help them as well.

Nah, not buying it - but we will see.

-ERD50

 

[marko]

A bit off topic but...I'm not that old (63) but I can remember when I was a young'un there was an old couple in my town who had an original electric car! It was maroon, was an open carriage and open spoke wheels. I can still see the old guy driving it with a straw hat and navy blue blazer.

 

[donheff]

I agree that the EV revolution will be more drawn out but it does sound like this shift may help keep oil prices relatively low as the China and the rest of the car-less world begin driving.

 

[Zathras]

EV adoption will continue to grow, regardless of gas prices.

Yes, the market share will grow faster with high oil prices, but it will grow regardless.

They will gain market share because they can be simply better than the alternative at the same price points.
Better performance, ride quality, cargo/passanger space, fuel cost,and for many, convenience.
That is most clear with the Tesla which is gobbling up market share in the luxury market.

With the next gen plugin vehicles hitting the market this year, they become available to much more of the market as the prices come down.
The Bolt with a $37k price and 200 miles of range could be huge if GM can get their dealers on board.

No, they won't work well for everyone. They don't have to though, they only have to work well for enough people to lower demand for gasoline by a similar amount as the supply glut, which is the whole point of the article.

I do agree with ERD though, it will take some time. As such it won't be a demand shock and the market will have time to adjust.

 

[dixonge]

Interesting. Short range and no rapid recharge on electrics is still a deal-killer for me for the foreseeable future. But it looks good for a city car or suburban second car.

Why do you think there is no rapid recharge? It's a bit underwhelming for shorter-range cars, but both range and charge time are continually improving...

I think the first level for EV's is to replace the daily commute. Of course by the time they reach that level, they might also be fully-automated driverless vehicles...

 

[Midpack]

I'd say that widespread adoption will only happen when EVs become clearly better products. That certainly could happen. It was Tesala, after all, that broke Consumer Reports car rating scale by scoring 103 out of a possible 100.

Except CR blew it on that one by their own admission, they very publicly rescinded their recommendation last October. And a $100K +/- car with limited range is a long way from spurring adoption. The Tesla S is a tech achievement, but it's a toy for the wealthy - it may lead to more competitive products.

Tesla, Consumer Reports and the art of doing your research - Roadshow

Interesting article, though it's not hard to poke holes in it.

• Take a look at the $30K EVs slated to go into production like the Bolt, think that will sway a lot of drivers? We have a long way to go...
• And as others have said, it has to make economic sense vs ICE cars to spur widespread adoption/growth. If there's significant demand for EVs, enough to significantly increase electric usage, electric utility costs will increase balance supply and demand.
• And finally from the article itself, no getting around:

Batteries account for a third of the cost of building an electric car. For EVs to achieve widespread adoption, one of four things must happen:

1. Governments must offer incentives to lower the costs.
2. Manufacturers must accept extremely low profit margins.
3. Customers must be willing to pay more to drive electric.
4. The cost of batteries must come down.

The first three things are happening now in the early-adopter days of electric vehicles, but they can’t be sustained. Fortunately, the cost of batteries is headed in the right direction.

If and when it happens, it won't be a "shock."

 

[dixonge]

When we travel we typically drive 8 hours which is about 600 miles. So until EVs can match the range I'm not interested.

Most aren't there yet, but 600+ mile road trips are pretty much no big deal for Tesla owners...

Andrew Connell, MVP SharePoint Server - Two Months with a Tesla Model S 85D & Our First 1,200+ Mile Road Trip

 

[Zathras]

Except CR blew it on that one by their own admission, they very publicly rescinded their recommendation last October. And a $100K +/- car with limited range is a long way from spurring adoption. The Tesla S is a tech achievement, but it's a toy for the wealthy - it may lead to more competitive products.

...

No, CR didn't blow anything, and they reiterated their rating of the car.
The Model S still has the highest "would purchase again" rating and has for years.

The "recommended" rating was removed because of reliability ratings. Even if a car rates higher than any other car ever has, if the reliability rating falls too far, the "recommended buy" rating is, rightfully, removed.

The Model S is extremely competitive in its class (large luxury cars). It is outselling the Mercedes S class, BMW7 series, Audi A8 (and I believe A7).

As batteries continue to get cheaper, and better, this will work its way down the market to less expensive cars. Although currently I view a Leaf as better than an equally priced Prius, the advantages will become even more obvious in the next generation.

 

[dixonge]

But the article is still a mess, IMO. They jump around from 2020 and 2040, mention the 35% decline in batteries (source please?) in one year, and extrapolate that out for many years, and do that with other things as well. It doesn't work that way - geometric growth hits 100% pretty quickly.

They mention different timeframes because they are referring to several different analyses. Not everyone uses the same timeframe for projections. I don't really understand how that is an issue for anyone...

They don't extrapolate the battery price like you said either. They state

Battery prices fell 35 percent last year and are on a trajectory to make unsubsidized electric vehicles as affordable as their gasoline counterparts in the next six years,

And if their 35% number is correct for decline in 'battery prices', it appears to be for the cells themselves, but cells need a whole lot of support stuff to make them reliable, safe power packs for cars.

I haven't been able to find a source for that number. Prices are down, and falling, but not 35% in one year. Tesla expects prices to hit $100/kwh by 2020.

Another point they made - I took as a negative, rather than a positive. They said more people will be using Uber-like alternatives, so more miles/vehicle means you amortize the EV cost faster. OK, but then you need range - you can't be a car for hire if you have to stop and recharge for hours. And increasing the charge/discharge cycles lowers the life of the battery. Many ICEs can be expected to go 200,000 miles or more with no major engine work, but battery packs are unlikely to last that long.

Even on a Nissan LEAF a rapid-charge outlet gets you 80% charge in 30 minutes. Much faster w/ better range for Teslas. It would still be tricky to cycle your fleet and make that work, though...

A couple other things to consider, that I've mentioned before - the rise in numbers of EVs won't match the miles directly. Long distance drivers, sales-people, and others need the range. EVs will be bought mainly be low-mile drivers.

I agree, not counting Teslas. As their battery and other technologies migrate through the industry, I expect that to shift. *when* is the big question...

And not everyone has access to 220V plugs. 110V isn't enough to fully charge overnight, many people park on the street, or in parking lots with no access to a cord. In Chicago, the single family homes have detached garages, connected to the alley. They might have a single 15 A circuit for a light/opener. That's a lot of places to convert to 220V hi-amp.

Yes it is. That cost should probably be factored in to the EV purchase. Tesla owners can probably afford it without blinking. LEAF owners, maybe not as much, but still. Minor inconvenience in the big picture of things... (imho)

 

[misanman]

Anecdotal: We have an 8-bay Tesla charging station at the supermarket where we get our groceries and just off the interstate. I admit that we're only there a couple days a week but I've never seen any of the chargers being used. Maybe they've been built in anticipation of the rush to EVs.

 

[DrRoy]

Short range and no rapid recharge on electrics is still a deal-killer for me for the foreseeable future. But it looks good for a city car or suburban second car.

+1 Also, EV's have inherent inefficiencies that people do not consider. First, the energy source is much heavier than gas and you use a higher proportion of your energy consumed just hauling the batteries around with you. Second, you get less energy out of the battery than it took to charge it. Also, if the electricity was generated from fossil fuel then you have lost a lot of the supposed benefit from the get go.

 

[Midpack]

No, CR didn't blow anything, and they reiterated their rating of the car.
The Model S still has the highest "would purchase again" rating and has for years.

The "recommended" rating was removed because of reliability ratings. Even if a car rates higher than any other car ever has, if the reliability rating falls too far, the "recommended buy" rating is, rightfully, removed.

So removing the recommended rating is insignificant?

Tesla Motors’ all-electric Model S sedan got high marks in Consumer Reports’ 50-plus tests involving driving dynamics and livability, and it consumed energy at the electric equivalent of 84 miles per gallon (87 MPGe in the P85D trim). It’s the best-performing car we’ve ever tested.

But its predicted reliability is another matter.

As part of our Annual Auto Reliability Survey, we received about 1,400 survey responses from Model S owners who chronicled an array of detailed and complicated maladies. From that data we forecast that owning that Tesla is likely to involve a worse-than-average overall problem rate. That’s a step down from last year’s “average” prediction for the Model S. It also means the Model S does not receive Consumer Reports’ recommended designation. (To be recommended, a vehicle has to meet stringent testing, reliability, and safety standards, including having average or better predicted reliability.)

The Model S is extremely competitive in its class (large luxury cars). It is outselling the Mercedes S class, BMW7 series, Audi A8 (and I believe A7).

Indeed. Maybe we'll see how that translates to the mainstream one day.
http://cleantechnica.com/2016/01/15/1-large-luxury-car-in-us-tesla-model-s-2015-sales-comparison/

 

[Zathras]

So removing the recommended rating is insignificant?

No, it isn't insignificant.
But likewise, it has nothing to do with the 103/100 rating given the Model S.

Those are two different measurements.

Frankly, our 2012 Model S has had more issues than any other car I have ever had. And I have spent less time dealing with it (on the phone, at the service center, time without a car or waiting at a car rental place) than any other car I have ever had.
Our 2015 has been rock solid. Actually, our 2012 has been rock solid after the first couple of years as well.

In practical terms, it has been a non issue.
Yes, it is a significant rating, and I look forward to the reliability rating Tesla gets this year.

 

[Midpack]

No, it isn't insignificant.
But likewise, it has nothing to do with the 103/100 rating given the Model S.

Those are two different measurements.

Actually they are related. Predicted reliability was a part of the 103/100 overall score (see below). The 103/100 was based on a predicted "average" reliability, CR has revised that to "worse-than-average."

If you go to the CR website, you will find the once freely available Aug/Sept review and rating has been pulled. If there's a new one, I've been unable to find it.

Overall Score
This is a comprehensive score that incorporates road-test performance, predicted reliability, owner satisfaction, and safety. A range of numbers signifies that multiple versions of the vehicle or powertrains were tested.

 

[Midpack]

And

Jake Fisher, director of [Consumer Reports] auto testing, said because of faltering reliability scores, the Model S is no longer the top ultraluxury car and ranks behind the BMW 750i xDrive, Lexus LS 460L and Audi A8 L. He said Tesla's quality problems including issues with hatches, door handles, electric motors and batteries have increased as the automaker has ramped up production.

No 3-peat for Tesla Model S - Business Insider

 

[ERD50]

... Even on a Nissan LEAF a rapid-charge outlet gets you 80% charge in 30 minutes. Much faster w/ better range for Teslas. It would still be tricky to cycle your fleet and make that work, though...

I was thinking that regular rapid charging would significantly degrade the battery, but this real-world test indicates it's not a huge factor (but it's a good news / bad news story):

Does Quick Charging Hurt Battery Life? Total Miles Are More Important

By 40,000 miles, the difference was still three percent--22 percent degradation for the Level 2 cars, 25 percent for the quick-charging cars.

First, let's use the appropriate denominator for the math. That's 3 percentage points difference, but an additional 13.6% degradation for the fast charge car. Still not so bad considering this was daily fast charging. But I imagine that is just what a taxi or fleet car would need, a private car, only occasionally for most people.

But the bad news is - 22-25% after 40,000 miles? So I assume that will extrapolate out to ~ 50% reduction after 80,000 miles? I'd assume a taxi/fleet would hit that in just 2-3 years? So an 80~100 mile range Leaf is now only a 40~50 mile range, meaning more frequent stops 1/2 hour quick charge stops?

As a side note - I really think that series hybrids ('range extended' EVs - similar to the Chevy Volt)will surpass EVs for the larger market. They only need a small battery pack, enough to handle acceleration, then let the power plant (ICE, turbine, other?) run at a single optimal speed to keep the batteries charged. No range restrictions, not even a need for a plug at all. ICE are not at a standstill - new materials, even new ICE designs (5-6 stroke approach, to draw energy out of the waste heat with an extra 'passive' power stroke), or other changes that might only make sense for an engine designed to run at one speed/load like the engine in a series hybrid. Or maybe micro-turbines made from ceramics? Something else?

.. Also, if the electricity was generated from fossil fuel then you have lost a lot of the supposed benefit from the get go.

And in most cases, almost all the energy used to charge EVs is fossil fuel. As I've discussed, a fleet of EVs is an added load on the grid, and that takes added energy into the grid. So even if a grid can claim they are @ 50% renewable energy (just for example, a high figure), that is all they've got. Add a fleet of EVs to that, and they have already used their renewables, there is no more available, so they need to keep their coal plants running a bit higher/longer, or crank up the gas plants. It's a marginal production issue, not average.

It's a little more complicated than that - there are occasional excesses of wind power available at night in some areas, but I don't think this happens often enough, or in a wide enough area, to make a big difference in the average power that would be consumed by a fleet of EVs.

-ERD50

 

[Zathras]

Actually they are related. Predicted reliability was a part of the 103/100 overall score (see below). The 103/100 was based on a predicted "average" reliability, CR has revised that to "worse-than-average."
...

No, they are not.
The "Recommended Buy" rating was removed due to the reliability.
The 103/100 rating was written and acknowledged the reliability issue (in a linked update) and discussed how reliability is not taken into account in the 103/100 rating.

Tesla Model S P85D Earns Top Road Test Score - Consumer Reports

It’s also important to note that our Rating doesn’t include the Tesla’s reliability. The Model S has average reliability, according to our owner-survey responses. (Update—October 20, 2015: Read our latest survey results on Tesla's reliability.)

That said, the Tesla Model S P85D is an automotive milepost. It’s a remarkable car that paves a new, unorthodox course, and it’s a powerful statement of American startup ingenuity.

This is really getting into the weeds though.
EVs have some of the highest owner loyalty numbers around. Even with lower than average reliability, the Tesla still has the highest reliability score of any car.

 

[Chuckanut]

When we travel we typically drive 8 hours which is about 600 miles. So until EVs can match the range I'm not interested.

Good point. And, I think it's possible that some EV owners may decide to rent a gasoline powered car just for those occasions if they only occur a few times year.