In the months since August 2017, when I started the "It Will Take More than Tesla" blog posts, much has happened in the world of Electric Vehicles. Indeed, it’s been hard to keep pace with all of the announcements. In the first four posts, I laid out a thesis of several interconnected trends that, for the maximum value to be realised, needed to be joined together in a strategic plan. In the UK we are good at giving visionaries room as evidenced by the recent "Mastaba" structure in the Serpentine. It rarely feels that we give the same room for implementation to visionary infrastructure projects – instead we get stuck in endless reviews and (in)decision processes. For EVs, and AVs, that needs to change.
The interconnected trends include:
The Flight From Diesel
In Part 1, I wrote "Some day soon, drivers of petrol and, especially, diesel vehicles will be like smokers today. They won’t be welcome at parties, will not be allowed to drive within a mile of a school and will see their health insurance premiums climb, not to mention their driving insurance premiums."
Diesel sales are falling and are down as much as 30% over the last year or so. Nissan, maker of the all electric Leaf, appears to be guilty of the same crimes as VW and has admitted to falsifying emissions data (this after, some two months ago, announcing that they would be withdrawing from the diesel market … the other shoe has now dropped perhaps).
Other manufacturers are following suit – some abandoning whole segments of the market (Ford with small cars) and others, Porsche, for instance, getting out of diesel.
The drive from countries, and cities, across the world to make the move to EV happen faster with each one racing to outdo the other, variously committing to be petrol and diesel-free anywhere from 2025 to 2040, as I summarised in Part 3 ("This feels like the early days of the gold rush or the Internet boom. Everyone is rushing to announce a policy or strategy that is bigger, bolder, sooner and more outlandish than everyone else").
In this context it seems odd to hear stories recently that the UK will back away from its own 2040 target and declare it an aspiration only – perhaps fearing that in this time of Brexit uncertainty, doing more to scare the car makers won’t be good for investment.
Yet every major car maker is announcing huge investments to go electric – most expecting to have EV models across their range well before 2025, and some within the next year or two whilst, at the same time, worrying about their profitability, the amount that they need to invest "because governments keep saying bad things about diesel", their ability to compete given decades of experience with combustion engines goes up in smoke, the supply chain and the challenges of software and over the air upgrades.
Slow, But Increasing, Adoption of Electric Vehicles (EVs)
Increasing choice in the market, lower prices, wider scale deployment of charging infrastructure and an Anything But Diesel approach are driving more sales (though still favouring plug in hybrids for now).
The Autonomous Vehicle (AV) Lure
These appear, simultaneously, tantalisingly close or a couple of decades away depending on who you read and which day of the week it is. I noted that the UK, so far, doesn’t have a leader in AV development – we don’t have mapping companies, taxi companies getting into self driving fleets, machine learning algorithms practicing their driving skills in GTA V etc. But we do have investment going into various research projects which might help.
The list of things to worry about is long and distinguished, hence the need for a strategic plan. None of these cause problems overnight, but there needs to be long term thinking about the solution way ahead of them becoming big problems. Some of the bigger ones are:
Charging EVs outside terraced houses in major cities are a difficult problem to solve, but 60% of houses have off street parking and charging at work or fast charging at service stations – there goes another phrase from the lexicon as Petrol Stations gradually become a thing of the past), and continued subsidies for purchase and, of course, fuel duty exemption. The UK government is already consulting on whether new lampposts should be mandated to include charging points (fine if there’s one car for every lamppost, or vice versa, but tricky to see how it works where that isn’t the case – i.e. all the time).
Part 2, particularly, looked at the money – and the £27bn of fuel duty and £5n of Vehicle Excise Duty that is at risk as cars increasingly go electric; those holes will need to be plugged – and owners and potential owners will want to know when the change is coming so that they can factor that into their budgets.
The obvious solution is a "per mile" charge that is taxed monthly based on a number reported by the car. That, though, is too simple for lots of reasons: it doesn’t reward those who choose to (or can) travel off peak when there is little traffic on the roads, or those who drive carefully and within the speed limit who would have used less fuel, or those who would have bought a more economical car to have a lower environmental footprint and so used less fuel and, indeed, it might penalise those who, because of their jobs, have to travel long distances.
A more complicated model will emerge as a result, but there seems no reason why it can’t be handled either through software reporting in the vehicle (a road tax app?) or through tracking sensors along the road (integrated with existing cameras), though the latter is a bigger project and I’m not convinced we need another one of those.
The Supply Chain
EVs have a handful of moving parts, versus dozens for a combustion engine. Overall, the number of parts drops from maybe 30,000 to perhaps 8,000. Providers of those "missing parts" will be smaller businesses. Independent servicing may become a thing of the past – no clutch and no gearbox to fix.
Maintenance revenues for garages will fall – and that’s where most of their profit over the long term comes from (margins on new cars are slim, and the same will be true of EVs once competition really gets underway).
Petrol stations, soon to be service stations or possibly locations for apartment blocks or houses, will need to rethink their business models – there won’t be space to charge a dozen cars for 20 mins at a time, or to hold a dozen cars waiting for a slot to charge. Motorway service stations may, somehow, benefit as customers will stop for longer, giving the chance to sell more.
As EVs become more common, we can picture quieter streets, lower atmospheric pollution in cities, increasing numbers of pavement cafes and even, hopefully, fewer accidents as driving assistance gets smarter on the way to AVs.
We will see companies like Zipcar go all electric, with London targeting car clubs to be at least 50% EV by 2025.
Buses will follow (and already are in many places, including in the UK, particularly in London). China is already adding a fleet of buses the size of London’s every 5 weeks. Yes, every 5 weeks. Buses consume much more fuel than cars – maybe 20-30 times as much – so replacing a diesel bus with a petrol bus is a big win. Today somewhere around 900,000-1,000,000 buses are delivered each year, with diesel accounting for c60% of those. That’s nothing compared with the 90 million combustion engine cars bought every year, but at 20-30 times the fuel use, the difference a switch to electric makes will be large – and likely quicker than the equivalent transition to EVs.
From buses it’s a small step to other commercial vehicles we see on the roads every day – local delivery vans, waste collection vehicles, Royal Mail vans and trucks. UPS has long been leading the way and recently announced plans to build its own electric vehicles – that’s a fleet of 35,000 vehicles they’ll be working to swap out. The Royal Mail is working to follow suit. Waste collection vehicles are available, at the smaller end of the market for now.
Cars, though, continue to lag, waiting for that increased choice, and for some of the challenges above to have signposted solutions. 1,500 EVs were sold in June 2018, with 10,000 plug in hybrids and 5,000 other electric. Pure EVs are up less than 4%, but other types are up 50%. But set against a total car sales count of some 235,000, this is still small.
So What Happens Next?
I fear that, without a strategic plan that joins all of this up in the UK, the answer is more of the same – incremental growth in sales of EVs whilst waiting for more competition, more clarity on tax, more charging stations, and for the early adopters to get increasingly public about how happy they are with their purchases, so influencing their neighbours and helping the rest of the market along.
That strategic plan will join up all of the investment and thinking that is already going on in government, industry and think tanks and:
– Clarify future subsidies and taxes – what will be available and when, what will be withdrawn and when will taxes to replace fuel tax and Vehicle Excise Duty be introduced
– Promote a wider programme of R&D incentives such as (1) a series of X Prize-style competitions but also (2) a comprehensive programme of proposals to encourage companies to take risks and develop new EV capabilities.
– A smart plan and infrastructure for dealing with the vastly larger number of scrapped cars that we will see over the coming years
– Ethical Sourcing standards for components. We have an opportunity to funnel money, with appropriate controls, through our aid and development funding, to change how this works – to upgrade and automate mining, protect the labour force and avoid exposing them to harmful conditions and enhance the environment.
No strategic plan and our ambition, aspiration or requirement to have only EVs available for sale by 2040 will be just another promise on a page, long forgotten by those who wrote it down who themselves will be forgotten.