Hypothetical: how fast could a "complete" EV transition happen?

[APotatoGod]

I'm curious to hear your theories on how a scenario where traditional automakers abruptly and strongly focus on transitioning to a all-EV lineup might play out.

Regardless of the cause (potentially government regulations, fossil fuel shortages, impending climate disaster, everyone suddenly forgetting how to design ICE engines, etc), imagine the traditional automakers all focused with space-race like efforts to make every new car produced an EV.

What are your thoughts on how this scenario might play out, what hurdles it might encounter, and how long it would take?

 

[commasign]

One of the big problems is lack of batteries. Unless traditional automakers start building battery gigafactories, there won't be enough cells for a rapid transition.

 

[ewoodrick]

Many manufacturers and cars made around the world. Highly aggressive? Maye 20 years.
You know how long we fretted over the old TV standard? And who would want 480i back today?

 

[240W]

infrastructure for the mass isn't quite there yet, at least 20 years is my guess

 

[srs5694]

One scenario I've heard of that could drive a more rapid transition goes like this:

Gas stations are basically low-profit businesses. They tend to make most of their money on the convenience stores that are usually attached to them, and people go to the convenience stores when they buy gasoline. Thus, as EVs begin to rise in market share, fewer people will buy gasoline or frequent the gas stations' convenience stores. With the low profit margins of these businesses, this will result in gas stations going out of business in increasing numbers, since the less-profitable stores' sales will drop and their finances will go into the red. These station closures in turn will make gas-powered cars less desirable to own, since it will become less convenient to fuel them, With less competition, the surviving gas stations may feel able to raise prices, which will make gas-powered cars even less appealing. This will turn into a death spiral, with used gas-powered cars becoming white elephants that nobody wants to own and new gas-powered cars about as appealing as manual typewriters in 1990. Thus, a transition may occur in just a few years.

That's the argument. I'm not sure I entirely buy it, for several reasons:

• It assumes that manufacturers will be able to transition to making EVs quite easily. As others have already noted, battery manufacturing capacity may well become a bottleneck. (It already is, in fact, according to various reports.)
• Cars are much more expensive products than, say, computers, much less cell phones. Most people can't afford to ditch their cars on a whim, so gas-powered vehicles are likely to stick around for a while, even if we lose, say, half the gas stations. Of course, this issue relates more to the existing fleet of vehicles than to what manufacturers make, which is the focus of the original question.
  
• At the moment, EVs are still more expensive than ICE counterparts. As long as that's true, most people won't look much beyond the sticker price, and the transition to EVs won't get much beyond the early-adopter phase. That said, this may well be a temporary condition. Certainly the price of batteries has been dropping, and somewhere in the flood of stories about the VW ID.3, I saw a claim that VW has brought their battery price down to the $100/kWh value that's often cited as the tipping point for EV pricing. If so, then the issue of EV pricing may be on the verge of evaporating.
• There's bound to be political (defined broadly) pushback against an EV transition. When they see it beginning to happen in a big way, oil companies are likely to roll out the FUD machine and open their checkbooks to get legislation passed to slow it down.

Overall, I'd say that the first of these counter-points is the most compelling one. The drop in lithium-ion battery prices over the past decade or so has been stunning, but I'm not convinced that will hold up to a really rapid rise in demand. This may keep battery prices hovering at a point where EVs remain a bit more costly than ICE vehicles for several years, even as EV market share slowly rises, thus slowing (but not stopping) the transition.

 

[wayner]

It is going to take quite a while to get to the poitn where greater than 50% of vehicles are electric vehicles, but even when that does occur there will still be ICE vehicles on the road for a long time as the life cycle for a vehicle is typically 10+ years. Here is an interesting chart from the paper - Old Pistons Die Hard

Even under an aggressive EV adoption scenario, our second figure shows that peak piston isn’t likely to occur before 2030. That’s because of the residual sales momentum and retention of petroleum power vehicles. By 2050, 60% of the global fleet of personal vehicles could be composed of EVs, but the number of ICE vehicles remaining on the roads would not likely to be much less than today.

 

[wycolo]

> infrastructure for the mass isn't quite there yet, at least 20 years is my guess. [240w]

And Earth had become uninhabitable some 8 years hence.
--

 

[RubberToe]

One scenario I've heard of that could drive a more rapid transition goes like this:

Gas stations are basically low-profit businesses. They tend to make most of their money on the convenience stores that are usually attached to them, and people go to the convenience stores when they buy gasoline. Thus, as EVs begin to rise in market share, fewer people will buy gasoline or frequent the gas stations' convenience stores. With the low profit margins of these businesses, this will result in gas stations going out of business in increasing numbers, since the less-profitable stores' sales will drop and their finances will go into the red. These station closures in turn will make gas-powered cars less desirable to own, since it will become less convenient to fuel them, With less competition, the surviving gas stations may feel able to raise prices, which will make gas-powered cars even less appealing. This will turn into a death spiral, with used gas-powered cars becoming white elephants that nobody wants to own and new gas-powered cars about as appealing as manual typewriters in 1990. Thus, a transition may occur in just a few years.

That's the argument. I'm not sure I entirely buy it, for several reasons:

• It assumes that manufacturers will be able to transition to making EVs quite easily. As others have already noted, battery manufacturing capacity may well become a bottleneck. (It already is, in fact, according to various reports.)
• Cars are much more expensive products than, say, computers, much less cell phones. Most people can't afford to ditch their cars on a whim, so gas-powered vehicles are likely to stick around for a while, even if we lose, say, half the gas stations. Of course, this issue relates more to the existing fleet of vehicles than to what manufacturers make, which is the focus of the original question.
  
• At the moment, EVs are still more expensive than ICE counterparts. As long as that's true, most people won't look much beyond the sticker price, and the transition to EVs won't get much beyond the early-adopter phase. That said, this may well be a temporary condition. Certainly the price of batteries has been dropping, and somewhere in the flood of stories about the VW ID.3, I saw a claim that VW has brought their battery price down to the $100/kWh value that's often cited as the tipping point for EV pricing. If so, then the issue of EV pricing may be on the verge of evaporating.
• There's bound to be political (defined broadly) pushback against an EV transition. When they see it beginning to happen in a big way, oil companies are likely to roll out the FUD machine and open their checkbooks to get legislation passed to slow it down.

Overall, I'd say that the first of these counter-points is the most compelling one. The drop in lithium-ion battery prices over the past decade or so has been stunning, but I'm not convinced that will hold up to a really rapid rise in demand. This may keep battery prices hovering at a point where EVs remain a bit more costly than ICE vehicles for several years, even as EV market share slowly rises, thus slowing (but not stopping) the transition.

I tried looking up once if there was a database somewhere showing the number of operating gas stations in California. I figured that would be the easiest way to see if the trend had started or not given the high EV penetration rate.

Another thread showed a link to monthly petroleum sales in Norway. They would've further along the curve WRT stations closing I would imagine.

As electricity gets cheaper over time relative to gasoline, you will probably see the gas station equivalent of what is happening to coal mining companies. Wyoming is going to be severly hurt going forward unless they diversify their economy.

RT

 

[mblakele]

I tried looking up once if there was a database somewhere showing the number of operating gas stations in California. I figured that would be the easiest way to see if the trend had started or not given the high EV penetration rate.

Statista has 2009-2017 — no clear trend to my eye. But I wouldn't expect to see one until the 2018 data shows up. I guess that'll happen around this time next year.

The California Energy Commission publishes weekly data on refinery production and output in California. That's much more up to date, and might show a trend.

 

[mblakele]

Statista has 2009-2017 — no clear trend to my eye. But I wouldn't expect to see one until the 2018 data shows up. I guess that'll happen around this time next year.

The California Energy Commission publishes weekly data on refinery production and output in California. That's much more up to date, and might show a trend.

@RubberToe

Assuming I didn't mess up this chart, it compares the running total of production for each year up to week 36, which is the latest week for which 2019 data was available. It looks like less gasoline was produced in 2019 to date than in any of the past three years.

This isn't a large drop, and may not be due to EV adoption. But maybe it's something to keep an eye on.

 

[RubberToe]

@RubberToe

Assuming I didn't mess up this chart, it compares the running total of production for each year up to week 36, which is the latest week for which 2019 data was available. It looks like less gasoline was produced in 2019 to date than in any of the past three years.

This isn't a large drop, and may not be due to EV adoption. But maybe it's something to keep an eye on.

Wow, actually it seems like a significant drop. I wonder if all California gasoline comes from in state refineries? Agree, that it should be watched over time. I may download the data and start watching it. Very cool stuff.

RT

 

[Evbwcaer]

People like to talk about the number of existing cars, the number produced per year, etc. Those metrics are ok, but the real metric is miles/km driven on renewables or fossils.

My thought is that FSD EV’s will change the dynamic massively. FSD EV’s could literally drive 1,000 miles/day and realistically a few hundred. Because they will be so cheap to utilize, with no driver costs, and very low fuel costs, all other options will either.

2 car household will go to 1 and Uber/taxi/robotaxi the other. 10% of cars on the road will drive 80% of the miles. Apps will organize carpooling. 3 cars at 25mpg become one car at 125mpge.

Instead of flying you’ll take a robotaxi, with two other people in it, covering 500 miles while you sleep, and it’ll cost $20.

 

[APotatoGod]

Thanks for all the continued replies! Good point regarding the importance of miles driven @Evbwcaer! Since my family got a model 3, there's definitely been quite a drop in use of the existing ICE car, and a drastic increase in carpooling with my friends in the Tesla, not even counting future robotaxi use.

I found another source for the statistics @RubberToe and @mblakele are discussing, from the California Energy Commission, which seems to show little to no significant drop in gasoline usage yet, but a blip that might become a bigger downturn in 2018 (the last year they covered). California Retail Fuel Outlet Annual Reporting (CEC-A15) Results

 

[SSedan]

Average car in the USA is nearly 12yo.

 

[RubberToe]

The most anecdotal of evidence here:

The gas station on the corner went from $4.09 to $4.19 since the attack on Saudi Arabia. Every $0.01 counts when it comes to incentivizing people to switch to EVs.

RT

 

[EinSV]

I think we need to consider what is the choke point or critical path.

Some think it is demand, some say it is battery production and some say raw materials for batteries (mining).

I don't think demand will be a serious issue because we should hit price parity for all forms of EVs v. ICE within a few years. Also, the nasty effects of the climate crisis will continue to surface creating more and more government and consumer support for EVs.

So IMO it is a question of production, which comes down to production of batteries. IIRC our fellow TMCer @jhm has estimated 10-15TWh of batteries/year are necessary for all EVs+storage, 300X+ more than the current capacity of GF1.

Benchmark Minerals, which tracks these things, estimates that 2 TWh of battery production is already in the pipeline between now and 2028. This is actual, planned projects in the pipeline. 2028 is a long way out and this number is growing all the time.

In addition, Elon has said Tesla is targeting multiple TWh per year, although we don't have a specific date yet. Let's say 2025-26 as a WAG.

With 4 TWh+ of batteries (2+ TWh from Tesla and 2 TWh from the rest of the world) already in the planning stages and that number growing all the time, I expect that by 2030 if not sooner >90% of new vehicles will be EVs.

With the scenario you describe and 100% support from governments and the public I have no doubt it could be sooner. The critical path is scaling up mining and battery production. Creative minds working with AI tools should be able to work wonders with both of those.

 

[jhm]

Thanks for all the continued replies! Good point regarding the importance of miles driven @Evbwcaer! Since my family got a model 3, there's definitely been quite a drop in use of the existing ICE car, and a drastic increase in carpooling with my friends in the Tesla, not even counting future robotaxi use.

I found another source for the statistics @RubberToe and @mblakele are discussing, from the California Energy Commission, which seems to show little to no significant drop in gasoline usage yet, but a blip that might become a bigger downturn in 2018 (the last year they covered). California Retail Fuel Outlet Annual Reporting (CEC-A15) Results

We need to be very careful about expecting to see an impact on fuel consumption just yet. It takes about 25 to 30 light duty EVs to replace the demand for 1 barrel per day (b/d) of motor fuel. Globally, there are about 5M light duty EV. So the total impact is about 200 kb/d and maybe about 80 kb/d was incremental in the last year. It is the incremental portion that impacts growth in fuel consumption.

So where are we this year. Maybe increment displacement from EVs is about 120 kb/d this year. Before the year began most forecasters were expecting oil consumption to grow about 1200 kb/d this year. So at the outset the EV impact is only about 10% of expected growth. However as the year has progressed, oil prognosticators have had to dial their 2019 projections back to 700 to 900 kb/d. They are quite concerned about "demand" problem. I am not aware of any industry analysts who attributes this shortfall in demand growth to EVs. That is certainly not a narrative that the oil industry wants to have out there. However, could this shortfall of about 300 to 600 kb/d be explainable in terms of EV? At the outset 120 kb/d impact from light duty EVs is material, but insufficient to explain this.

There is a black swan, however. And that is the impact of heavy duty, commercial EV. Here the reporting is really lousy. Nobody has good numbers on how many commercial EVs there are. Last year I did an analysis and found that electric buses alone could account for about 4 times the oil displacement of all light EVs. I suspect this ratio continues and is even high because of substantial underreporting in this space. So I believe conservatively the total impact on oil is about 5 times that of LD EVs. This gets us to a potential incremental impact of about 600 kb/d this year.

So EV impact potentially explains the decline in oil demand growth that the oil industry is worrying about this year. What is even more opaque is how much of the slowing had analysts already baked into projections before 2019 began? They simply are not forthcoming about making such assumptions public. Moreover, they have huge institutional blinders not to see EVs as at a scale to impact forecasts. Still there are signs of economic decline that analysts can point to explain away the softening of demand growth. No one at this point is compelled to attribute any of this to EVs.

Nevertheless, EV outsiders like me do have grounds to argue that EV are finally at a scale where they can have material impact on slowing oil demand growth. Moreover, each year this impact can grow 40% to 60%. So there is a day of reckoning when oil analysts will be forced to admit that EV are a dominant and unignorable force of demand erosion. I believe this day is about 2 to 3 years away.

It is hard to say just how loathsome this narrative is to the oil industry. They are under enormous pressure to keep attractive massive capital each year and will do and say almost anything to avoid driving up the cost of capital on worries about little ole EVs. Below is an analysis from Michael Liebreich that illustrates what's at stake in terms of cost of capital. The oil industry absolutely does not was this to blow up for them as it has for coal. There are huge incentives to downplay the impact of EV for as long as possible.

There is no financial or professional incentive for any oil analyst to tell the truth about EVs. How does the truth get out? We keep building more EVs and the oil industry will lose credibility in due course.

 

[jhm]

I think we need to consider what is the choke point or critical path.

Some think it is demand, some say it is battery production and some say raw materials for batteries (mining).

I don't think demand will be a serious issue because we should hit price parity for all forms of EVs v. ICE within a few years. Also, the nasty effects of the climate crisis will continue to surface creating more and more government and consumer support for EVs.

So IMO it is a question of production, which comes down to production of batteries. IIRC our fellow TMCer @jhm has estimated 10-15TWh of batteries/year are necessary for all EVs+storage, 300X+ more than the current capacity of GF1.

Benchmark Minerals, which tracks these things, estimates that 2 TWh of battery production is already in the pipeline between now and 2028. This is actual, planned projects in the pipeline. 2028 is a long way out and this number is growing all the time.

In addition, Elon has said Tesla is targeting multiple TWh per year, although we don't have a specific date yet. Let's say 2025-26 as a WAG.

With 4 TWh+ of batteries (2+ TWh from Tesla and 2 TWh from the rest of the world) already in the planning stages and that number growing all the time, I expect that by 2030 if not sooner >90% of new vehicles will be EVs.

With the scenario you describe and 100% support from governments and the public I have no doubt it could be sooner. The critical path is scaling up mining and battery production. Creative minds working with AI tools should be able to work wonders with both of those.

If Tesla gets to 2TWh capacity by the late 2020s, they will own at least 20% of the auto industry.

 

[EinSV]

If Tesla gets to 2TWh capacity by the late 2020s, they will own at least 20% of the auto industry.

Elon suggested on Twitter that probably 1/4 to 1/2 of the 2 TWh would be for stationary storage.

They may also be thinking that their sweet spot in the long run will lean toward battery heavy products like Semis, pickup trucks, heavy SUVs, etc. Personally, I think they could end up with a much higher market share of the trucking market than auto market because it will be hard for anyone to compete with the Semi (and other trucks that will likely follow it).

But no matter how you slice it it seems clear are aiming to have a significant percentage of the auto and truck markets.

 

[RubberToe]

Being able to watch and participate in this process is one of the primary sources of enjoyment in my life.

RT