...not to buy it
To drive…
1. The experience of driving an EV is
excellent
2. There is now sufficient variety of
EVs being offered (between pure EV and PHEV)
3. Range anxiety is almost over
4. There are exclusive benefits for EVs
in most large cities
5. The running costs of an EV are much
cheaper than those of equivalent ICEs
…not to buy
1. High volatility of residual values.
2. Current EVs may age rapidly
3. Current local benefits of driving an
EV will gradually dissapear
4. Taxes on EVs will increase.
We are
living fascinating times for the automotive industry. We are witnessing a transition from internal
combustion engines (ICEs) to electric engines as the means of providing power
to move our vehicles. As in any shift in
technology, it is difficult to decide when to make the switch. In this article I will try to give you the
fundamental reasons why the time has come for most of us to drive an
electric car. I will also recommend not
buying those electric cars (leasing them will be preferred).
1. The experience of driving an EV is
excellent.
After more
than a century of driving cars with an internal combustion engine (ICE), we
have learned to live with its intrinsic characteristics of noise, vibration and
uneven power delivery. And, of course,
the emissions of unhealthy rejects into the atmosphere. In fact, those of us who are passionate about
cars, tend to admire the “good” noise that some of those engines emit, love
using the gear-change to keep the engine at its optimum revs and basically
ignore all the pollution generated while running.
When
driving a car with an electric engine, we suddenly realise that we were just
sticking to a flawed way of providing mobility because we had not tried
alternatives. If you have time, you can
read my previous article on what to expect when switching from an ICE driven
car to one with an electric engine (EV)[1],
where I try to summarise all the things that may change in your driving
experience.
It is just
a plain superior reality in so many ways that you may wonder why you did not
try it earlier. The magical silence and
lack of vibration while running is immediately noticeable. Not feeling the annoying stop/start of the
engine in the city is a welcome gain. And
the unstressed linear acceleration an added bonus. Of course, knowing that you
are not producing pollution while running is the ultimate benefit, not only to
you, but to everyone. I cannot stress it
enough, please try it and hopefully you will agree with me.
2. There is now sufficient variety of
EVs (and PHEVs) being offered
Up to very
recently, the number of EVs on offer was very limited and their cost too
high. A new technology that had to
compete with the 20th century wonder of mass production, the ICE
car, has faced logical challenges in order to provide a viable
alternative. The electric engine in an
EV is not a technical or cost challenge, but the means of providing energy to
that engine is a different story. The
batteries in an EV are by far the single largest source of cost and added bulk.
With
continuously decreasing cost of batteries due to extensive research and mass
manufacturing, we are reaching the point where it is economically feasible to
offer a mass-produced electric car at competitive prices.
The shift
to a new drivetrain technology, a fundamental change for car manufacturers, is
an opportunity with high risks for the incumbents. Up to last year, the choice of EVs on the
market was very limited. However, most
traditional manufacturers are now launching EVs and have many electric models
in their pipeline. From a handful of
available models, we are quickly seeing a variety of new offers entering the
market in many different segments. We
are far from the myriad options of sizes, shapes, trims and engine
configurations offered in the very mature ICE market. Available EVs, however,
are quickly multiplying, giving drivers a reasonable variety of choice.
In fact, in
addition to pure electric cars (which only have an electric engine), there are
many plug-in hybrid electric cars (PHEVs), which add an electric engine to a
traditional IC engine, complementing it, not replacing it. These PHEVs combine
both engines in an effort to supplement the virtues of electric driving with
the long range driving capabilities of gas power. I mention them because they are clearly bridging
the gap between ICEs and EVs in this transition times.
You can
look at PHEVs as an expensive transition format, combining the cost of both
engines and their accessories, the added weight and achieving limited benefits
in terms of the pure electric driving experience. I prefer to value them for helping to smooth
the transition to the new electric technology for both manufacturers and
drivers. There are many of them on offer
now, almost every manufacturer includes them in their range. And most provide significant electric only
range (in excess of 40 kmts on a full charge) that can cover the majority of
commuting habits.
Whatever
your requirements in terms of size and usage, you should be able to find a
suitable EV or PHEV alternative to make the jump towards the new world of
electric mobility!
3. Range anxiety is almost over
The
traditional weakness of electric cars has been their limited range on a full
charge, combined with the long charging times and small number of public
charging points. Those three factors
produced what has been called “range anxiety”, or the permanent worry about the
need to plan your recharges in order to be able to reach your destination, especially
in long trips.
Conditions
are quickly changing, to the point of making range anxiety almost irrelevant.
First, for
purely electric vehicles, the ranges achievable with a full battery are
increasing with every new model. Most
EVs can now travel more than 300 kmts without recharging. And, in many cases, the same vehicle is being
offered with different battery sizes (and related costs and range) to give
customers a broader choice.
Second, the
network of recharging points is quickly being developed in many countries. The most advanced ones in EV adoption, like
Norway and The Netherlands, already offer sufficient density of public charging
alternatives.
Third, the
recharging times are diminishing quickly, as the combination of factors
determining them is carefully optimized[2]. Nowadays, with modern chargers and battery
technology, some new models are able to recharge at rates of up to 300
kilometers in 15 minutes[3].
Last, if
all of the above does not offer customers full peace of mind, there is always
the alternative of driving a PHEV, which combine limited electric range that is
suited to most commutes and city drives with the long range and no anxiety
associated with traditional ICE driven cars.
4. There are exclusive benefits for EVs
(and some PHEVs) in many large cities
Councils
are trying hard to clean the air in their cities and one of the biggest sources
of pollution is ICE vehicles. In order
to accelerate the transition to cleaner mobility, many large cities are
offering advantages to drivers of electric vehicles. Among the typical ones we count: free parking
in regulated areas, free circulation in congestion controlled zones where ICE
vehicles are not allowed or asked to pay a circulation fee, free usage of
special bus or congestion free lanes, lower (or no) annual taxes.
Most of
them are real tangible benefits that will make using an EV (or equivalently
treated PHEV) an advantageous proposition beyond the already explained
surprisingly improved driving experience.
5. The energy cost for running an EV is
much cheaper than in a fuel burning car
This is the
biggest advantage from a cost perspective. As with ICE cars, the electricity consumption
of an EV depends on many variables. And
it will gradually improve over time, as manufacturers learn to optimize
them. But most EVs can now run 100 kmts
on 20 kw/h of energy. The cost of
electricity will vary greatly from one region to another but, in most countries,
it will be below 20 cents per kw/h. With
those numbers, the electricity cost for an EV over 100 kmts would be around 4
euros. That would be the equivalent,
depending on the fuel cost per country, of around 2/3 liters of fuel.
Numbers
will vary greatly per EV model and per country, but in all cases the cost of
electricity will be far lower than the fuel cost of an equivalent ICE
vehicle. That is a real economic advantage
that you can enjoy on top of the other benefits of driving an electric vehicle.
These are
very strong arguments for anyone to consider driving an EV or an PHEV, however,
there are also significant reasons to recommend not buying it, but leasing it or searching for any form of usership where the driver does not take the risk of keeping the car after 3 to 5 years…
The reasons
for this recommendation are:
1. High volatility of residual
values.
For EVs
(and a bit less for PHEVs), we are beginning to enjoy the benefits of high
R&D expenditure and mass production.
We can see it in the rapidly decreasing cost of buying them, and also on
the radical increase in performance that we get on the newer models compared to
older ones[4]. Although the speed of improvement will
logically decrease over time, we can still expect significant advances in
technology for future EVs, which will have an impact on the residual value of
existing ones in the future.
2. Current EVs may age rapidly
Another
effect of the speed of technological improvements on EVs is that older models
quickly loose some appeal when compared to what is offered on newer ones. For ICEs, using a car during 10+ years will
not generate in the driver a feeling of great obsolescence, as long as the car
is properly maintained. In the current
generation of EVs, that may not be the case.
Traditional car manufacturers have just started to dedicate large
amounts to the development of electric vehicles. The pay-off of those substantial investments is
going to appear incrementally in the new EVs to be released in the years to
come. We will probably be able to access
EVs that show longer range, are more efficient and less expensive than the
current equivalent ones.
My personal
impression is that the latest EVs offer compelling benefits to make the jump to
the new technology now. But being aware
that, in 3 to 5 years, there will probably be really improved models, with so
many new features available that upgrading to them will seem like a must. Think about the first smartphones available
in 2007 and how quickly newer models were providing the user with more benefits. We will experience something similar with
current EVs. They are revolutionary, a must drive, but will become obsolete in
the near future when the newer ones are launched.
3. Current local benefits of driving an EV
will gradually disappear.
Some of
those benefits previously described, like free parking or free usage of
restricted lanes, are naturally going to be limited in time. As more people make the switch to EVs or
PHEVs, the incentives given to early adoption will stop making sense.
Imagine
regulated parking in a city, where allocation of a limited resource (parking
spaces on the street) is managed by putting a price on it and restricting the
total time that it can be used. As a
greater number of vehicles enjoy benefits, the resource becomes less usable and
the income stream for municipalities decreases.
The natural move is to gradually remove those advantages for early
adopters of clean cars as the total number of them increases.
This is
another reason to avoid buying an EV/PHEV at this time, since the desirability
of its usage (and the demand for it) in the future can be more volatile,
depending on the privileges that it still enjoys when used.
4. Taxes on electric vehicles will
increase
Another
natural evolution that we can expect as the number of EVs on the roads increases
and become significant is the creation of new taxes. All administrations have come to rely on
significant income derived from cars.
Taxes upon purchasing, yearly road licensing and, most of all, taxes on
fuel. The last ones represent a
significant income for most administrations (up to 5% of total income). It will obviously take some time to shift all
cars on the road to the new electric drivetrains. But regulators will see their tax income from
ICE vehicles decrease and will probably react by creating new taxes on the EVs
to compensate their income[5].
Conclusion
We are
currently in what I would identify as the sweet spot, the right time, to start using
an EV. As explained, it is a fantastic driving
experience, to move smoothly, without generating air or noise pollution. The technology
is reliable, the drawbacks of limited range and need to recharge are quickly
diminishing. The running costs are lower. And there are significant exclusive benefits
in yearly taxes and parking/road usage.
However,
the environment is still evolving quickly.
Battery technology will continue improving and will make the next
generation of EVs significantly more appealing than the existing ones. And some of the current advantages, usage privileges,
and taxes treatment may change in the near future.
Therefore,
the logical choice, is to drive an EV, but not to own it yet, since in 3/5
years circumstances may change and force us to revisit the decision.
But I
invite you to make that change and start enjoying the world of EVs!
[1] “Switching from ICEs to
electric, goodbyes and hellos”, published in my blog, blog.jr-aboutcars.com
[2] The speed of transfer of
electricity to the car battery depends on many factors and changes frequently. The output power capacity of the charging
station is one. But the maximum input
power capacity of the battery is another.
The latter also fluctuates with conditions of the battery, like
temperature and charge level.
[3] Tesla model 3 can recharge at that
rate on their proprietary Tesla Superchargers 3.0 (250KW)
[4] The most important element of improvement
is the battery, where we are benefiting from increased capacities with similar
bulk, weight and cost, allowing newer EVs to offer longer driving ranges. An
additional benefit in newer EVs is the capacity to charge batteries
faster.
[5] To be fair, the speed of this
change may be slower than the 3 to 5 year window that I refer to in the rest of
the article. Replacement of the existing
cars on the road with EVs will take much longer and the decrease in tax income
may not be felt so quickly. However, regulators
tend to be very creative when introducing new taxing figures and can try to
anticipate those decreases in fuel tax income in advance.
