In my book Transition Point, I detail how a series of technological waves have been responsible for the exponential rate of progress since the Industrial Revolution. Each wave is powered by a revolution in power generation, communication or transportation, which, when combined, cause a societal paradigm shift. The fourth wave saw the combination of the internal combustion engine, gasoline and mass-production techniques produce vehicles capable of providing mobility to both people and products for the last 100 years. But technological progress is always a double-edged sword, for the process of creative destruction wipes out the old industries and old jobs, causing social unrest. The technology itself can also have two-edges: for example, gasoline-powered engines have enabled people to traverse the planet, but they have also polluted it, causing 16% of all human-made greenhouse gas emissions. The COVID pandemic created an opportunity to see what would happen if fewer cars were on the road and whether it would make a difference. The answer to the latter question is yes. Researchers from NASA found that the pandemic restrictions on travel have reduced global nitrogen dioxide concentrations by nearly 20%, with cities experiencing the biggest declines. For example, during their lockdown periods Wuhan and Milan both saw a 60% drop in nitrogen dioxide emissions, and New York saw a 45% reduction.[i] The decrease in air pollution allowed people to see their cities with new eyes, free from the constant haze that permeates urban skylines. India's drop in air pollution has even allowed the 125-mile away Himalayas to become visible for the first time in 30 years. All this is adding fuel (pun intended) to the sixth wave’s transportation revolution – electric vehicles (EVs).
The Electrification of Transportation
It may be surprising to know that the history of the electric car stretches back almost as far as the internal combustion engine, with the earliest road-worthy versions emerging in the second half of the 19th century. Electric cars initially outsold their internal combustion engine counterparts as people found them superior to steam and gasoline vehicles, due to being quiet, easy to drive and absent of smelly pollutants. Ferdinand Porsche, the founder of Porsche sports cars, developed an electric car called the P1 in 1898, as well as the world’s first hybrid electric car powered by electricity and a gas engine. Thomas Edison believed that electric vehicles were the superior technology and worked to build a better battery for them, trying to overcome the biggest downside to lead-acid batteries – their weight and the fact that the acid from the battery would corrode the car’s interior. Edison even partnered with Henry Ford to explore options for a low-cost electric car in 1914. But as we now know, Henry Ford departed from working on electric vehicles to focus on the mass-produced Model T, which he launched in 1908, and which made gasoline-powered cars both available and affordable. By 1912, the cost of a gasoline car had fallen to $650, while an electric roadster cost $1,750. The rest, as they say, is history.
Growing up in 1970s Britain, the early morning milk float was the only time you would see an electric vehicle on the roads, and its 5-mph max speed did little to inspire people to swap their car for one. During the 1980s, inventors such as Sir Clive Sinclair tried to relaunch electric vehicles, hoping that the population would embrace travelling around in electric-powered personal transportation devices such as his Sinclair C5. However, the idea of open-air travel in the famously warm and dry British weather, combined with the prospect of almost certain death from passing lorries, resulted in a lukewarm response and the C5 passed into infamy. Society, it seemed, was not ready for an electric revolution, and the oil and motor industries were perfectly happy to keep it that way.
Sir Clive Sinclair in 1985, in one of his Sinclair C5 electric tricycles.
The electric vehicle dream lay dormant for over a decade, and big oil continued to rule. In 1997, Toyota launched an electric hybrid called the Prius in Japan, hoping to tap into the rising ecological concerns of the population. However, its launch was during the downswing of the fifth wave, and the market was still focused on increasing horsepower, not saving the planet. While the Prius found a market amongst climate-conscious consumers in places such as California, it struggled to achieve worldwide popularity, with global sales of just 414 cars in 2007. The electrically powered vehicle remained an outlier in a market that continued to be wholly dominated by combustion engine vehicles.
Then came Tesla, and suddenly electric was cool again. Now electric vehicles are associated with achieving Lamborghini beating 0-60 speeds, rather than milk floats, Sinclair C5s and dull-looking hybrids. Elon Musk did to electric vehicles what Steve Jobs had done to computers; he made them desirable. While Toyota might have been the early innovator in electric, it was Tesla that was prepared to base their entire business strategy around this new technology, building the vehicles from the ground up, creating Gigafactories bursting with robotics, and producing the batteries needed to power these cars. Musk was also prepared for Tesla to make a loss while they laid the foundation for a transportation revolution it fully intended to dominate. But Musk also knew he had a major sticking point. To compete against gasoline power, they needed nationwide charging station infrastructure that enabled people to recharge their vehicles on the move, and batteries that had sufficient range to avoid the anxiety that turned off so many potential customers. While he worked on both, he really needed the market to move and pick up the slack. For a while, it looked like it wouldn’t, and despite critical acclaim for the Model S executive saloon, Tesla nearly slipped into bankruptcy while they fought to mass-produce their more affordable Model 3.
The Transportation Tipping Point
Like all paradigm-shifting innovations, adoption by the market starts deceptive, up until a tipping point is reached when it becomes disruptive almost overnight. There is every reason to believe that 2020 may have been the tipping point for electric vehicles and that 2021 would see them cross the chasm into the mainstream. One look at Tesla’s incredible market valuation and rising sales figures would indicate that this is almost certainly the case. From almost facing bankruptcy in 2019, Tesla went on to sell over 365,240 Model 3’s in 2020, 12% of the total EV sales and the company now has a market cap of $756 bn, more than every other major car manufacturer combined.
The reason for this high valuation is that the market has indeed moved – electric is going mainstream, and the days of the internal combustion engine are coming to an end. Creative destruction in action once again, driven by advancements in technology combined with a series of ‘carrot and stick’ incentives by governments to steer the public towards more sustainable, greener forms of transportation. The carrots take the form of various government-backed benefits that include 0% benefit-in-kind tax rates, zero road taxes, exemption from VAT and purchase taxes (responsible for Norway’s high EV rate) and no inner-city congestion charges for pure EV vehicles. The sticks take the form of ever-higher road tax for diesel and high carbon-emitting vehicles, greater use of congestion and low emission zone charges, and now the public declaration that governments will totally ban the sale of new internal combustion engine cars. For example, Norway – the world’s leading user of electric vehicles where they already make up 60% of all new car sales - will ban them from 2025, the UK from 2030, California from 2035, and other European countries such as Germany and Slovenia will act to prevent sales of carbon-emitting vehicles between 2030 and 2040. Car manufacturers are also being pressured to produce greener cars. In early 2021 the VW Group was fined over €100 million after it missed its EU CO2 emissions targets for 2020 by 0.5 g/km.[ii] This pressure has had the necessary reaction. Jaguar Land Rover has just announced that all Jaguars will be electric from 2025, and its entire range will be electric from 2030. GM has also declared that it will phase out fossil fuel burning vehicles by 2035. As a result of these decisions, money will now be redirected from combustion engines to electric-powered vehicles in a way we haven’t seen to date. For example, Volkswagen’s response to their negative emissions PR was to announce expenditure of around EUR 73 billion on electrification, hybrid powertrains and digital technology over the next five years. Elsewhere, the BMW Group plans to virtually double the number of electrified vehicles it offers to 25 models by 2023[iii], and Daimler will invest €70 billion ($85 billion) between 2021 and 2025 into EVs.[iv] Researchers IHS Markit predicts a 70% rise in global sales of electric vehicles in 2021, 44% in China, 28% in Europe, 16% in North America and a combined Japan/South Korea share of 11%. They also predict that by 2025 global sales will top 12.2 million, indicating annual growth of nearly 52% (compounded).[v] In a perfect example of the fact that this year represents the EV tipping point, in Jan 2021 it was announced that the world’s biggest diesel engine factory in Tremery, eastern France, will switch production to electric motors.[vi]
Laying the Foundations
Generating a revolution requires more than just electric cars – it also needs the infrastructure to support a world where people drive electric cars. The biggest barriers to EV sales have been their cost, the availability of charging stations, and the time it takes to charge a vehicle when you find one. While the cost of EVs is starting to drop and will continue to do so as demand goes from niche to mainstream, range anxiety is an area that still haunts these vehicles. As a result, most EV sales to date have been to people who do not commute long distances, with a recently released US study finding that the average mileage of an electric car is only 5300 miles, half that of gasoline vehicles.[vii] Currently, hybrids are the answer for those wanting to avoid range anxiety, using electric travel for short local distances, while the combustion engine kicks in when needed. But if we are to rely totally on electric power, then batteries need to become cheaper and more powerful, and there needs to be a massive increase in the number of public fast-charging stations. The real tipping point will happen when charging an EV is as quick and convenient as refuelling a regular vehicle.
Currently, the availability of charging infrastructure across Europe is both insufficient and unevenly distributed. There are currently only 224,538 public charging points across the EU, and in February the European Automobile Manufacturers’ Association (ACEA) and other consumer and sustainable transport groups told EU leaders that one million public EV charging points would be needed by 2024, and three million by 2029.[viii] A massive investment in EV charging infrastructure is therefore urgently required to facilitate the increasing demand, something we are now starting to see. In the UK, the first electric-only charging station was opened in December, the first of more than 100 that are planned over the next five years. The station has 36 vehicle charging points and is powered by a mix of solar and wind energy, delivering 200 miles worth of charge in 20 minutes for just £10. Private corporations are also stepping up to fill the gap. For example, moving forwards, whenever you see the Golden Arches, you’ll know that you will be able to boost your battery as well as buy a Big Mac, as McDonald's plans to install EV charging points at its 1,300 UK and 1,000 German restaurants by 2025.[ix] Expect to also see EV charging stations appear at supermarkets, service stations, shopping centres and hotels. The final challenge is to develop batteries that can be rapidly charged, removing the inconvenience of waiting. In early 2021, Israeli company StoreDot demonstrated its ultra-fast charging capability for cars earlier that could fully charge an EV in five minutes. However, this required higher-powered charging stations than are currently available, and the company – whose investors include Daimler and BP – is working to deliver batteries that can meet this five-minute promise using current EV chargers by 2025.[x]
Powering the Revolution
Building these new batteries is going to be a significant challenge. Tesla made the decision early to develop its own battery production facility, building the first Tesla Gigafactory in Nevada, and the second in Buffalo, New York, the third in China (Shanghai) and the fourth - Giga Berlin – in (surprise!) Berlin. Giga Berlin is due to start production in late 2021 and is designed to position Tesla as the primary EV battery supplier in Europe, producing Tesla’s newly announced 4680 cells, which are bigger, six times as powerful and hold five times the energy capacity of Tesla’s previous cells.
Architect drawing of Giga Berlin. Source: Tesla.
Other GigaFactories are being planned in Europe. French carmaker PSA Group and the French battery manufacturer Saft recently announced plans for two European Gigafactories, the first in France and the second in Germany, providing a total of 48 GWh of manufacturing capacity. In the UK, the West Midlands has been proposed as the site of the first UK Gigafactory, which if it is greenlighted, would start battery production in 2025.[xi] The European Union has also approved a 2.9-billion-euro European Battery Innovation plan that involves giving state aid to Tesla, BMW and 42 other firms to support the European production of electric vehicle batteries, removing the need for imports from China. Demand will soon outstrip supply, so ensuring that Europe has its own production capability will be as essential as becoming oil and gas independent was in the 20th century. The current production capacity under construction worldwide will enable the production of 40 million electric vehicles annually by 2028. This sounds impressive until you realise that nearly 100 million cars, vans and trucks were produced globally in 2019 alone. There are currently about 1.4 billion operational vehicles in the world, a number that is still increasing, and at the projected battery production capacity, it would take 35 years to replace this global fleet with electric models.
While the commuter has been forced off the road due to COVID, freight movement has actually increased, mostly due to the rise in online shopping, with home deliveries using diesel vans that emit high levels of nitrogen oxides. The aforementioned governmental ‘carrot and stick’ measures are therefore more sharply felt when you own a whole fleet of high emission vehicles. UK fleet provider Fleet Alliance has already reported a huge surge in electric vehicle orders, driven by both the 0% Benefit-in-Kind rate and the 2030 deadline on the sale of fossil fuel vehicles. Amazon, the company driving the eCommerce revolution in the West, declared its intentions to develop what Amazon CEO Jeff Bezos called “the most sustainable transportation fleet in the world”. He backed up that claim by placing an order for 100,000 electric delivery vans from start-up Rivian Automotive, a company that Amazon is investing $700 million into. To cover the period while Rivian gets up to full production, Amazon has also purchased 1,800 Mercedes Benz electric vans. To facilitate these new vehicles, Amazon has had to install thousands of electric vehicle chargers and change up the electrical design and layout of its delivery facilities in the US and Europe.
Outside of goods delivery, other extensive users of vans, such as British Gas, have also started changing their fleet to electric, purchasing 1,000 Vauxhall Vivaro-e vans for their engineers last year and promising to electrify its entire 12,000 strong fleet of vehicles by 2030. One of the reasons why LCVs are likely to be a good fit for electric vehicles is that on average, an LCV fleet travels less than 100 miles a day. Mercedes Benz has reported that tracking of their electric eSprinter vans highlighted that on average they travelled under 60 miles a day, well within the capable milage of a charged battery, thus avoiding any range anxiety.
But what about long-distance haulage? This is perhaps one area where the business case for electric isn’t there yet, due to battery size and power needed to move such heavy vehicles, combined with the range these vehicles have to travel. A concerning conundrum considering that large haulage trucks consume the most fuel, deliver the worst mpg and kick out the most emissions. This is where some people believe that hydrogen fuel cells, rather than electric batteries, are the answer. Charles Freese, executive director of GM’s fuel cell business, states that hydrogen fuel cell trucks have an advantage over battery-electric versions as they can handle longer-range pulling heavy loads and can be refuelled faster. This view has been supported by leading truck manufacturer Navistar, who declared that their hydrogen trucks are capable of travelling 800 km on a single charge and can be refuelled in less than 15 minutes. Peter Voorhoeve, president of Volvo Trucks North America, stated that; “We believe that hydrogen fuel cells are another alternative fuel source that will happen in the future… more in long haul and heavy haul. Where then electric we will see more in local and regional distribution, food delivery and pickup for instance …But fuel cell trucks are absolutely part of the solution going forward.”
One of the issues with hydrogen is the high cost of installing hydrogen fuelling infrastructure, resulting in the same issues that blighted electric cars initially. People like the concept but are concerned about being unable to refuel when needed. The cost is the issue. While hydrogen is hyper-clean, emitting only steam, and the most common element in the universe, it doesn’t appear in its pure form on earth and must be separated via the running of an electric current through water to split the oxygen and hydrogen atoms apart. That takes energy – energy which has to be captured from renewable sources else you are simply moving the emissions elsewhere in the supply chain. It is also difficult to transport and store hydrogen, for unless it is combined with other chemicals, it must be compressed to 700 times atmospheric pressure or refrigerated to minus 253 degrees Celsius. A vehicle with a fuel cell also has more moving parts and is more expensive to maintain than one with a battery – and unlike electric cars, they can’t be refuelled at home. Hydrogen also likes to explode, which is generally deemed an undesirable outcome.
Tesla’s CEO, Elon Musk, believes that the focus on hydrogen is a distraction and that electric battery capabilities will increase and their cost decrease to make hydrogen unnecessary. He believes that while hydrogen may have the highest energy mass of any fuel, its density is so low that the pressure needed to store it, combined with adding fuel cell technology to create electricity, adds way too much complexity. “It’s only a liquid close to absolute zero, so it’s really not realistic to keep it as a liquid, so you have to keep it as a gas. So you need a gigantic fuel tank, volumetrically, and it’s got to be very high pressure. It’s a big pain in the arse, basically,” said Musk. And he may be right, for as we have seen throughout history, the winning innovation is not the best but the one that is the simplest to use for the most amount of people. Musk is betting on his predictions, unveiling the Tesla Semi truck in 2019, which has a range of up to 500 miles per charge and can go 0-60 in under 20 seconds fully loaded. The Semi has already attracted pre-orders from organisations such as Walmart, PepsiCo, Anheuser-Busch, DHL, FedEx and UPS. The first Tesla Semi trucks will be released this year, and full volume will be achieved once Tesla ramps up 4680 battery cell production. Tesla is not the only company looking at electrifying trucks. Volvo has announced they will sell a complete range of battery-electric trucks in Europe for distribution, refuse, regional transport and urban construction operations in 2021, with volume production kicking off in 2022. We are therefore likely to see electric and hybrid trucks on the road in numbers from 2022.
This year is therefore set to be the one when many consumers and companies decide to switch from fossil fuel-powered vehicles to electric ones. There are still many challenges to overcome, such as reducing the amount of coal-based electricity used to charge these vehicles (which defeats the point) and finding ways to create faster-charging batteries with longer lives that can be recycled much more effectively. But this author is optimistic that the increasing investment into EV technology will lead to these breakthroughs soon. By 2050, we will be looking back at the internal combustion engine the same way as we now view steam engines – as nostalgic period pieces that fell victim to the process of creative destruction.
Article published on behalf of P3 by futurologist: