EV penetration in Australia

The Australian amateur astronomer Bob Evans has such an incredible knack for spotting minute changes in the night sky that he holds the record for visual discoveries of supernovae. There seems to be an evolutionary advantage to being able to spot changes in the natural world but it also means that we tend to overstate rates of change in the technical sphere. In various experiments, Sterman and others have shown that people tend to misinterpret system dynamics problems, such as carbon accumulation, and the fluid balance of bodies. The problem stems from a misunderstanding of the principles of accumulation.

Another example is the hype surrounding electric vehicles (EVs), and the tendency to directly translate rising global sales to a meaningful proportion of the total stock of motor cars. Most energy transition studies project increasing electrification of transport. Trying to derive plausible substitution rates of EVs is essential to understanding future energy scenarios. Horace Dediu also covered this topic in Asymcar episode #28. As Horace noted, the proportion of the EV stock in the future is several times removed from the current sales growth, as shown in figure 1.

ev-stock

Figure 1.

In order to derive projections for Australia, I took Australian Bureau of Statistics car census datanew car data and average age data. I used census data to derive sales data back to 1955. I used the historic attrition rate of 4%. By optimisation, I found that the proportion of cars of a certain age remaining after t years can be roughly described by a logistic distribution –

Yt = 1 / (0.995 ( 1 – 0.995) e^(0.305 (t – 0.25)))   where t is age in years

The ABS does not disaggregate EV data so I’ve had to use other published data. There have been around 3,300 electric vehicles sold since 2010, with 1,140 sold in 2014 and 942 sold in 2015. Assuming that new models and lower battery costs will drive compound growth of 40% through to 2030, the sales volume of EVs in 2030 will be around 146,000 units per annum or 10.5 % of new car sales, and make up 2.5% of the total stock of passenger vehicles. Around 20% of the passenger vehicles that will be on the road in 2030 are on the road today. The 40% projection is a best guess based on strong but plausible growth. The year on year growth up to September was 23% and 33% for Europe and the US respectively. I suspect the tip-over point will occur when the the price of an EV drops below internal combustion of an equivalent vehicle, and the case for electric is compelling. People will simply adapt to the charging regime.

abs-9309-0-do001_2016-motor-car-census

Figure 2. Number of passenger motor cars first registered from 1955 to 2015 as at 2015. Smoothed estimate with logistic distribution, based on ABS car census, sales data, and average age data, various years.

stock-of-cars
Figure 3. Historical and projected stock of passenger motor cars and EVs. Assume compound sales growth of 3% for new cars and 40% for EVs.

There are several challenges I see with increasing the adoption of EVs.

Firstly, the charging infrastructure may take decades to be comparable with petrol/diesel refuelling. It isn’t just a matter of infrastructure, but overcoming the limitations of electrical charging. For example, the Tesla Supercharger delivers 120 kW and takes 30 minutes to deliver 270km of range, or 0.15 km of range per second of charging. In the future, this will improve, but there is a limit to the charge time and current – assuming 7,000 batteries in the Model S (Panasonic NCR18650B, 3.6 volt) calculates to 4.6 amps per cell. Most homes have a single phase 40 to 80 amp 230 volt connection, equal to 9 to 18 kW, and therefore rapid charging is not going to be possible at home. In contrast, a fill-up at a petrol station delivers around 500km of range in about 2 minutes plus another 2 or 3 minutes to go inside and pay, or about 1.7km per second at the petrol station. Hence electric fill-up takes around 12 times as long. Management of electrical assets will require that most charging takes place overnight.

When I had a pre-injection Commodore V-8 (a while ago), the most annoying thing was always being conscious of the fuel gauge. I now drive a diesel and fill up once every 2 or 3 weeks  and never worry about refuelling.

Early adopters find plugging in at home a few times a week a novelty, but it remains uncertain how average consumers will take to plugging in. Many people in inner-city houses without off-street parking, plus apartments, etc. won’t have the option of an overnight charge. Yet this is potentially a key early adopter demographic.

A marketing mismatch is between high and low-km motorists – the low running costs of EVs will benefit high-km motorists, but long daily commutes and rural/interstate travel will mostly preclude the use of EVs. On the other hand, low-km commuters with ready access to charging will be less willing to outlay additional capital to reduce already low running costs – fuel costs make up only around 15% of ownership costs for small cars (see RACQ guide).

Much of the hype around EVs comes from Silicon Valley entrepreneurs rather than the car industry. I doubt that many people care what type of driveline a car has except to the extent that the driveline provides the mix of performance, economy, reliability, drivability, etc. that consumers demand. The closest many people get to thinking about the driveline is ticking the ‘auto transmission’ option. A basic error is failing to account for what consumers actually want in a car.

The car ecosystem is complex. Dealerships want cars on the showroom floor that people will buy. Holden stopped selling the Volt because few people wanted to buy an electric-powered 4-seat Cruze, regardless of price. The GM range-extender is a technical fix but doesn’t change whether consumers aspire to own a Volt. GM take electric seriously and want to be in the game, but also need to stay in business while batteries improve. The sales data on the Nissan Leaf is informative – an early spike followed by declining sales despite strong discounting suggests that there is a small demographic of price-insensitive consumers that want electric, but that the majority of consumers do not value electric in-itself.

Until EVs sales reach a critical mass that forces dealerships to take them seriously, sales will be hampered by a lack of commitment – EVs represent a potential threat to profitability because manufacturers and dealerships are heavily dependent on parts and service. Long warranties keep customers within the dealer orbit. The low maintenance of EVs will require a rethink of the current dealership business model that relies on post-sale servicing revenue. Software updates, tweaks and free data features may provide the motivation to keep customers within the dealership orbit.

Having driven a Tesla Model S, my immediate impression was of a tight, sharp and powerful car. Electric works. Home owners with a garage and another car for rural driving will find that electric works for them. But for all the excitement of electric drive, the car didn’t do anything that a conventional car doesn’t already do. The car was silent at low speeds, but a Lexus LS is quieter on the freeway. Long service intervals, twin-clutch transmissions with millisecond gear shifts, high efficiency diesel and hybrid drivetrains are a routine feature of internal combustion. The engineering elegance of so few moving parts is irrelevant for the new car buyer driving a reliable car with 1 year+ service intervals.

I’ll tackle the vital issue of embodied energy of EVs in another post.

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