Automakers are ignoring a potential nightmare scenario for electric cars – Markets Insider


A Tesla Model S charges at a Tesla Supercharger station in Cabazon, California, U.S. May 18, 2016.   REUTERS/Sam Mircovich/File Photo
A
Tesla Model S charges at a Tesla Supercharger station in Cabazon,
California.

Thomson
Reuters


Half a decade ago, electric cars looked as if they were finally
going to reverse a century of history and take their rightful
place as the transportation choice of the future.

But the financial crisis killed off numerous startups, leaving
Tesla as the only major player.

Traditional automakers rolled out their own electric vehicles,
but consumers didn’t buy them in significant numbers; only 1% of
the current global car market has gone electric.

We’re now in a second wave of
EV enthusiasm
as longer-range cars come to market and address
the key weakness of the previous generation of vehicles. It is
costing automakers billions to develop and produce these cars on
the assumption that demand will evolve in the coming years.

This week, Volvo made the bold announcement that it would

eliminate vehicles from its portfolio than aren’t 100% electric
or gas-electric hybrids.
(In the US, Volvo currently holds a
tiny 0.5% market share, so its declaration was out of proportion
to any meaningful impact on the long reign of the
internal-combustion engine.) And of course Tesla’s massive
stock-price surge at the beginning of 2017 — which has since
collapsed — showed that sentiment around EVs could reward a
money-losing carmaker with a market cap bigger than Ford’s and
General Motors’.

Beyond designing and building EVs that can travel more than 200
miles on a charge, however, car companies are also dealing with
the other major hurdle EVs face: charging times.

Charging networks required

Tesla has constructed an extensive Supercharger fast-charging
network that can restore one of its vehicles to full charge in
about an hour. Access to the network was free for all Tesla
owners, but the company recently said it will start charging a
fee to new owners. For Tesla, this is an effort to preserve the
network for drivers on longer trips and discourage it as an
alternative to much slower home charging.


Volvo DriveMe
Volvo
is moving away from IC engines.


Volvo


It was expensive but necessary to build the Superchargers as part
of the overall Tesla ecosystem. But it’s also akin to a
traditional automaker opening its own gas stations to get people
to buy cars.

That’s what the electric-car industry is now confronting: a
potentially nightmarish added cost. It’s moving forward, together
— Ford, Volkswagen, Mercedes, and BMW just partnered to develop a
fast-charging network in Europe.

Here’s
Bloomberg’s Tom Lavell
:

“The partnership … aims to establish ‘thousands’ of stations
along European highways by 2020, the automakers said … The rare
broad-based cooperation shows the strains on carmakers as they
invest billions of dollars to develop battery-powered vehicles to
comply with tighter environmental regulations. Buyers have so far
shown little interest in the models because of limited driving
range, the time needed for recharging and the high price of
vehicles. BMW sold fewer than 24,100 of its i3 electric city car
last year, out of the company’s total 2.2 million deliveries,
while the Renault-Nissan automaking alliance has only handed over
350,000 electric vehicles to customers since 2010, versus a
target of 1.5 million by the end of 2016.”

These challenges are nothing new for EVs. For a hundred years,
they’ve been more expensive, offering less range and more
difficult “refueling” than gas-powered cars. That’s why it’s
taken so long for them to grab even a tiny slice of the market.

But on paper, they make more sense than old-school autos. They’re
easier to build and maintain, and they produce no tailpipe
emissions. (Pollution generated by the plants that make the
electricity that powers them is another story). Tesla has shown
that EVs don’t need to be glorified golf carts — they can serve
up supercar-beating performance.

There’s also a case to be made that they will thrive in a
self-driving-car world, as operators of large fleets can recharge
them at central locations before dispatching them to the roads.


Chevrolet Bolt EV 2017
The Chevy Bolt EV.
Chevrolet

Tipping point?

Still, getting EVs to a tipping point — say, 10% to 20% of
the global car market — is turning out to be extremely difficult.
The sequence of problems that Tesla has had to solve is being
replicated as more manufacturers enter the market, starting with
the simple fact that gas-powered cars are cheaper and extending
to the patchy, inefficient charging infrastructure.

Meanwhile, the big narrative in transportation has shifted from
EVs to self-driving vehicles. Self-driving tech is far less
expensive than the engineering required to make a car run on
electricity, and at this juncture, consumers don’t even expect
full autonomy in cars. Advanced cruise control is good enough.

In any case, bringing self-driving tech to gas-powered cars
doesn’t ask the automakers to create an entirely new fueling
system. The winners in this space could be new entrants who avoid
the “old” futurism of EVs and concentrate on the brave “new”
future of autonomous mobility. Prior to its management crisis and
the stepping down of CEO Travis Kalanick, Uber looked to be the
one to beat on this front.

It’s becoming clear that the legacy problems of EVs are proving
to be just as daunting as they always were. For automakers that
have already committed to substantial EV programs, the risk is
that they’ll be stuck with vehicles nobody wants to buy — and
charging networks that nobody wants to use.

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