Minnesota study challenges coal car claims about electric

About Electric Vehicles

Vehicles / November 27, 2020

By Michael Liebreich, Chairman of the Advisory Board
and Angus McCrone, Chief Editor
Bloomberg New Energy Finance

One of the key characteristics of complex systems, such as the world’s energy and transport sectors, is that when they change it tends not to be a linear process. They flip from one state to another in a way strongly analogous to a phase change in material science. We have written about this before, for instance here and here.

A second important characteristic of this type of economic phase change is that when one major sector flips, the results rip through the whole economy and can have impacts on the societal scale.

We are seeing this effect in the electricity system right now. The rapid uptake of renewable generation in the power system, unstoppable now because of cost reductions in wind and solar, has not simply rendered a certain proportion of conventional generation uneconomic. It has fundamentally changed the way power markets work, making new investment in other sources all but impossible; it has changed the control paradigm for the grid from base-load-and-peak to forecast-and-balance; it has altered flows of investment throughout the power system and its technology providers; it is forcing through an accelerated digitisation of all electrical equipment. It is even changing the way buildings are designed, the training needed by the construction trades, and the way infrastructure is financed.

We’ve seen this effect before, and not just in the distant past. When the first cell phones appeared, the assumption was that they would be used like normal phones, but on the move. But as their costs came down, their uses rose and they demanded the digitization of the analogue phone network – just as renewable energy is doing now to the power network. Three decades on, cell phones have pushed fixed phones to the fringes; even more importantly, however, they have driven profound changes in sector after sector of the wider economy – the type of holidays we take and how we book them, the mix of shops on high streets and in malls, the way we move around our cities. Mobile phones have eaten entire industries (cameras, alarm clocks, maps) and are set to do the same to others (newspapers, cash handling, music systems). No sector is immune, right down to furniture design, the size of pockets sewn into garments, even how many single diners a restaurant needs to plan for each night.

Over the past few years we at Bloomberg New Energy Finance have been devoting more and more of our attention to the transportation sector. Just as in 2004 we felt the energy industry and its mainstream analysts had failed to understand the scale, imminence and implications of the renewable energy revolution, so in 2010 we started to feel the same about electric vehicles. One of the Magnificent Seven long-term trends I highlighted at our Summit that year was “The Transformation of Transportation”, which I illustrated with pictures of what electric vehicles looked like up to that point – British milk floats, the Sinclair C5 (look it up!), various tiny and weird-looking cars like the G-Wiz – followed by pictures of the electric cars of the future, which looked like, well, normal cars.

This year, BNEF was the first mainstream energy research firm to publish a comprehensive forecast showing electric vehicles penetrating deep into the car market. The central scenario of our Global EV Sales Outlook to 2040, published in February, was that 35 percent of new sales would be electric by 2040, and perhaps as high as 47 percent under certain conditions (higher oil prices, more widespread use of car-sharing). If anything, since publishing that forecast, we are tending to think EV penetration will be faster, not slower, despite persistently low oil prices. In the first half of this year, worldwide EV sales were 285, 000, up 57 percent on 2015.

The reason for our bullishness on electric vehicles is not just the fact that battery costs are dropping at the sort of rates we have seen in the solar industry, down 65 percent in the past five years. It is also that electric vehicles out-compete internal combustion cars in lots of important dimensions: they drive more smoothly yet accelerate better, they can be charged at home or at the office, they require much less maintenance, they help solve air quality problems, they improve the energy autonomy of oil-importing countries. Sure, they have limited range and take a while to charge, but this is, in practice, irrelevant for the vast majority of use cases. Up to 40 percent of the cars in the U.S. are second vehicles; can anyone think of a good reason to buy a diesel or petrol second car in 15 years?

Another powerful driver for the uptake of electric vehicles is that they are a vastly superior platform for autonomous driving, infotainment, connected vehicle and transport-as-a-service technologies, which are starting to transform the safety and experience of the travelling public. Put simply, our transport system is digitizing, just as the phone system digitized, just as the energy system is digitizing, and this will yield dramatic benefits in terms of asset utilization (in other words cost), flexibility, service levels and cleanliness. And it simply makes no sense to have an inherently analogue power unit – vibrating, volatile-liquid-consuming, hot-polluting-exhaust-producing – at the heart of a fully digital, sensor-pervaded, solid-state-electronics-controlled system.

Source: about.bnef.com