Schalk Cloete has completed his own 5-part independent Global Energy Forecast to 2050, to compare with this year’s IEA World Energy Outlook, published this week. Underpinning all his predictions is his bet that the world will adopt tech-neutral policies (i.e. not backing any one technology over another) in 2030 as the best and only way to accelerate the transition to meet the 2050 goals. Given that, he sees the traditional fossil fuel ICE’s share of the car market declining but still dominant: increases in efficiency and sliding oil prices will make them cheaper to run and keep them on the road. On electric cars he advises us to stop obsessing about pure BEVs over PHEVs: electric emissions are not much lower than the hybrids, especially as petrol is replaced by biofuels over the next 30 years. The major change, he predicts, will be in our behaviour: our car-centred society’s “biggest problems” are not oil dependence or pollution but massive capital expenses, space requirements, wasted time, and health impacts. Solving these problems will drive change as much as reducing emissions. As a result, global car sales will actually decline as the world moves towards people-friendly smart cities.
You can read the author’s complete series, starting with his first article which introduced his methodology. The second covered wind and solar, the third fossil fuels, the fourth nuclear, biomass and CCS. His next article will wrap up this series by comparing his predictions with the IEA’s. On his journey, Cloete welcomes comments and feedback from our readers.
Introduction
Over the past century, industrialised society has developed a close relationship with the car. It has become more than a simple machine for getting from point A to point B. People experience the car as a symbol of freedom, an expression of individuality, a source of entertainment, or even a form of art. This augmented emotional connection with the car is part of the reason why electric cars attract so much attention, even though their practical, economic and environmental benefits are debatable.
Before we start, a quick clarification: this article will look at electric cars with a plug, that is battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). Detailed forecasts for less hyped electrified drivetrains like conventional hybrids and fuel cell vehicles are not included.
Key principles influencing the forecast
There are many commentators who think the end of the good old internal combustion engine (ICE) is just around the corner (e.g. this presentation). I have a more conservative outlook for the five reasons briefly outlined below.
Limited demand despite low effective costs
First is the observation that BEV sales remain low even when incentives cancel out the entire cost of the battery pack. The only segment that does well is the low-volume luxury/performance segment where even a large battery pack represents a relatively small fraction of the total cost of the car and the quiet performance of electric drive is highly valued. This creates the undesirable dynamic that current BEV subsidies are mostly funnelled towards rich buyers in the luxury/performance market.
As shown below, data from the US indicates that sales of affordable BEVs (of which there now is a good selection) remain very low, even though incentives make these cars cheaper than they can ever be in an open market. More information can be found in an earlier article.
Part of this poor sales performance can be explained by limited availability of BEVs in some states and a lack of BEV trucks, but most of it originates from practical concerns regarding range and charging times. The car is a symbol of freedom and convenience and having to carefully plan any longer trip around several 30-60-minute stops at public chargers clashes with this expectation.
Minimal fuel savings compared to hybrids
An important part of the BEV value proposition is its impressively high efficiency, leading to low fuel costs. BEV advocates often highlight this advantage by comparing conventional ICE cars running on highly taxed gasoline to electric cars running on less taxed electricity. This is not a meaningful comparison for estimating the long-term potential of BEVs. Instead BEVs should be compared to efficient hybrid drivetrains with all taxes backed out.
The graph below shows such a comparison. Currently, BEVs are about 150% more efficient than hybrids in the city and 100% more efficient on the highway (e.g. the Hyundai Ioniq hybrid and BEV options). Future ICE efficiency improvements, larger and heavier BEV battery packs, and autonomous driving technology could further reduce this efficiency advantage to 50% for long highway journeys (earlier article).
Clearly, home charging is not much cheaper than hybrid fuel costs at today’s oil prices, while fast charging is substantially more expensive. In addition, today’s fast chargers remain too slow to achieve the practicality demanded by the mainstream market, but introducing higher charging speeds will only further increase this cost disadvantage. The introduction of very fast charging to help address the low demand outlined in point 1 above will therefore put BEVs at a significant running cost disadvantage relative to hybrids.
Minimal emissions benefits relative to hybrids
The technology-neutral climate policies envisioned in this forecast will focus more attention on the CO2 emissions involved in various transportation modes. Electric cars can reduce their emissions by charging with cleaner electricity, while hybrids can reduce their emissions through biofuel blending.
The graph below shows how these factors interact using an efficient electric car achieving 150 Wh/km with battery CO2 emissions of 5 tons spread over a 200,000-km lifetime. Each line indicates the efficiency of a gasoline car required to have the same lifetime emissions as an electric car charged with electricity of different CO2 intensities.
Clearly, a hybrid will be better for the climate in most of the growing markets of developing Asia for a long time to come. In the stagnant or declining markets of Europe, electric cars can have a minor climate benefit. Blending with biofuel (assumed to have 20% of gasoline emissions) substantially improves the hybrid CO2 emissions performance.
Local emissions of modern hybrids are also very low and will reach negligible levels as battery technology improves to allow the electric motor to take care of essentially all acceleration events.
Declining oil prices
As discussed in part 3 of this series, my outlook for oil is quite grim. I forecast a peak around 2030, followed by a sustained decline in demand. This outlook is driven by a shift to car-free lifestyles, efficiency and increasing competition from biofuels, electricity and hydrogen. Such a declining oil market will lead to very low oil prices, lengthening the reign of the internal combustion engine.
Electric cars do not address the car’s biggest drawbacks
The biggest problems with our car-centred society is not oil dependence or pollution, but rather massive capital expenses, space requirements, wasted time, and health impacts from sedentary living. Electrification can do nothing about these major drawbacks of the car.
Most of the cost of a car is unrelated to the drivetrain, so car capital costs will remain high regardless of how far battery costs fall. More importantly, cars require enormous infrastructure buildouts in the form of roads, parking spaces and garages. Furthermore, cities designed for cars result in poor utilisation of building capital, since home space, office space, retail space, and driving, fuelling/charging and parking space are all used at a rather low capacity factor. In addition, the large amount of time spent in a car cannot be used effectively for work or relaxation. In fact, it is often quite stressful, adding to the very costly health problems caused by a sedentary car-based lifestyle.
With advances in telecommunications technology and small electric vehicles, I believe the car will start to pay for these major fundamental drawbacks. For example, my estimate is that telecommuting and small electric vehicles can save a mammoth $18,500/year and $10,000/year respectively relative to the conventional car-centred lifestyle. For this reason, I believe that the next couple of decades will see a gradual shift in urban design from sprawling cities built for cars to smart cities built for people.
The forecast
The graph below summarises my forecast for the global car market. Despite massive growth in the global middle class, I believe that car sales will peak around 2030 when technology-neutral climate policies are introduced. By that time, value propositions from telecommuting, small electric vehicles and online retailing in smart cities built for people instead of cars will reach maturity, taking significant market share from the car.
Given the large amount of expensive capital already invested in building our car-based society, the transition to cities built for people will not happen rapidly. Still, these trends away from the traditional car-centred lifestyle will steadily proceed over the coming three decades, creating a lengthy plateau and ultimate decline in global car sales.
The demand for stop-go city driving (where BEVs are at their best) will be hit hardest by these trends. Thus, I believe that the market share of BEVs will plateau at about a quarter of car sales. Most cars specialising in highway driving will remain plug-free (although hybridisation will become standard). PHEVs will find a home in the shrinking general-purpose car market where slow charging at night will suffice for most city driving and the conventional hybrid drivetrain will take care of long trips. The PHEV package will also work well for fuel cell drivetrains towards the latter part of the forecast period.
Autonomous cars present an important uncertainty in this forecast. At this point, autonomy is assumed to only have a minor impact, but many companies are working hard on this topic, so a breakthrough is possible. However, I think the universal level 5 autonomy (where all cars are sold without steering wheels) that is required for making a significant impact on this forecast is still many years away.
Comparison to other outlooks
The graphs below compare my forecast to that of BNEF and two IEA scenarios – the base case (IEA) and an accelerated case aiming for 30% plug-in market share by 2030 (IEA 30).
My forecast falls roughly in between the two IEA scenarios and diverges from the BNEF scenario in the longer term. There are two main reasons for the differences between my forecast and the BNEF outlook.
First, and most important, my assumption regarding displacement of the car via the car-free lifestyle options of telecommuting, small electric vehicles, online retailing and smart neighbourhoods are certainly not mainstream. This assumption strongly reduces demand for that highly economically inefficient transport mode where electric cars are at their most attractive: daily commutes to the office and the shopping mall. It also leads to lower oil prices, increasing the competitiveness of ICE vehicles. On the other hand, BNEF assumes more traditional car usage patterns with potential future electric car benefits from shared mobility in cities (an increase in city driving demand).
Second, BNEF assumes quite aggressive battery pack cost reductions, falling by two-thirds to $62/kWh by 2030. I’m a bit more conservative regarding battery cost reductions due to slower expansion of the electric car fleet and expected cost increases of key raw materials. In addition, I’m more optimistic about possible advances in hybrid drivetrains (with further CO2 reductions from biofuels) and fuel cells (fuelled by hydrogen produced from flexible plants designed for integrating more wind and solar).
Conclusion
Even though electric cars are of little significance to global CO2 emissions when correctly compared to hybrids, the development of electric mobility will still be fascinating to watch over coming decades. Incentives are being wound down, but a general electric car optimism remains as exemplified by regular media stories about the imminent demise of the ICE and several aggressive government targets for electrification. It will be very interesting to see how electric cars fare when the climate reality eventually forces markets into technology-neutrality.
Regardless of direct CO2 emissions, advances in the personal mobility space are crucial for general economic efficiency with large indirect implications on the trade-off between economic growth and climate change. In this respect, I sincerely hope the trends toward smart, efficient and safe car-free city zones prevail over the trends towards larger and heavier electric SUVs used predominantly for short trips through the urban jungle.
Still, the successful introduction of electricity as a mainstream transportation fuel alternative (next to other alternatives like biofuels and hydrogen) is very useful for breaking oil’s monopoly and securing low oil prices for the long-term future. Next to telecommuting, small electric vehicles and online retailing, these alternative fuels will result in a much more balanced and stable transportation market. Each of these options will carve out its own niche in terms of application and region, thus preventing a global domination by any single option.
So, what do you think? Am I too optimistic in my predictions of broad acceptance of smart car-free lifestyles? Will the ICE go the way of the dinosaur within the next decade or two? I’d be interested in reading your critique below.
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Schalk Cloete is a Research Scientist at Sintef
Frits Maas says
I don’t know why anyone would want an ICE over a BEV when the cost parity is reached in mid 2020’s. The BEV is faster, quieter, more convenient to charge (at home vs on the road), more reliable (less moving parts that can break down), cleaner and cheaper to maintenance. You look at it as if they are two identical products where the only difference is the pollution but they are in a different class. Combine a superior product with stricter pollution standards in many cities and countries around the world and the transition will go way faster than you can imagine.
Schalk says
As pointed out in the article, incentives already cancel out the entire cost of the battery pack in markets like the US. So, for all practical purposes, BEVs are already beyond cost parity. But still, sales are rather disappointing. This suggests that, at cost parity, the total freedom granted by ICE cars in terms of long range and rapid refueling are more valued by the average mass market customer than the BEV advantages you correctly list above.
There are many old polluting cars on the roads, but modern gasoline cars, especially hybrids, have very low local emissions. Peer reviewed studies like this one (https://doi.org/10.1016/j.atmosenv.2016.03.017) even suggest that BEVs have no positive impact on local particulate emissions because of their added weight. Hence, pollution standards that actually benefit the people will not help BEVs much.
Peter Farley says
1. The Timmers and Atkins article is behind a paywall however it appears that it is already out of date. Many electrified versions of existing vehicles may have been 24% heavier but that is no longer the case, The Tesla model 3 weighs about the same as an equivalent BMW 3 series and a Hyundai Kona EV is only 10% heavier than the diesel version of the same vehicle.
Schalk says
Well, from the information on the Hyundai UK website: https://www.hyundai.co.uk/brochure-request/download, regular 2WD Konas have a kerb weight of 1223-1342 kg, whereas the electric Kona has a kerb weight of 1685 kg. Hence the electric version is anything from 26-38% heavier…
Peter Farley says
The electric Kona is a considerably higher spec model than the basic 2WD
Schalk says
I don’t think a few options will add the weight required to bridge the gap between the 10% increase you quoted and the 26-38% increase calculated from the official documents I linked above. Please give some more detail for how the specs can make this large difference.
S. Herb says
The estimates for ICE cars are probably too high. There is a good chance that in the course of the 2020’s the revulsion for oil and the oil industry felt by some of us will spread to the general populace, affecting both individual and political choices. This will also hit the hybrid sales. The motivations to expel ICEs from cities will increase, including in the developing countries where they are even more of a plague. It is important to keep up the EV and battery momentum so that affordability will match the social movement. I would prefer that this is accompanied by a factor of two reduction in the number of cars but that will take quite awhile. We must push on all of the alternatives and telecommuting will be suitable for only a limited number of people.
Schalk says
I certainly agree that we should push all alternatives and break oil’s monopoly. The second-last paragraph of the article sums this view up nicely.
Note that the “others” slice in the graph will also contain some fuel cell cars, taking away even more ICE market share. However, at this stage, it is to early to venture a reasonable guess at the future of fuel cell cars.
As mentioned in my reply above, I don’t think that modern ICE vehicles are much worse for the local pollution than BEVs. My guess is that most large cities around the world will realize this and choose the emissions tax route instead of the all-out ban route. Under a technology-neutral local emissions tax, hybrids will probably experience minor or even negligible penalties relative to BEVs.
Peter Farley says
It is interesting to try to discern the effects of all the trends you identify.
1. I think you are right about a decline in car intensity but I think it will happen much faster than your forecast. The present troubles of the private car industry will not go away, they will get worse with congestion charges, tolls, increased cost of parking etc affecting all types of drive-train.
2. Cheap oil is possible but not very likely. As oil becomes less important all the tax breaks for exploration and production are likely to be wound back and pollution standards tightened, requiring more expensive processing. Taxes on oil will probably shift but increase
3. It is not credible that tax free gasoline is cheaper than tax free electricity, the gap may be smaller than it appears now, but when all pollution costs are taken into account electricity is now cheaper than gasoline or diesel. Even if gasoline was cheaper per kJ an electric vehicle uses 1/4th to 1/8th of the energy per km and hybrids don’t change that much
4. At the moment people are still wedded to the fast fill long range paradigm of the ICE vehicle, but more and more studies are showing that 150 km range is adequate for most applications even taxis and metro area delivery vehicles. While drivers have to stop for lunch or comfort breaks, ubiquitous charging will mean that 150 km range is adequate. Once people are more confident of their charging options they will realise the cost of buying and carrying around batteries with 500 km range is unnecessary for about 90% of vehicles, particularly if inductive charging at the equivalent of taxi ranks becomes a thing. Even for longer distance journeys 300 km range is adequate, with 300 kW charging not far away, a 10 minute break every two hours will add 250-300 km range.
5. While you say there is an adequate selection of EVs available, that is hardly the case. a) There are thousands of ICE models and variants available in for example the US versus less than 20 plug in models
b) Some of those vehicles have very long deliveries and/or are only available in a few states.
c) Many car dealers even if they have an EV product de-emphasise them because the sticker price is higher or more likely the service revenue is lower.
d) In the US in particular there are no electric pickups and only three SUVs, i.e. three models to cover 60% of US light vehicle sales.
6. Range anxiety is still a deterrent, yet once people own EVs very few want to go back, they find that a) the benefits far outweigh the disadvantages, b) the range thing is not in fact a problem, but it takes a long time for that to permeate through the community.
7. There is still very little advertising for EVs as most manufacturers in the west can sell more than they can make.
Schalk says
Yep, this is certainly an interesting exercise. As I said in the first article in this series, the only thing I’m sure about is that I’ll be wrong. But it will be very interesting to gradually find out why I was wrong and by how much 🙂
On to your points:
1. I sure hope you’re right about this one. There are good reasons to predict a decline in the car market, but there is also a rapidly growing demand for mobility from the developing world. Hence, my more conservative estimate of car sales declines.
2. Average production costs for oil are very low. Prices just shoot up during times of high demand (or OPEC problems) because global prices are set by the most expensive producer. When oil demand starts dropping, very little new investment will be required and prices will plummet.
3. Please see the links in the article to the Ioniq MPG figures to see that the BEV is 3x more efficient in the city and 2x more on the highway. Feel free to repeat the calculations I made for the second graph in the article, but to me it appears clear that BEVs offer very little fuel savings relative to hybrids when taxes are backed out.
4. As illustrated in the aforementioned graph, BEV fuel costs become considerably more expensive than hybrids when charging from daytime fast chargers. For high-use applications like taxis, the tradeoff will be between a small battery pack and expensive daytime charging or a large battery pack and cheap night-time charging. Sure, 150 km range is adequate for most applications, but people buy cars for compete freedom, not 90% freedom. Sales data clearly illustrate this.
5. Sure, I agree that there are caveats to the very low BEV market share in the US despite incentives cancelling out the entire battery pack cost. This is stated in the article.
6 & 7. I agree, but it is taking surprisingly long. The Model S has now been around for 7 years. The Leaf for nearly a decade. And throughout that time, there have been strong incentives making EV ownership costs equal or less than that of conventional cars. Many EV enthusiasts compare electric cars to smartphones, but the adoption has moved at a snails pace relative to that benchmark. Perhaps we stand today on the cusp of the long-predicted step change, but with incentives starting to wind down, I doubt it.
Peter Farley says
It is not clear that FCEVs will weigh much less, but they will still be more expensive to operate because the energy conversion efficiency is so much lower and complexity and therefore maintenance higher.
If batteries with 500 Wh/kg become available ( much more likely than cheap fuel cells) and ubiquitous charging is available at every fifth parking spot the so called freedom will be even more easily attained with BEVs than finding rare H2 filling stations
Bas Gresnigt says
Many people value the freedom that present ICE cars offer. Only the FCEV offers similar (or even slightly better) freedom with its long range and fast refueling.
People want more convenience when they buy a next car.
Because FCEV’s weight less, they may become also cheaper than BEV’s which have a shorter range (especially when mass produced fuel cells become cheap).
Then the FCEV will take the market starting with drivers that need to drive long distances, gradually taking over the market for shorter distance rides.