Hitting 50% EVs Won’t Be Easy
By decade’s end, half the new cars, trucks and crossovers sold in the U.S. will be EVs. But that’s only if the automotive industry lives up to the executive order signed by President Joe Biden last week.
The president’s mandate won widespread praise from automakers. “You can count on Toyota,” the Japanese giant said in a statement. Detroit’s Big Three jointly declaring their intent to “enable these ambitious objectives.”
While skeptics questioned whether the industry will follow through on what one derided as “loophole-riddled” rules, manufacturers plan to rapidly ramp up EV production. A study by global consulting firm AlixPartners estimates they’ll invest $330 billion electric vehicle development by 2025. Yet, even if automakers prove their commitment, meeting a 50% target is far from assured.
Reaching the Target
“There are plenty of challenges on the manufacturing side, and getting consumers onboard is far from certain,” says Stephanie Brinley, principal automotive analyst with IHS Markit. ”But we have a lot of momentum that, if we put ourselves to work, a lot of these challenges can be overcome.”
There are three primary ways to reach the 50% target: plug-in hybrids (PHEVs), pure battery-electric vehicles (BEVs) and hydrogen fuel-cell vehicles (FCVs). Each has unique advantages, as well as challenges. And not all manufacturers plan to take the same approach.
Toyota and Honda, for example, will rely on a mix of all three technologies. “We are not anti-BEV. We want BEVs to succeed,” says Chris Reynolds, chief administrative officer for Toyota Motor North America. But the automaker isn’t convinced pure electric technology is ready to take over.
Even manufacturers like General Motors, Volkswagen and Mercedes-Benz, which are focusing specifically on BEVs, acknowledge the list of obstacles is a long one, starting with the need for cheaper, longer-range, faster-charging batteries. During last Thursday’s signing ceremony, the president spotlighted the need to build a massive, cross-country EV charging network.
And, no matter which zero-emission technology wins the race, the biggest hurdle could be winning over consumers.
Add up all forms of “electrified” vehicles–including conventional hybrids–and they generated barely 6% of U.S. sales last year, according to MotorIntelligence. The products covered by Biden’s executive order barely amounted for 2%.
Momentum is Building
But, as Brinley noted, momentum is building. During the first half of 2021, demand more than doubled. Much of that was driven by Tesla which delivered a record 201,250 battery-cars during the second quarter. But its market share actually shrank, says Sam Abuelsamid, lead auto analyst with Guidehouse Research pointing to the numerous new competitors who’re coming to market.
There are PHEVs from brands as diverse as Hyundai and Mercedes-Benz, and Toyota recently redesigned its hydrogen-powered Mirai. But the floodgates are opening in the BEV segment with 2021 bringing models like the Ford Mustang Mach-E, Volkswagen ID.4 and Polestar 2. And the months ahead will bring more offerings from Tesla, GM, Mercedes, BMW, Mazda and other established automakers, as well as new brands Rivian and Lucid.
Not only is the range of choices expanding, but prices are beginning to reach more mainstream buyers. For 2022, Nissan will start its Leaf BEV at $27,440–that means it costs under $20,000 after factoring in $7,500 in federal tax credits.
While prices drop, range increases. Most new models nudge 250-miles, many 300. A version of the Tesla Model S delivers over 400. Lucid promises a version of the new Air sedan will top 500 per charge.
Newer battery technologies, such as the solid-state cells that could come by the second half of the decade, should store even more power in smaller packages and at lower cost. Boston Consulting Group foresees batteries dipping to $70 a kilowatt-hour, down from $150 today. At that price, it forecasts, BEVs would achieve price parity with gas models.
But Biden highlighted another challenge last week.
Day-to-day, “80% of EV owners will charge up at their home or office,” predicted Pat Romano, CEO of ChargePoint, which operates one of the country’s largest networks of EV charging stations. That’s great when traveling near home, but the president wants a nationwide network of 500,000 charger ports to ensure EV owners can travel with the same level of freedom motorists have today.
Even if Congress doesn’t grant Biden the money that would take, the charging network is growing fast as companies like ChargePoint, EVgo and Electrify America see future opportunities.
Charging up can be a laborious chore, most BEVs taking over an hour just for an 80% “fill-up.” But many experts believe solid-state and other future batteries will slash that. GM President Mark Reuss said the company’s target is down to around 10 minutes.
Most EV owners today charge up at night when there’s currently a surfeit of energy available. But that could change when millions more plug-based vehicles roll out each year. And the vulnerability of the U.S. electrical grid was highlighted by recent crises such as the blackout much of Texas suffered during last winter’s ice storm.
“We have to recognize that the (electric) infrastructure in parts of this country has fallen behind that in many other parts of the world,” said Scott Hinson, the CEO of Pecan Street, an Austin, Texas-based energy research firm.
Then there are the challenges of ensuring the supply of batteries. Some components, like cobalt, come from foreign sources that might prove unreliable, experts fear. New extraction methods could help tap vast domestic sources of lithium, such as California brine salts. Tesla and other automakers are directly lining up their own mining deals to ensure steady supplies.
The list of challenges goes on and on. Fuel-cell vehicles will need ready supplies of hydrogen, for example, requiring not only energy to produce the gas, but a distribution infrastructure similar to the charging network Biden wants.
Add it all up and it’s the automotive equivalent of a moon shot. And not everyone is convinced it’s do-able, though in times of deep national polarization, there’s a political element to the opposition.
“It’s extremely important we push past the political polarization we’re facing now,” said David Cole, the director-emeritus of the Center for Automotive Research. “The move to EVs shouldn’t be politicized.”
While he’s not sure the 50% target for 2030 will be met, Cole said that we could come close if industry and government come together and get behind the transition.