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My last post was pretty dark and dire, so here’s something a little more cheerful and optimistic. One of the most important and positive trends that I’ve been trying to highlight over the past few years is the amazing progress in battery technology. Huge increases in energy density and even bigger declines in manufacturing costs have made batteries competitive with combustion engines for a large variety of applications. The most important of these is transportation.
At the beginning of this year, the big story about electric vehicles was that sales were slowing down. Detractors of EVs — and there are a lot of them out there — declared that EVs are a flash in the pan, that interest is already waning, that the problems of EVs would prevent them from ever displacing internal combustion cars, that EVs will never be viable without subsidies, and so on. Essentially, the story was that the EV revolution was over, or at least stalled indefinitely.
That narrative has now essentially collapsed. EV sales reaccelerated in the U.S. after just a couple of months, and their market share has hit a new record high:
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And EVs continue to outsell combustion cars:
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Nor is there any sign of a slowdown at the global level:
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A number of developing countries are seeing truly spectacular growth in EV sales:
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So EVs are still winning. But they haven’t won yet; only 4% of the global passenger car fleet, 23% of the bus fleet, and less than 1% of delivery trucks are electrified.
But at this point I think the writing is on the wall. The phenomenon of a superior technology displacing an older, inferior technology is not uncommon, and it generally looks like the EV transition is looking now. When a new technology passes a 5% adoption rate, it almost never turns out to be inferior to what came before; with EVs, that threshold has now been reached in dozens of countries.
In fact, we don’t have to rely on trend-based forecasting to understand why EVs are just going to win. There are a number of fundamental factors that make EVs simply better than combustion vehicles. The longer time goes on, the more these inherent advantages will make themselves felt in the market.
The first of these is price. Currently, EVs often require government subsidies in order to be price-competitive with combustion cars. But batteries are getting cheaper and cheaper as we get better and better at building them. The cheaper batteries get, the smaller the subsidies required to get people to switch to EVs. Goldman Sachs reports that this crucial tipping point will be reached in about two years:
Technological advances designed to increase battery energy density, combined with a drop in green metal prices, are expected to push battery prices lower than previously expected, according to a new briefing from Goldman Sachs Research…
Goldman Sachs’ researchers further predict that average battery prices could fall as far as $80/kWh by 2026, which would equate to a drop of almost 50 per cent from 2023 levels.
It is at this point that the investment giant expects battery electric vehicles could potentially achieve cost parity with ICE vehicles in the United States on an unsubsidised basis.
Once batteries cross that tipping point, the EV revolution will take on its own momentum. It will simply be cheaper to buy an EV than a combustion car. People will gravitate toward the cheaper option, especially if it comes with other advantages. And in this case it does.
EVs’ second advantage is convenience. Most EV owners will almost never have to fill their cars up at a station. This is because they will charge their cars at night, in their own home garages or driveway.
The BYD Atto 3 has a range of 260 miles. Suppose you only charge your Atto 3 halfway every night, to preserve the battery life (just as you would for your phone). That’s 130 miles. And let’s say that just to be on the safe side, you’d stop driving at 100 miles a day.
Very few Americans drive their cars for more than 100 miles a day! The number is less than 1%. In fact, the average miles driven per day is around 40. Which means that as an EV owner, on all those days when you don’t drive over 100 miles, you will never have to visit a charging station at all, any more than you now visit charging stations for your phone.
I suspect that many Americans still don’t understand this basic fact about EVs. They’ve spent their entire adult lives periodically visiting gas stations to fill up, so they naturally imagine that they’ll be doing something similar with an EV — visiting a charging station whenever their batteries get low. But that’s not how EVs work at all! They’re more like a phone than a car — you plug them in at home, so you almost never have to charge them when you’re out and about.
Of course, this doesn’t work for everyone, because not everyone has a place to charge their car at home. If you use street parking instead of a driveway or garage, it’ll be a lot harder for you to own an EV. But fewer than 10% of Americans park on the street when they’re at home. If you live in an apartment complex, that complex will eventually have EV chargers in most or all of the spaces in its parking lot, especially as EV adoption increases.
This means that simply comparing how long it takes to charge an EV vs. how long it takes to fill up a combustion car’s gas tank makes absolutely no sense. With a combustion car, you’ll be going to the gas station