Prediction 3 – E.V.'s Reach An Inflection Point
Five years ago, in my predictions for 2019, I wrote that electric vehicles would become cheaper than petrol and diesel cars. Taking running costs and depreciation together, that is, now true, though the price of electric vehicles remains higher, particularly as the initial (30%) £3,000 discount off your first EV was scrapped by the government. The imposition of lockdowns between 2020-2022, has frozen the development, but with lockdowns removed, the pace of that development is set to accelerate once more. During lockdowns, many people couldn't buy any kind of new car, and even when lockdowns were ended, and car production resumed, waiting lists stretched out to more than a year, which pushed up the price of nearly new, used cars. The frictions caused by the aftermath of lockdowns, together with the increasing protectionism, as US imperialism attempts to deny China access to trade and technology, has also slowed that development, as well as raising the costs of EV production, and batteries.
During lockdowns, many people were also simply unable to drive in the way they did before. In my own experience, I went from driving around 20,000 miles a year, down to around 1,000, and in the following period that hasn't risen that much, yet. Consequently, many people have less reason to swap cars, given the initial cost of purchase. As people begin to drive more, but still over relatively short distances, the advantages of EV's become even clearer. Across the globe, demand and production of EV's continues to rise significantly, and this increased level of production, will itself bring economies of scale, reducing costs, and consequently prices, which will stimulate further demand, as has happened with all such new products in the past.
Car companies have invested far too much fixed capital in EV's to now, look backwards, or slow the transition. The faster they replace petrol and diesel the better for those companies, as they can utilise fixed capital more effectively, and, thereby, increase their rate of profit. Many had said they intended to stop production of petrol and diesel vehicles by 2025, but two years of lockdowns has delayed that, and, as governments have pushed back the date at which they are required to do so, that has fed into that. However, it seems clear that the producers will end production much sooner than required by law. One of the main reasons that governments have pushed back the date for ending petrol and diesel engine production, is that they have fallen down on the job of ensuring adequate charging infrastructure, and as they are, again, looking at measures of fiscal austerity that looks set to continue.
Governments have failed to ensure a planning and development environment in which all of the required number of charging stations can be established, and, unlike petrol stations, supplied by tankers, charging stations, particularly fast charging stations, require considerable infrastructure in terms of power supply, and connections to the grid. Moreover, there is a lack of consistency of the charging points and systems. Many are unreliable or non-functional, pricing varies considerably, and a plurality of suppliers have introduced a plurality of payment systems, required even to charge your car. For one thing it assumes you have a smart phone, in order to download the relevant app, and if you may never use it again, that is a deterrent. Different car producers also have different standards for connection to chargers. Governments should have ensured standardisation of all of that, and it is, again, an obvious advantage of regulation by a large single market such as the EU.
Increasing protectionism makes that more difficult, with Republicans in the US, already talking about delaying and obstructing EV production in the US, which will further damage the US car industry, as global producers steam ahead with EV production, leaving the US trailing technologically, and so damaging the interests of US car workers, in the years to come, not to mention US workers as a whole, as consumers. However, much as with the symbiotic relation between car producers and oil companies in the 20th century, so that relation continues with EV's. The big oil companies, like BP, are increasingly rolling out charging stations, such as BP Pulse. They have an incentive to make charging as simple as refuelling a petrol or diesel engine car, by simply plugging in, and using a payment card. To do that, it is in their interests to be able to standardise, and to have the car producers also standardising their charging systems.
The initial inflection point is going to come from all of those drivers who benefit from the cheapness of electric over petrol or diesel, and for whom the constraints of available charging points, and range is not a significant issue. There are probably few people, who drive down to Spain, as I used to do, more than a decade ago, and for whom, range anxiety would, then be a problem. The majority probably drive at most 100 miles a day, and can charge up their car overnight, or even at work. Just a few hundred yards from me, there is a large tech company with numerous charging points on its employee car park, and opposite, a Premier Inn with charging points for customers.
But, as the charging infrastructure improves, across the EU, even the undertaking of longer journeys need not be a severe problem. Even with a petrol or diesel engine, its necessary to take a break every four hours or so, and in that twenty minutes, the car can be recharged, provided adequate facilities are available. Modern SatNav and Infotainment systems not only detect when its necessary to refuel/recharge, but do so, whilst pointing to the nearest service station etc. Having that as simple as current arrangements for petrol and diesel may take several years, but it will follow inevitably from an accelerating pace of adoption of EV's.
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