Electric Cars Soon to Be Reality for All of Us

People within and outside the auto industry have been making arguments for electric vehicles for decades.  In some cases, the proponents of electrification were mocked as “tree-huggers” despite the fact that GM launched an electric car as far back as the late 1990s.  Making matter worse, the economic equation for electrification didn’t add up, as electric or hybrid vehicles were more expensive than traditional vehicles.  When gas prices fell in the early 2000s, America’s love affair with big cars and SUVs gave the auto industry an incredible jolt – one that pushed electrification way down the agenda until now.  With all due respect to Tesla and the sliver of electric cars on the road today (1.1%), electrification is still in its infancy.  Yet, the big boys are now “all in” on electric vehicles, and we will see major changes in the coming years.

First, the finances

The politics of Global Warming has less of an impact on the future of electric vehicles than you may think.  The most important factors are financial, including the cost to produce batteries and the price of fossil fuels.  According to a recent article in Bloomberg Businessweek, electric cars will be as cheap as gasoline models by 2025, and battery manufacturing capacity will triple in the next four years.  When the cost to produce electric cars matches that of gas vehicles, the market will take off.  To date, one of the major concerns was the cost and supply of lithium-ion batteries. Global production is on the rise and economies of scale are kicking in.  Soon the costs associated with owning and operating an electric vehicle will match that of a traditional gas-powered car, and this will drive the future for electrification.

 

Electric performance cars from Infiniti will hit showrooms in 2020.

 

Let’s talk about fossil fuels and emissions

Fossil fuels cause pollution, and the auto industry and governments worldwide have been cutting emissions on vehicles since the 1960s.  The transportation sector accounts for significant greenhouse gases, and here is where Global Warming enters the equation.  Where you stand regarding the politics of climate change doesn’t matter because large and influential countries around the globe have committed to cutting-out fossil fuel powered vehicles.  The British and French governments have said they will ban sales of gasoline-driven cars and diesel-powered vehicles by 2040. China, the world’s biggest car market, is also tightening rules to push the move toward electric cars.

The reality is that gas powered engines are old technology.  Even though the classic internal combustion engine has been greatly refined through many iterations in recent decades, it continues to be an inefficient machine.  A typical gasoline car converts only about 20% of the chemical energy in the fuel into useful work.

Electric vehicles are three times more efficient than gasoline vehicles as about 60% of the electrical energy is converted into power. This lowers operating costs significantly.  Electric vehicles also have fewer moving parts, can accelerate faster than gas cars and, as an added bonus, can have no emissions.

It’s important to note that there remains room in the marketplace for internal combustions, so don’t disregard our love affair with American muscle cars anytime soon.  We still love the roar of classic cars, but we will see more electric cars soon.  I also believe the safety, performance and efficiency of today’s car will have a lasting legacy on the automotive world.

A note on our dependency on foreign oil

The global petroleum industry is greatly influenced by the Organization of the Petroleum Exporting Countries (OPEC.)  As of last year, the 14 countries accounted for an estimated 44 percent of global oil production and 73 percent of the world’s “proven” oil reserves, giving OPEC a major influence on global oil prices.  While part of OPEC’s mission is to ensure the stabilization of oil markets and secure a regular supply of petroleum to consumers, it holds tremendous power over the rest of the world.  In my opinion, any long-term trend that removes the balance of energy power away from OPEC is a good move for America and our allies.

 

Rendering of interior of Honda’s Urban EV — could be on the road in Europe as soon as 2019

 

Coming to a dealership near you – by the mid-2020s

The move to electrification is not conjecture.  It is happening across the board as every major manufacturer, and some smaller ones, are committed to electric vehicles.  General Motors recently announced that it is ending its reliance on gas and diesel.  The company said it is working toward an all-electric, zero-emissions future. GM will have two new, fully electric models in 2018 and then at least 18 more by 2023.  Expect new all-electric models to be a mix of battery electric cars and fuel cell-powered vehicles.

What will this do for the current dealership model?

Of course, no one likes to see upheaval within their industry, but we expect great opportunity from electrification.  We will have new models across all of our brands – each rolling out on independent timelines, but it is an inevitability.  Just like their gas-powered predecessors, electric cars will need a marketplace to be displayed, test-driven, sold, leased and serviced.  We expect it will be an exciting time for our industry.

Will these cars look cool?

With the top manufacturers spending considerable resources, we know that the new electric vehicles will have excellent performance and some great new features.  Without the restrictions of the combustion engine, engineers have a new canvas to design and re-imagine how we travel.

 

Audi E-Tron — Absolutely Cool.

 

Audi, for example, is testing cars that can be recharged to 80% in 30 minutes and have a driving range of 311 miles. Some vehicles can achieve 0-60 mph in less than 3-seconds and also include panoramic OLED panels that display a wealth of information, including what’s going on around you.  The newest vehicles will also have an array of lasers and cameras around the outside to enable self-driving capabilities.  Yes, these new vehicles will be cool, inside and out.

While your neighborhood will not be overrun with electric cars next year or even the year after that, expect that they will enter your auto-buying equation sometime in the next 8-10 years.  Electrification is no longer a flight of fancy.  It is an inevitability.


Make it a Great Day!

Mario