E-Mobility: Will petrol stations disappear?
An electric car is nothing new. Henry Ford and Thomas Edison, 100 years ago, tried to build one but failed. What would happen if they had actually succeeded? Nobody can answer this question. And now, Europe is entering a new automotive revolution adopting usage of electric vehicles on a daily basis. Across the world, the established models of the automotive industry are increasingly better. Worldwide sales reached a record 88 million cars in 2016 including more than 870,000 electric cars, up 5% from a year earlier. One-fifth of non-electric cars were made in Germany recognized as the leading producer and sales market. Despite this fact, a new champion has appeared on the horizon. According to the Big Four, China produced 43 percent of EVs worldwide in 2016. And now the country has the largest fleet of EVs in the world, overtaking world powers like the United States and the European Union. From this overarching point of view, the Chinese Electric Vehicle Index (EVI means electric vehicle adoption and preparedness) is growing rapidly. Compared to Germany which is the strongest economy in the EU, the country produced 58,000 EVs in 2016. But, while it may seem unclear, the global demand for EVs is huge and will continue growing.
The human mobility is undergoing a rapid transformation. The megatrends (urbanization, demographics, consumption, and infrastructure) are rewriting the world affecting science, technology, and innovation. It requires and enables both social and technological innovation on a large scale to get better economic results and significant growth calculated by national GDP. The world entered a new path where decarbonization of the energy system processes plays a significant role. The human migrations and desire to quickly move between point A and B globally, make the automotive industry and transport sector incredibly dynamic. The EVs and smart transport boom is generating an additional demand for electricity causing a lot of troubles in national grids. For instance, electric cars could increase peak demand electricity by 8GW by 2030 (Poland had 6.4GW of installed onshore capacity at the end of 2017 — Global Wind Energy Council ) according to UK National Grid. Using information from Germany as an example, EV growth will not be likely to cause large increases in power demand by 2030 — potentially adding about 1% to the total. So it’s clear that the demand will depend on the country in question and condition of the electrical grid system. Again, taking Germany as an example, it is predicted that the national power grid system will most likely absorb the higher EV electricity demand.
Electric vehicle benefits and limitations
High costs, range anxiety, and low awareness are the most often cited barriers to use electric cars. Nevertheless, there is a sizable segment of amateurs who are willing to switch to EVs in spite of those defined barriers. According to McKinsey & Company research shows that this group of people are in line with high-income, well-educated consumers who are looking to both save money and protect the environment.
Although many factors such as brand, performance, and design are really important features considered by potential consumers, three key motives for electric car adoption emerge:
• Reduction of carbon footprint,
• Driving benefits,
• Cost savings.
To handle pollution problems, governments around the world are implementing ambitious policies to promote usage of electric vehicles by tax deduction or free of charge access to center zones in cities. Other countries such as France or the United Kingdom both plan to ban the sales of petrol and diesel-only cars by 2040 (The Guardian, 25 Jul 2017) while India set up the year 2030 for this action. At the country level, a shift away from natural fueled conventional vehicles seems a way for European counties to meet their commitments to reduce CO2 emissions under the Paris Agreement (an ambitious plan to reduce CO2 and stop global climate changes signed 12 December 2015 ). Electric vehicles reduce air pollution but they also increase the demand for electricity.
As it was already said, national governments create some benefits to stimulate electric vehicle (EV) sales such as preferential parking spots (areas) (e.g. Amsterdam) or the ability to drive in bus lanes (e.g. Germany). The latter, however, seems to be controversial. Many cities including Berlin, Munich or Hamburg have already spoken against sharing lanes with electric or hybrid cars, saying that sales stimulation should be done using other factors. Other cities like London will not allow electric cars to use bus lanes at all. Instead, the city will use its government money to create more charging points and parking spaces around the city. For example, Estonia installed fast charging stations throughout the country — 165 in total and ensured that every city with at least 5,000 citizens (inhabitants) hosts at least one station. So EV driving benefits will depend on the country where you drive for the next few years until national policies of European countries will be changed.
Electric vehicles have only a tiny market share right now, but they will soon be as cheap as conventional cars. “Once the trend gets going, it can happen very fast,” said Guido Jouret, the chief digital officer at ABB, a Swedish-Swiss company based in Zurich whose businesses include constructing charging stations. EVs are drastically more expensive than petrol or diesel cars right now. But in some very specific cases, as a result of governmental support, they are even cheaper than new traditional engine cars. That’s why some consumers looking for benefits are ready to buy an EV. One of the most expensive parts of an electric car is the battery. According to statistics from 2010 to 2016, battery pack prices dropped around 80% from ~$1,000/kWh to ~$227/kWh. Current forecasts, prepared for instance by Tesla, put EV batteries below $190/kWh by the end of the decade and suggest ~$100/kWh by 2030. So there is hope one day you and me will have an electric car as well.
The next important factor which has a significant impact on the buying process of an EV is the vehicle range. Since the year 2013, the estimated range for EVs has increased significantly (Tesla Model S as an example) from 75 miles (126.7km) to 250 miles (402.2km). It means an increase of approximately 20–40%, mainly because of the size of battery packs. What is more, charging infrastructure plays an important role in this matter and has not been mentioned before. Currently, there are 127,000 charging points across the entire European Union including more or less 580 points in Poland.
One of the most innovative companies in this field is ABB which currently sells the best solutions for charging EVs worldwide. In Europe, where carbon emission reduction is a priority, countries invest a lot of money into solutions connected with renewable energy resources and devices minimizing CO2 emissions. The results so far are huge in Nordic countries for instance. Norway has the world’s highest market share for sales of electric cars (more than 22%). ABB has already delivered more than 500 fast charging stations there. Apart from this, the company is developing its own resources by setting up the Center of Excellence in E-Mobility in Montreal, Canada worth more than $90 million. What is more, the company takes part in many national and international innovative events. Impact E-Mobility in Katowice can be an example of this.
“EV” cars for the future
One of the most amazing events connected with electric cars is the international championship race organized in different countries. Bernie Ecclestone, the former chief executive of Formula 1, said to The Guardian that “he believes that sport needs to make a radical break with the past and embrace an all-electric powered future”. And he’s right. A new high-class initiative sanctioned by the Federation Internationale de l’Automobile (FIA) and owned by the Formula E Holdings started organizing Formula E championship race for single-seater electric cars. The first race was in season 2014–2015 and nowadays ten teams and 20 drivers including companies such as BMW, Jaguar, Renault, and Audi, compete with each other to get first place in a race. The fourth season of the race brought a new beginning. Formula E delivers world-class racing to 10 cities over five continents throughout the seven-month-long season. ABB as the title partner of the event, takes part in the championship race, too. Its really innovative and fully electric bolide is becoming a more and more important competitor in the race.
But actually what exactly is the electric car built of? EVs get power from the rechargeable batteries installed inside a car, usually in the trunk or below the car floor. These batteries are not only used to power a car but also used for the functioning lights and electric systems. EVs look like other gasoline-powered vehicles, except for the lack of an exhaust system. However, inside they are very similar to each other. It’s the same kind of batteries that are used when starting up a fuel engine. The only difference comes in the fact that in EVs, they have more batteries and they also store energy that is used in powering the vehicle.
One of the major true differences that you will find in EVs is the electric motor and the type of batteries used inside the car. In terms of batteries, there are various batteries to choose from however the most popular type is Li-ion batteries (Lithium-ion). Because of their performance, life cycle and very friendly technical parameters, Li-ion batteries are not only used in the automotive industry but you can also find them on your mobile phone. The main challenge with these batteries are minerals which are used to build them. One of the most random metals called Lithium is unavailable in Europe from natural resources so European companies transport it from outside the continent. For example, to extract lithium from brines beneath the deserts of South America, salt-rich water is pumped to a surface tank where it evaporates in the sun over a few months. It may sound simple, but the entire process is actually very expensive. Because of this, the price of lithium is really high and has a significant impact on the end price of an EV. Another way to receive lithium is recycling. However, what’s interesting, we only recycle 13% of electronic waste in Europe. The rest of it stays in your houses creating a new type of mining — urban mining. Automotive companies have to face this challenge.
Most importantly, EVs can be charged at home. This is one of the biggest differences between EV and petrol cars which need to be filled up at a petrol station. You can refuel your electric car using an ordinary three prong plug wherever you find a socket — unless you go abroad. While some owners choose to install a slightly more convenient plug at home for faster charging, it’s perfectly possible to use the existing setup system. Unfortunately, a disadvantage of this solution is that the charging process takes far longer than filling up a petrol or diesel car tank, usually several hours compared to a few minutes. As usual, there are some specific cases where some cars can be half-charged in a shorter time but this will be around 45 minutes. During this time, a car needs to be plugged in a socket which makes EV ownership difficult in some counties where charging points are not popular.
So just how green are EVs?
Environmentally, there are still some questions as to where electricity for electric cars comes from. There are only 17 countries worldwide which produce more than 90% of electricity from renewable resources. Some critics are pointing out that there are some indirect green gas emissions from electric cars which mainly come from the production process. Let’s see how actually it looks.
Multiple studies and research have found out that electric cars are more efficient and because of this, responsible for less greenhouse gas and other emissions — in theory of course. For instance, the EU study indicated that by 2020 electric vehicles will use two-thirds of the energy of a petrol-based car traveling the same distance. But currently, the statistics are not so friendly because of the fuel source for electricity. For instance, China is a pioneer in producing electric cars however coal-based power plants are the primary sources of electricity in that country (more than 70% of electricity comes from burning coal). In Germany, it’s less than 50% but it’s still a lot. Countries such as Japan, the Netherlands or the US have more than 25% of energy produced using coal. France and Scandinavian countries are exceptions in this summary. Both countries have a small percentage of coal energy sources. Take into account power plant emissions and your electric car. A gasoline car produces around 245 grams of CO2 per mile, EVs in China — 188 grams, US — 147 grams, Japan — 142 grams, UK -76 grams and France — only 2.7 grams.
Looking on the bright side of those numbers, driving an electric vehicle is still better for the environment than driving around in a petrol-powered car. According to Bloomberg, “running off electricity was 39% cleaner than using internal combustion engines in 2016”. And this change will become even more significant as by 2040 it is predicted that it could be 67% as renewable resources such as solar and wind power plants keep taking on a bigger and bigger share of the market.
While the numbers go down steadily on an annual basis if we are talking about carbon footprint, the real environmental impact occurs before an e-car has left the factory floor. One of the most famous German institutes — Fraunhofer Institute for Building Physics — revealed that the e-car production process takes twice the amount of energy to build one car as a conventional vehicle. The main challenge here is the battery as it was mentioned before. Swedish Environmental Research Institute estimated that battery production produces from 150 to 200kg of carbon dioxide equivalent per kWh of produced battery. But on the other side of the fence, Norwegian University of Science and Technology in 2017 indicated that “larger electric vehicles can have higher lifecycle greenhouse gas emissions than smaller conventional vehicles”. The point is not to make the argument for one technology over another, or discredit e-cars but to start making valuable and suitable calculations answering the question: do people save our planet by using EVs?
But what of the future? Will we get cheap, efficient and environmentally friendly e-cars from companies like ABB? Or will carbon dioxide emissions stay on the same level as nowadays? The benchmarking prepared by McKinsey & Company reveals that there are four main technologies which have the potential to radically change the mobility industry. The first of them is, of course, e-mobility, then connectivity and IoT, autonomous driving and diverse mobility. At this stage, we only focus on the first topic — e-cars.
There are a few macroeconomic trends which can help facilitate e-mobility. A customer potentially is considering a car price as the most important factor which influences his decision. That’s why national GDP growth has an important role in the entire process. It is expected to grow by 1.6–3.2% by 2030. What is more, global urbanization processes taken into account in connection with population migrations by 1.1 bln between 2016–2030, can influence e-cars, too. Because of this, EVs can be favored over conventional vehicles in cities, in general, due to zero emissions targets. Apart from this, numerous trends, ranging from oil and gas to mining sectors, are likely to forecast rising oil prices in the next 10 years. Rising oil prices and declining battery prices could put e-cars at cost parity in some scenarios by the year 2025.
Summary
Mobility is the lifeblood of the cities and towns where we live. Every day, public transport systems bring people to work and home. Vehicles deliver posts, food, and other assets. Mobility is what keeps urban centers functioning. Governments and local state authorities widely support e-mobility technologies by many different initiatives. As a result of this, people are more willing to buy a new e-car in exchange for the additional benefits.
Norway is expected to become the first country where one in every 100 cars is electric. It is a significant sign that governments will get people off fossil fuel (e.g. tax bonuses). Apart from this, e-mobility services including shared mobility could see accelerated growth after 2030, driven largely by the growing penetration of car fleets with autonomous vehicles. It is expected that Scandinavian countries will be the pioneers in those technologies and business models. On balance, the effects from future mobility can be expected to outweigh the effects of macroeconomic growth in developing markets but it will happen after 2030. According to research, 50% of all automotive and mobility-related revenue will account for digital services.
ABB is an example of a company which delivers the best fast charging points in the world. The company takes part in many international events and conferences connected to e-mobility solutions. As the demand for e-cars rises, EV technology and design will continue to change and evolve accordingly. The traditional suppliers of gasoline-powered cars will need to rethink their approaches and long-term strategies to preserve their revenue and profitability because of the global green power boom.
