The Impending Electrification of Transportation
How will it unfold? Fast and furious, if history is to be a guide
I’m not buying a gasoline-powered vehicle ever again.
From the moment I brought home the first Nissan Leaf seven years ago, I knew it was game over for the internal combustion engine. Forget about the environmental virtues and express lane privileges on Californian highways — the electric car is simply more fun to drive. In the intervening years, electric vehicle (EV) products have improved by leaps and bounds, with a proliferation of consumer choices. But for EVs to truly gain mass adoption, the infrastructure required to refuel these vehicles has to be rolled out at scale.
Fortunately, America has done this once before: in the span of about 15 years in early 20th century, a nationwide network of fueling stations sprang into existence.
The Extraordinary Tale of the Ordinary Gas Station
At the turn of the 20th century, gasoline was still considered an unwanted byproduct from processing kerosene. This highly flammable liquid was not available in urban centers. Instead, the few outposts that carried it in early 1900’s were located outside of densely populated areas due to fire danger. Early automobile owners relied on a jerry-rigged system of tubes, funnels, sediment filters, and gravity to pour fuel into their sputtering engines. The dangerous combination of spills, discarded gasoline-soaked rags, misfiring engines, and cigarettes created countless horrific explosions and fires in the early days before American ingenuity kicked into high gear.
The first gas station was conceived in 1905 by the Automobile Gasoline Company in St. Louis. It operated with a large gravity-fed storage tank overhead and an ordinary garden hose at its base. This simple contraption made refueling significantly safer and more accurate, and business thrived from day one. Others worked on technological innovations such as manually operated pumps in order to place storage tanks underground, thus allowing for safe refueling in cities.
By the time Ford introduced the Model T in 1908, the automotive world was advancing at breakneck speed. A total of 19,000 Model Ts were sold in the first year alone. In a span of ten short years, state of the art in transportation went from horse-and-buggies to mass adoption of automobiles, with 350,000 of them on the road by 1910. By 1920, there were 15,000 gasoline stations operating in the U.S.
In cities, the gas pump had become an integral part of the streetscape, with a rightful place on the sidewalk next to mailboxes and fire hydrants.
The pace of innovation and execution in the oil industry has not let up over the past hundred years, and this Goliath has continued to power global economic growth and prosperity. And what a Goliath it is — as of 2014, publicly listed firms processing and peddling fossil fuel are worth more than $4.6 trillion. It may sound odd to describe the electric utility sector as the David in this story, but with a combined market capitalization globally of less than $1 trillion in 2018, it is the up-and-comer in comparison. Electricity carries one significant advantage — with solar or wind as the power source, the marginal cost to produce one kWh of energy is essentially zero because there is no fuel cost. If done right, electricity holds the promise to provide cheaper and more convenient refueling.
Just over a hundred years ago, the convenience and low cost of gasoline, along with American ingenuity and hard work, enabled the rise of modern transportation infrastructure within 15 years. We are on the cusp of another revolution, driven by the same set of dynamics.
A Closer Look at Economics
Electric vehicles simply last longer than vehicles with internal combustion engines (ICEs). Wear and tear is limited to ~20 moving components in a typical EV, compared to hundreds if not thousands of parts under friction in a similarly equipped ICE vehicle. Tesloop, a service offering city-to-city shared-car transportation in Teslas, notably racked up more than 400,000 miles on one of its Tesla Model S in a little over three years. During this period, Tesloop spent a total of $19,000 on maintenance or about $0.05/mile, compared to similarly equipped ICE vehicles at 4x or 5x the maintenance cost. Early data from electric trucks, buses, and even school buses offer similar results.
As for longevity, the numbers from EVs are awe-inspiring. Proterra recently signed the Raleigh Durham Airport Authority with a five-year or 300,000 mile warranty on the electric motor and batteries, and a 12-year warranty on the chassis. Tesla famously offers an “infinite” warranty for its cars and Solar Roof product.
From an economic point of view, total cost of ownership is thus getting cheaper for fleets to operate EVs, and it will only get better in the years to come.
The only thing left, then, is convenience.
Just as you would never visit a “smartphone fill-up station” on your way home from work to charge up your phone, EVs have the potential of being more convenient to fill-up than ICE vehicles. Think about how many electrical outlets there are in your house or at your workplace. I haven’t done a detailed survey, but in a given square mile of suburban area where I live, I’d bet electrical outlets probably outnumber gasoline dispensers 500 to 1. The groundwork is laid for electricity to be the preferred choice for easy fueling. There is much work to do to realize this vision — faster charging, more prevalent charging outlets, common plug standards, just to name a few.
The good news: we’ve done this once before and it will all unfold again in the coming decade.
Vic Shao is the Founder & CEO of AMPLY Power, Inc., a charging-as-a-service provider to fleets transitioning to electric vehicles. Prior to AMPLY, Vic was the Founder and CEO of Green Charge Networks, an energy storage company which managed electric demand for its clients and became the #1 distributed storage provider in the world. In 2016, Green Charge was acquired by ENGIE, the largest electricity provider globally with 150,000 employees in 70 countries.
