Electric vehicles still only represent a tiny part of the automotive market, but all that is expected to change in coming years. CEO of RoofJuice Australia and keen EV rider Nigel Morris gives a personal view of the factors working for and against EVs in Australia.
Recently, Bloomberg New Energy Finance (BNEF) predicted that the mass market tipping point for EVs will arrive in around ten years (see ‘The EV tipping point’). The report suggested that mass market adoption is likely to happen faster than currently expected by many, and that pure economics will drive the growth.
I have used an EV as my primary source of transport for almost four years now. While my preferred ride is an electric motorcycle rather than a car, the issues affecting wider adoption rates are very similar, and I’ve experienced the good and the bad. Let’s start with the good.
Performance
My personal view is that performance is crucial to the take-up of EVs, and in that sense EVs have absolutely arrived. Acceleration, speed and a positive “seat of the pants feel” is now, in the upper end of the EV market, at the levels of high performance vehicles.
My little bike (a 2014 Zero DS) is capable of 0-100 km/h in around five seconds for around $20k, which is very respectable and a bucket-load of fun. I reckon I paid about a 20-30 per cent premium compared to a comparable internal combustion engine (ICE) bike, and the figures are similar in cars.
Although it takes a little getting used to, the lack of noise and snarl in EVs is soon forgotten. We have become trained to associate sound with speed, but it’s amazing how fast this sense can be relearned in a new, whisper-quiet adrenaline rush.
Ask anyone who has test-ridden good electric bikes and cars and they will almost always say the same thing: “Wow, awesome acceleration, just mind blowing” – and they get better every day. In my view, a lot of buyers experience and desire this emotional reaction and it’s a key reason I believe take-up will be faster than many predicted – they go like stink without the stink.
Cost of ownership
This is harder to quantify across the board, but in my case I’ve already paid off the premium compared to my 2000 model 1100cc V twin. Comparing the DS to a comparable new BMW F700 shows a payback of around 4-5 years. Almost half of the total savings (totalling $1,600 per year) are from maintenance costs, coming in at around 13 per cent of typical ICE bike costs. This is because there are so few mechanical parts to adjust and virtually none of the expendable items such as oils, air systems, ignition systems, gearbox and so on. More time riding, less time tuning and servicing.
The next biggest cost is fuel costs. Using the last 12 months of fuel pricing at an average $1.30 per litre and assuming $0.25 kWh for recharging, my running costs are almost 80 per cent lower than an ICE bike, saving me more than $500 a year per 10,000 km. Of course, if you recharge from solar at around $0.10 kWh, or from free charging stations, the sums get substantially better.
So as BNEF suggests, the economics are powerful. But will this be the main driver of mass adoption? I’m not so sure. Some consumers buy vehicles based on their economics, but I would argue that the majority buy on passion. How it looks, how it feels, quality of ride – the desirability factor is a very powerful force in automotive purchasing.
Now let’s look at the factors working against EV adoption.
Range anxiety
Okay, let’s deal with range anxiety and limitations. I’m a typical rider – I wish I did more long trips, but in truth I spend 99 per cent of my time commuting. I can and have pushed my range to the absolute limit, reaching a personal best of around 180 km on a single charge, but on a day-to-day level I have more than enough range. Yes, I have to be aware and I can’t just jump on and ride to Alice Springs, but frankly I can live with that. I will hire a bike for the odd long run until fast charging stations abound.
Until a few years ago, all the discussions were about how to jam more battery capacity into the bike and Zero Motorcycles has done a remarkable job at this with up to 13 kWh available. Car makers are improving every day, too. However, in the last few years the discussion has switched focus to bigger on-board chargers instead of bigger batteries. Bigger chargers are quite simply lighter and cheaper than bigger batteries. There is a sweet spot between the two that we are almost at now, with new products coming slowly but surely that get recharge times down to under an hour. While this still doesn’t make them a long-distance touring solution, it dramatically extends the potential as long as you can find a power point.
Charging infrastructure is crucial to all EVs, but it does not have to be expensive, custom-made charging stations. With larger on-board chargers the potential exists for millions of high capacity single phase or three phase outlets to be used as charging points. It may not be the ideal solution, but is a great use of existing infrastructure as a bridging solution and many EV owners, including me, have successfully done long range trips this way.
Personally, I think the utilities (who need to regain lost energy sales) should be all over this and installing pay-as-you-go three phase outlets at places such as service stations, public buildings, car parks, caravan parks and more.
Bridging charging infrastructure in this low-cost way would encourage consumers to adopt EVs until volumes justify dedicated charging networks.
Reliability
Both my electric bikes have suffered relatively minor problems that have taken me off the road temporarily. On my new one I blew a charger and more recently a DC-to-DC converter failed due to the wiring loom chafing. The charger was a home swap after a warranty replacement. The latest fault (arguably partially my fault for tinkering) has taken a couple of weeks so far to diagnose and sort.
All up, I think these issues are pretty comparable to what most vehicles would face, although overall I think it’s true that reliability is lower on newer technologies, including EVs. This is a pain that early adopters can live with, but needs to be sorted for mass market adoption. In Zero’s case, with around 50 bikes in Australia, finding trained service agents on your doorstep is difficult to say the least. What this also highlights is the massive rethink that is needed in distribution and support of EVs.
On the plus side, it is pretty cool to be able to almost instantly send an error log to the factory from the side of the road via the phone App and get feedback very quickly on likely faults. Virtual service and diagnostics is alive and well for me.
Currently the (very low) margins available on Zeros leave no room for great support by dealers; the margins and the volumes are out of whack. On ICE bikes the service costs and spare parts make up for low margins but on Zeros you get neither.
This is a huge issue, because it means dealers struggle to justify selling them and customers get inconsistent service.
The next steps
Of course, there are many more issues and intricacies that could be debated, but from my perspective as an owner these are the key ones.
In Australia, there are virtually no incentives to use an EV and in some cases there are actually disincentives, despite the enormous impact and high ownership cost of ICE vehicles.
I believe that mass market take-up will come when manufacturers develop new incentives for dealers and service agents to sell their vehicles.
The second key factor, especially for lower priced, lower capacity EVs, is recharging infrastructure. I think there is a massive opportunity for a bridging charging infrastructure in the near term which could be supported by manufacturers and government with wider societal gains.
In terms of policy, well, anything would do given that we have virtually nothing. Registration, stamp duties or taxes, charging equipment and insurance could all be reduced in the near term without the need for cash support. As volumes increase, EV-only CBD zones, transit lanes and emergency support programs would support consumer confidence.
Overall, I think the key is designing and building vehicles that compete on performance to speak to the passion of motorists. Comfort, style, ease of use and acceleration across various consumer segments is already proving to be a powerful factor and will become even more powerful as we progress.
The EV tipping point
In February 2016, Bloomberg New Energy Finance (BNEF) released a report that said a ‘tipping point’ for electric vehicles – where sheer economic logic will push them into the mainstream – would be reached by 2025, meaning the transition to EVs could happen much more rapidly than governments and oil companies have yet realised.
The research said that continuing reductions in battery prices would bring the total cost of ownership of EVs below that for conventional-fuel vehicles within this timeframe, even taking low oil prices into account. It forecast that sales of EVs would hit 41 million by 2040, representing 35 per cent of new light vehicle sales. This would be almost 90 times the equivalent figure for 2015, when EV sales are estimated to have been 462,000 (which, though small, is still some 60 per cent up on 2014).
Crucially, the study indicated that the surge in uptake would be driven by economic rather than environmental considerations. The research suggested that further, big reductions in battery prices lie ahead, and that during the 2020s EVs will become a more economic option than gasoline or diesel cars in most countries.
BNEF said the EV market at present is heavily dependent on early adopters keen to try out new technology or reduce their emissions, and on government incentives offered in markets such as China, Netherlands and Norway. Although some 1.3 million EVs have now been sold worldwide and 2015 saw strong growth, they still represented less than 1 per cent of light-duty vehicle sales last year.
Salim Morsy, senior analyst and author of the study, said: “In the next few years, the total-cost-of-ownership advantage will continue to lie with conventional cars, and we therefore do not expect EVs to exceed 5 per cent of light-duty vehicle sales in most markets – except where subsidies make up the difference. However, that cost comparison is set to change radically in the 2020s.”
Q&A: Dr Nikolas Soulopoulos, BNEF
To find out more about the state of the EV industry, we spoke with Dr Nikolas Soulopoulos, Advanced Transport, Bloomberg New Energy Finance.
How would you characterise the EV market? Where is most of the demand coming from?
Last year China’s EV sales grew by 250 per cent and Europe almost doubled. The combination of favourable policies and desirable models supported the market, and we see that continuing this year as well.
Is the auto industry doing all it can to accelerate the uptake of EVs?
Established and start-up automotive manufacturers will introduce several new electric vehicle models in the next few years and have announced billion-dollar investments on vehicle electrification. Current plans are moving EVs away from the fringes of vehicle production, but it is still not a mainstream activity.
What are the main forces holding back the transition to EVs?
EVs are still more expensive to purchase than internal combustion engine cars and face further challenges in the deployment and availability of public charging infrastructure. Consumer acceptance – partly related to driving range – poses additional headwinds.
What is the attitude to EVs in the general public? Are they taken seriously?
Consumers are becoming more familiar with EVs, especially in countries beyond the early adopter phase. Presently, I believe that EVs are mostly used as either a second car in multi-vehicle households or specifically for city driving.
What can be done to accelerate the uptake of EVs (both by the industry and at a regulatory level)?
The initial build-up of a wide public charging network is important, partially through the involvement of utilities and the support of regulators. Incentives reducing the upfront cost of an EV have been critical and may have to continue, but other benefits such as preferential treatment in city traffic are also important to consumers.
How important is the rise of residential energy storage to the uptake of EVs?
The EV industry is not dependent on the uptake of stationary storage, but additional battery demand will help bring costs down. We have already seen many of the automakers active in EVs going after stationary storage applications, but this should be viewed as an additional business rather than one they need to be in for their core EV business to succeed.