Transport Sector Primed for the Growth of Electric Vehicles

by | Jun 27, 2017

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When it comes to reducing the greenhouse gas emissions, the electricity sector gets much of the attention, considering that it is responsible for 29% of those releases. But the transportation sector makes up 26% of them. If that is going to change, the electric car will have to make significant inroads. Is that possible?

As for those stats, that’s the US Environmental Protection Agency speaking, which also says that industry is responsible for 21% of greenhouse gas emissions while commercial and residential users comprise 12%. Meantime, the agricultural sector makes up 9%. The electricity sector is having success because of the switch from coal-to-gas. And industry is committed to such reductions because that is what their customers want, forcing them to track their releases and find new ways to cut them.

One method that companies could use to have an impact is to buy into the electric car. While the automotive sector has been a slow mover, things could change if industry gets involved.

In the International Energy Agency’s ‘Global EV Outlook 2017,’ it shows a lot of acceleration in the last year. Kirill Klip, executive chairman of International Lithium Corp. points out in a blog that there were 2 million electric cars on the road in 2016. “It took us all human history to get to 1 million of electric cars in 2015 and just over 1 year to double this amount and exceed 2 million EVs by now,” he writes. 

“Electric Cars still represent only 0.2% of all cars in the world,” Klip added. “Worldwide sales of electric cars have reached 1.1% of total auto sales in 2016. In order to limit temperature increase below 2º C the number of electric cars needs to reach 600 million by 2040.”

China has been the biggest market, he adds, at 40% of all sales. It also has 2 million electric bikes. Norway, meantime, was a third of the EV market in 2016.

But the global EV market is at a tipping point, he says. The impetus? The Tesla Model 3, which is due out this summer and which has a 200 mile range. It is to be priced in the mid $30,000 range. And it will rely on the lithium battery that Tesla will mass produce at its giga-factor.

“Very slowly Lithium Industry is starting to get some attention from the investment crowd, but the real awakening is still ahead of us,” says Klip. “This summer will be very hot for the lithium supply chain, and the first real test is coming. Tesla Gigafactory will start mass production of Tesla Model 3 batteries in July and 4 Lithium Mega-factories are coming online in China.” 

But what type of environmental impact will EVs have? Wood Mackenzie is saying that the Tesla Model 3 will help cut gasoline consumption by 300,000 barrels per day by 2035.

By 2035, Wood Mackenzie estimates that electric vehicles will be 12 percent of all new car sales, or 16 million vehicles, says an earlier report in Environmental Leader. Such a base case scenario, it adds, would mean that the country consumes 5% less oil than today, or 350,000 barrels per day. Electric vehicle sales now make up less than 1 percent of the market.

“EVs would likely become a disruptive force in the oil industry before they do for the power industry, especially considering that much of the charging infrastructure is currently being built in areas affected by renewable over-generation, where additional demand would be welcomed,” said Prajit Ghosh, research director at Wood Mackenzie, as reported by Greentech Media.

To be sure, obstacles abound. Fitch Ratings calculates calculates that at a 32.5% compound annual growth rate, it would be nearly 20 years before electric vehicles comprised 25% of the auto market. So, it does expect oil to be around for a while. 

“The transition to EVs will be slow due to the need for infrastructure investment and the fact that new vehicles can have a 20-year lifespan,” the ratings service says.

Tesla, though, is a powerful catalyst driving electric cars. In fact, just about every car maker in the world is developing either an all-electric car or a hybrid vehicle that runs on both electricity and petroleum. As they continue to improve, so do the efficiencies — or the ability to input a unit of energy and to realize more output. In fact, traditional cars running on an internal combustion engine have a 30% efficiency rate. The rest is lost to heat, sound and energy.

But vehicles that run on electricity have an 80%  efficiency rate, or they convert 80%  of those Btus to energy, says Thor Hinckley, an electric vehicle and renewable energy expert with CLEAResult, a consulting specializing in energy efficiency. The efficiencies are greater because of the superiority of the electric motor over that of the internal combustion engine — not because one unit of energy is better than another.   

“With an efficiency difference that great, anything will be cleaner than burning gasoline,” says Hinckley. 

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