BNEF On Electric Cars: This Changes Everything

Michael Liebreich is chairman of the advisory board and Angus McCrone is editor in chief of Bloomberg New Energy Finance. This week, the pair wrote an article in BNEF that looks at the social and economic changes that will follow as a result of the transition to electric cars. The alterations, they predict, will be massive and will effect virtually every sector of the economy.

Electric cars

Liebreich and McCrone believe we are at a tipping point — one of those occasions when tiny changes add up to transformative alterations. Tipping points are hard to see in real time, but can usually be identified in hindsight. The two authors point to the mobile phone as one such transformation. One day, some trendy people started replacing their home phones with cell phones. Now they could place and receive calls anywhere on earth — just as long as there was a cell tower within range.

Before long, apps came along that allowed us to find highly recommended restaurants nearby, read our e-mail, plan a route from Okefenokee to Oskkosh, and keep track of how many steps we take each day. What was once a phone changed into a never before seen device. one that everyone wanted. As so often happens with technology, volume sales drove prices down to the point where virtually anybody could afford one. The latest cell phones are making the sharing economy possible. New industries like Uber and Lyft would not exist were it not for the GPS enabled smartphone.

The authors think the same thing is about to happen with electric cars. Here is a sampling of the changes they foresee.

Vehicle maintenance and retail:

Since electric cars require much less routine maintenance, both dealer service facilities and neighborhood repair shops will have less business. Auto body repair will be less in demand once autonomous cars learn how not to run into each other. The auto insurance industry may wither away.  Auto parts stores will see lower demand for their products.

People will prefer Tesla-like sales stores rather than traditional car dealers. Just those changes alone will be monumental, but Leibreich and McCrone aren’t done. In fact, they are just getting started.

Fueling and charging infrastructure:

More electric cars means lower demand for gasoline. Gas stations may no longer be profitable, so they will have to figure out new ways to sell things to people waiting to charge their cars. Private charging networks will proliferate. People who make home chargers and charging stations for work locations should thrive. The demand for electricians should increase.

Urban transportation:

Some of the most dramatic changes will occur in urban environments. Ride hailing and ride sharing services (enabled by smartphones) may take as much as 3/4 of all cars off the road, making congestion a thing of the past. Typically, an automobile is only in use about 10% of the day or less. If it can be put to work during that 90% of the time when it would normally sit idle, cities would be quieter, friendlier to pedestrians and bicyclists, with much lower carbon dioxide levels.

The electrical grid:

Demand for electricity should go up, but people who drive electric cars won’t want to recharge them using power that comes from burning fossil fuels. Renewables will continue to fall in price, making them the first choice of utility companies.

Vehicle to grid systems may allow millions of electric cars to store excess electrical power and feed it back into the grid as needed. The grid itself will change dramatically so it can accept small inputs from everywhere instead of massive inputs from a few centralized locations. Used EV batteries may be re-purposed as grid storage devices. New businesses will be created to recycle old batteries.

Pity the poor tax man:

Gasoline and diesel taxes generate substantial revenue for national and local governments. As sales of gasoline decline, governments will have to scramble to make up the deficit. We are already seeing the devastation that low oil prices and falling demand are causing in many oil producing nations. No one wants to predict armed conflict, but unstable governments may lead to revolutions.

Hindsight is 20/20. Foresight is far less accurate. But the changes Liebreich and McCrone predict may be just the beginning of the changes electric cars will bring. If you close your eyes and listen closely, you can almost sense the tipping point when electric cars go mainstream approaching. The changes have already begun and there is nothing anyone — not even Donald Trump — can do to stop them.

Source: Bloomberg New Energy Finance via TreeHugger

 

 

Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.