The EV Revolution – How it is changing the future of road trips, our lives, and, the auto industry
The EV Revolution is not something in the distant future, it is upon us right now. I was in Norway in late 2019 and quickly observed how many Tesla’s were on the road. It seemed that at least a quarter of the cars I saw were Tesla’s. Surely my assumption was exaggerated, I thought. When I came home I did some research and soon discovered that in fact for Q3 of 2019 nearly 1 out of every 4 cars sold in Norway was an EV.
After further research, I learned the reason for the large numbers of EVs . Norway has exorbitant tariffs on vehicles being imported into the country, some brands are over 100%. That means a $50,000 car would cost $100,000. The exception to these tariffs are EVs (electric vehicles). There are no tariffs on EVs, which means they are far less expensive to buy then an ICE vehicle (internal combustion engine). This is a bit ironic when you consider that Norway funds its social programs from the profits it makes from oil. This is just one example of a paradigm shift that is beginning to occur in transportation.
In the past year or so, I have become infatuated with the EV market, primarily with Tesla as they have become the clear leader in the sector. I love business and learning why some businesses succeed, while others fail. Tesla has been on the ropes, as well as on the verge of bankruptcy on more than a few occasions. With a lot of luck, a great deal of perseverance, and good leadership, Tesla is now over the hump and is firmly in position to be one of the biggest auto makers in the world in the not so distant future.
As a matter of fact, Tesla has recently become the most valuable auto company in the world with a valuation of $50 Billion more than Toyota, the 2nd most valuable auto company at around $210B. Tesla has become more valuable than all other U.S. automakers combined.
ICE Vehicles maybe be done for in less than a Decade
I recently read a study that suggested by 2026 people will stop buying ICE vehicles as nearly all new vehicles sold will be an EV. This paradigm shift will not only effect car manufactures, but will then hit the repair industry hard. As ICE vehicles begin to fade into history, the need for repair facilities will diminish dramatically by 2031.
You see, EV vehicles require little to no maintenance or repairs. Even the brakes don’t need to be changed as often because with an EV, there is regenerative braking, meaning, when you let your foot off the accelerator, the vehicle begins to slow.
An EV is essentially comprised of a motor(s), batteries, electronics and a computer, there is no engine oil, transmission or other fluids, no spark plugs, etc to maintain. It really is a remarkable path we’re on. It’s also quite surprising how far behind the eight ball the traditional auto manufactures are. BMW for example produces some incredible cars, but their foray into the EV market has given the public the i3, one of the least desirable BMW cars ever produced.
Then, you have Ford who is coming out with the Mach Mustang EV that is not a Mustang at all, but rather draws inspiration from the Tesla Model Y (see photos below). Why would they not make an actual EV Mustang? Or call this new EV they introduced as a Mustang something else all together? This is further evidence that the traditional automakers are not prepared for the future of vehicle transportation.
Tesla has a huge advantage over traditional manufactures, but also had to overcome many disadvantages in the beginning. As to their advantages, Tesla was able to build an EV from the ground up in a plant built specifically produce EV’s. Plus, they don’t have burdensome pensions, labor unions, legacy issues or a dealership networks to deal with. They can build a plant for a mere $1 Billion dollars and can have it operational in just 1 year.
This is quite remarkable! This ability will allow Tesla to scale very quickly, allowing them to introduce new models to serve particular markets, such as Europe where the cars are much smaller. Or with the ever popular pickup truck here in the States. Their Cyber Truck is truly a revolutionary truck, and while it may have been a polarizing design to many, there is no denying the number of reservations, which will take years to meet demand.
Telsa has essentially 3 levels for each model they produce, with a few upgrades to choose from. You build the car on their website and pick it up at one of their delivery facilities. That’s it! Tesla even offers insurance, which is substantially less that the traditional market. This was a brilliant move because Tesla knows exactly what their risk levels are, where traditional insurance companies have to estimate, plus they require higher margins than Tesla does selling directly.
There are a slew of new EVs coming out in the coming years. No one will catch Tesla, but there is certainly room for niche players:
- Canoo is producing a minivan-like vehicle with a subscription-based business model.
- Kepler and Drako are both producing super cars.
- Neuron will be producing a heavy duty truck (shown below)
Then there are the more well-known players such as Nikola Motors, Lucid and Rivian, each with products that will go head-to-head with Tesla, but with some different value propositions. For example, in addition to the much anticipated truck and SUV from Rivian, they are also producing a delivery vehicle and already have a large purchase order from Amazon.
As of 2020 there is simply no denying that the EV Revolution has arrived and will soon displace the internal combustion engine and legacy auto-makers. When you have a vehicle that is cost comparative with an ICE vehicle, costs far less to operate, travels farther than a full tank of fuel, is safer, pollutes less, and has little to no maintenance costs, the writing is on the wall. EVs are here to stay and people are lining up to buy them.
EV Passenger Vehicles are just the Beginning
Electric passenger vehicles are just the beginning of this EV Revolution. Both Tesla and Nikola Motors both have Semi-Trucks in development. Tesla’s version is all electric, while Nikola is developing a hydrogen fuel-cell system and corresponding infrastructure. This is a massive sector to enter with annual sales between $20-$30B.
Tesla by far has the advantage here as electricity is far cheaper and more available than hydrogen. Plus, Tesla has had a decade long head start on the recharging network.
I have a feeling that Freightliner, Peterbilt, Kenworth, Mack and the like are not even going to know what kit them. They will likely be displaced (or be forced to merge) just like the traditional auto-makers.
The EV Revolution and Autonomy
While autonomous vehicles are not exclusive to EVs, the clear leader in the space is again, Tesla. While there are many companies, such as Google’s Waymo, working on autonomous technology, Tesla has become the clear leader in the space due to one important factor, they have hundreds of thousands of smart-enabled vehicles on the roads collecting valuable data to improve their AI technologies.
There are five stages of autonomy and currently Tesla is at level four. Level four autonomous vehicles can drive themselves without human interactions, but still require a human to be alert. Level 5 is 100% autonomy and Tesla is knocking at its door. It is expected that Tesla will be able to provide level 5 autonomy (or full self-driving) by mid-2021. Their fee for the service will increase from $6000 to $8000, presumably for the additional level of autonomy.
What to expect from EV Road Trips
The future of road tripping is going to change dramatically. EVs are not just for commuting back and forth from home to work. As millage capabilities increase and rapid charging times decrease, along with an ever expanding charging station network, the anxiety of a long road trip is a thing of the past.
A road trip in an autonomous vehicle is going to be quite a different experience. No longer will you have to keep your eyes on the road, but rather you can enjoy the scenery revealing itself before you. You will be able to photograph the scenery without worrying about keeping the car on the road. Drivers will also be able to multi-task, or dare I say, even take an afternoon snooze as your car pulls up into a vacant parking spot at the hotel you have reserved.
Ride Hailing will diminish the need to own a vehicle
In the not so distant future the need for owning a car or truck will be greatly reduced. This automotive dependency will depend on where and how you live your life. In larger cities where real estate is at a premium, owning a car is just not going to be practical, or, necessary. Ride hailing is at the forefront of the EV Revolution and will reduce the cost for transportation drastically. Half the expense for an Uber or Lyft ride goes to the driver, but with an autonomous vehicles that cost can be cut in half. Throw in an EV and the cost can go down even further as energy and maintenance costs are much less.
In the near future it simply will not make economic sense to own a car unless you need to do a lot of independent driving. This is another reason why the traditional auto-makers are in so much trouble right now, not only are their cars now less desirable than an EV, but there will be fewer buyers as societies around the world shift to ride hailing.
The EV Revolution has finally begun and the industry has a firm foothold on the market. The transition before us is going to feel strange for some time to come, but just as we transitioned from horse & buggy, this too will be a distant memory before you know it.
If you have any thoughts about the EV Revolution, please leave a comment below.