“I am very pleased with how our strategic transition is moving forward at ILC,” states Kirill Klip, Chairman, President and CEO International Lithium Corp. “We are switching from a relatively low profit base of only managing exploration operations for the development of our J/V projects with our strategic partners to building a sizeable portfolio of strategic assets. Examples of our successful past record include the Mariana and Avalonia lithium projects which are being developed in conjunction with lithium industry leaders like Ganfeng Lithium, our strategic partner. Read more."
"We have the magic of technology in the making now. While ICE cars were becoming more and more complex and more expensive with time, electric cars are enjoying The Silicon Valley laws of dramatically decreasing costs with "The Learning Curve." Lithium Batteries are the most significant part of the overall costs in electric cars and the costs are going down as fast as 19% per year, according to Bloomberg. Actually, the situation is already much better than presented in the article below. Elon Musk has announced long time ago that al-in-all cost of lithium batteries at Gigafactory is already $190/kWh! "I do not really know" why journalists are not digging enough information to stay current on the subject. Headlines like "Electric Cars Are Here To Stay" belong to 2009, not 2017 when they are getting to the milestone of being sold over a million per year.
Tesla Model 3 and GM Bolt will ignite the next phase of mass adoption for electric cars in the West attacking the exponential part of "The S-Curve." Both EVs are priced below $40k and provide the range of over 200 miles. The price of the average new car in the U.S. has skyrocketed to over $33k in 2016 and now these electric cars will be very attractive to the new buyers. When you will consider the overall cost of ownership these EVs start to beat ICE cars of the similar model class not only on performance but on cost as well!
We are moving very fast with electric cars out of grasp by any politics and towards the economic decisions when customers will start voting with their wallets. This is the bifurcation point to put all ICE cars to rest in a decade. It will be impossible to sell cancer hazard 100 years old oil burning technology anymore. The Switch is happening right now when millions of people are deciding to buy new electric cars. Read more."
Carmakers face short-term pain and long term gain
THE high-pitched whirr of an electric car may not stir the soul like the bellow and growl of an internal combustion engine (ICE). But to compensate, electric motors give even the humblest cars explosive acceleration. Electric cars are similarly set for rapid forward thrust. Improving technology and tightening regulations on emissions from ICEs is about to propel electric vehicles (EVs) from a niche to the mainstream. After more than a century of reliance on fossil fuels, however, the route from petrol power to volts will be a tough one for carmakers to navigate.
The change of gear is recent. One car in a hundred sold today is powered by electricity. The proportion of EVs on the world’s roads is still well below 1%. Most forecasters had reckoned that by 2025 that would rise to around 4%. Those estimates are undergoing a big overhaul as carmakers announce huge expansions in their production of EVs. Morgan Stanley, a bank, now says that by 2025 EV sales will hit 7m a year and make up 7% of vehicles on the road. Exane BNP Paribas, another bank, reckons that it could be more like 11% (see chart). But as carmakers plan for ever more battery power, even these figures could quickly seem too low.
Ford’s boss is bolder still. In January Mark Fields announced that the “era of the electric vehicle is dawning”, and he reckons that the number of models of EVs will exceed pure ICE-powered cars within 15 years. Ford has promised 13 new electrified cars in the next five years. Others are making bigger commitments. Volkswagen, the world’s biggest carmaker, said last year that it would begin a product blitz in 2020 and launch 30 new battery-powered models by 2025, when EVs will account for up to a quarter of its sales. Daimler, a German rival, also recently set an ambitious target of up to a fifth of sales by the same date.
The surge has two explanations: the rising cost of complying with emissions regulations and the falling cost of batteries. Pure EVs, which send no carbon dioxide directly into the atmosphere, and hybrids, which produce far less than conventional engines, are a way to meet Europe’s emissions targets—albeit an expensive one. But the gains from cheaper methods such as turbocharging smaller engines, stop-start technology and weight reductions will no longer be enough, since a tougher testing regime, to be introduced in the wake of VW’s diesel-cheating scandal, will make those targets still harder to reach.
The hefty cost of preventing nitrogen oxide spewing from diesel engines, which emit far less carbon dioxide than the petrol equivalent, may see them disappear by 2025. Further development of ICEs could be enough to meet the 2021 targets. Carmakers also need to be prepared to hit the next ones, says Andrew Bergbaum of AlixPartners, a consulting firm. These, yet to be finalised in the EU for carbon dioxide, may be as low as 68g/km by 2025 compared with 130g/km today.
Regulations are favourable outside Europe, too. In China more than 400,000 pure EVs were sold last year, making it the world’s biggest market. The government, keen to clear the air of choking exhaust fumes, has plans for a quota that could insist that 8% of sales are EVs or hybrids by 2018. And even if Donald Trump relaxes American emissions standards, this will not hold back electrification. California, which accounts for one in eight cars sold in America, is allowed to set tougher environmental standards than the national ones. It, and seven of the other states that have adopted its emissions rules, have a target of 3.3m EVs on their roads by 2025.
Moving right along
Technology will have as much impact as politics. Vehicles that carmakers are forced to produce for the sake of the environment will become ones that buyers want for the sake of their wallets. EVs were once generally a second car for richer, environmentally minded drivers, prepared to pay a big premium for a vehicle with a battery that took an age to charge and had a limited range.
The falling cost of batteries will make the cost of owning and running an EV the same as that of a traditionally powered car in Europe by the early 2020s, even without the hefty government subsidies that many rich countries use to sweeten the deal (see article). Better batteries should also conquer “range anxiety”—most pure EVs now run out of juice after around 100 miles (161km). If battery costs continue to tumble and performance improves at the current rate, the price of a car with a range of 300 miles could hit $30,000 by the early 2020s, according to Exane BNP Paribas. Slicker technology will also mean charging in minutes, not hours.
The lack of charging infrastructure still deters buyers, but signs of growth are encouraging. In most rich countries governments, carmakers and private companies are putting up the necessary cash. In America the number of charging points grew by more than a quarter to almost 40,000 in 2016. Even Shell and Total, are planning to put chargers on the forecourts of their petrol stations across Europe.
But EVs are not yet a profitable business for carmakers precisely because of their batteries. Chevrolet’s Bolt, on sale late last year, costs under $30,000 with subsidies and travels 238 miles between charges. But each sale will reportedly set General Motors back $9,000. Tesla’s rival, the Model 3, is set to go on sale later this year; the firm has yet to make an annual profit. Even Renault-Nissan, the world’s biggest EV manufacturer, loses money on electric models.
Research and development also costs a fortune. Daimler says it will spend €10bn by 2025 on just ten battery-powered models. Restructuring is also expensive. For a century carmakers have built factories, employed workers and developed a supply chain around the ICE. In one scenario Morgan Stanley reckons that VW’s entire car business could make a loss between 2025 and 2028 as it transforms itself.
Some carmakers are better placed than others for the transition. Profitable premium brands such as Daimler and BMW have the resources to invest and can be confident that their richer customers will be the first to switch to more expensive EVs. Mass-market carmakers have a trickier task, according to Patrick Hummel of UBS, a bank. Despite falling costs, a cheap EV for the mass market is still a distance away. The likes of Fiat Chrysler (whose chairman, John Elkann, sits on the board of The Economist’s parent company) or PSA Group, which makes Peugeots and Citroëns, have barely begun changing. But these carmakers, already operating with wafer-thin profit margins, must still invest heavily in anticipation of that moment.
EVs may eventually make more money than ICE cars as battery costs fall further. They are competitive in other ways too: EVs are simpler mechanically, and require less equipment and fewer workers to assemble them. But carmakers first face a transition that will hit cashflow and profits. Getting ready for an electric race will be painful, but missing it altogether would be disastrous.