7 reasons why Electric Cars are in our future

I believe in 10 years, the majority of cars on the road will be electric cars. My 7 reasons for this belief are:

  1. Operational costs – Electric cars are significantly less cost to operate than IC powered cars. Depending on the car, typically this can save approximately $200/month in gas. If you can charge at your office, or at other publicly available charging stations, these savings be even larger. Although battery electric cars are significantly more desirable at higher gas prices, the savings are still significant even at $2/gallon gas prices.
  2. Performance – Electric motors are much more efficient in areas that matter to drivers. They are very high torque, which provides instant powerful acceleration immediately on request. IC engines (especially turbocharged engines) require RPM’s to be in the 2500-3500RPM range before reaching maximum torque. Tesla has recently introduced their P85D all-wheel drive model that goes 0-60 in 3.1 seconds…as fast as or faster than many supercars available today 0-60MPH. Tesla’s almost always beat supercars off of the line, but eventually IC supercars can accelerate faster after 60MPH is reached. In real world every day driving, Battery Electric cars feel significantly faster than their IC counterparts at a much lower cost.
  3. Environment – although I am not going to pontificate on the effects of climate change (or even if climate change issues exist). I will, however, repeat Elon Musk’s (CEO Tesla) argument which resonated with me. Ultimately Oil/carbon based fuels are limited resources – they will run out. If there is even a slight probability of the destructive climate change scientists are predicting, why take the risk of burning carbon based fuel still remaining? Isn’t it better to simply switch to battery electric cars ASAP? In addition, if solar panels and low cost electricity storage become a reality, your car can be essentially fueled for free (assuming the capital investment of the panels/batteries) at your house with absolutely no carbon footprint. This is a HUGE win in my book, and just makes sense.
  4. Longevity – Electric cars should last significantly longer than IC cars for the following reasons:
    1. IC engines are complex and prone to breakdown – Electric motors can last a LONG time. Electric motors are simple, and the drivetrains required to run them are also simple (eg no transmission) with very few moving parts. IC engines are mechanically complex with many potential areas of failure. Although current Lithium Ion batteries in EV’s can lose effectiveness over time, batteries can be easily swapped out with more effective battery technology. For example, Tesla recently offered a battery upgrade for their initial roadster car that upgrades the range to 400 miles (originally 245). IC engines have a useful life of anywhere from 150 – 200k miles. Even if the engine is rebuilt, transmissions, axles, etc still need to be replaced…making the car effectively worthless once the drivetrain is shot. A Tesla battery swap takes less than 10 minutes at a service center vs an engine rebuilt is a costly and time consuming overhaul. Batteries also degrade gradually over time vs IC engines simply break and stop working usually at a most inopportune time.
    2. Over the air software updates – Although there is nothing stopping IC automakers from doing this, software is at the core of electric cars. Computers control electric current flow to the engines, battery management, heating/cooling, etc. These are all areas that can be controlled and optimized through software. Tesla has upgraded battery longevity, performance, and features of the car through over the air updates…extending the useful life of Battery Electric cars much more than their IC counterparts.
  5. Lower maintenance costs – because electric cars have very few moving parts, they are not as prone to breakdown. For example, due to regenerative braking on electric cars that charge the batteries, brake pads last significantly longer than their IC counterparts. In addition, IC cars require oil changes, anti-freeze flushing, transmission oil changes, spark plugs, water pumps, belts, hoses, and other routine maintenance. Battery electric cars have none of these complexities. Taking in a pure electric vehicle go in for service much less frequently than IC cars. In addition, because Tesla’s are always connected to HQ, problems can be remotely diagnosed long before IC powered cars are diagnosed because of the constant connectivity.
  6. Battery costs dropping like a rock – Electricity storage today is still in it’s infancy vs IC engines are very mature technology. The cost savings in electricity storage are going to drop dramatically in the next 5-10 years to a point that the costs of producing a Battery Electric Vehicle’s (BEV) will be significantly less than an IC engines. The business case for BEV is simply going to get better and better over time while business case for the IC engine will only deteriorate.
  7. Usage patterns – I do not believe fuel cell’s, hybrid cars, or any other non-BEV will be anywhere as successful as BEV’s over time. Converting any Carbon based fuel to Hydrogen, or even electricity to hydrogen makes any sense at all. Hydrogen is highly combustible, and the conversion efficiencies simply are not there to make Hydrogen work from a business case perspective. And even if you could overcome this, there is still the issue of building out hydrogen fueling stations. Electricity is ubiquitous. It is in our homes, it is at our place of work, it is where we shop, and it is now on the highways we travel on. Electricity is already everywhere we already are. For local commuting, I simply plug in my car when I am at home, and everywhere I go I start with a full tank. As long as I can get over 200 miles of range, I have no concerns about local travel with a BEV. Once Tesla superchargers are widespread (they are rapidly getting there today), and once electricity range > 500 miles, driving between cities becomes a non-issue. Range anxiety will become a complete non-issue in less than a couple of years.

Future of the auto industry

So lately, I have been intrigued with the announced capabilities of autonomous cars, and what it will mean to humanity in the very near future.  First, a few observations:

  1. Autonomous car announcements - Today, Tesla, Audi, Ford, and others have all announced that they believe autonomous cars will be here in the next 5-10 years. 
  2. Car sharing on the rise - Companies like Uber and Lyft, and other car sharing companies are taking off...threatening long standing rental car and taxi service business models.
  3. Electrification of autos - Tesla, the Nissan Leaf, and the future Apple car are simply the first indicators of a massive shift underway replacing the internal combustion engine with electricity.  See "Why electric cars make sense" in another blog post I am writing for more details.

Assuming all 3 of these things gain significant market momentum, there will be MASSIVE disruption of the automobile industry.  This post is all about prognosticating what the future will look like.

But first...a story.  Over the holidays this last Christmas, I did some simple math calculations to come up with how much money was invested in cars sitting in the parking lot of my local shopping mall.  Based on an average used car price of $25,000 (could be more or less...just an estimate  based on the area I live in), I counted approximately 3,000 cars sitting there representing a total of $7.5million of investment doing absolutely nothing except waiting on it's owner to emerge with Christmas presents for family/friends.  These cars were also actively depreciating.   This, coupled with the fact that these cars spew CO2 into our atmosphere, release poisonous CO (Carbon Monoxide), and other cancer causing compounds, it became readily apparent to me that as a society we humans have a great deal of room for improvement.

Based on assumptions of autonomous electric cars, I believe a whole new era of car sharing services will become possible at a fraction of the cost of what the average car owner spends today.  Of course, there will always be those who will purchase their own cars in the future either as an enthusiast or as a status symbol, but I believe the vast majority of people around the world will choose new car sharing services that do not yet exist because the economics will drive this to happen.

What a future shared autonomous electric car service will look like

So, what will the user experience be for this new service?  First, the business model will look like today's cell phone plans.  Just like you have a data plan with X gigabytes of shared data, I envision a consumer paying a monthly service fee, and the consumer will get X amount of credits (based on minutes of transportation) to spend on whatever autonomous vehicle fits his/her needs based on the transportation scenario required.  There will be a local "barn" full of transportation modules that can be summoned based on <10 minutes notice via a smart device (phone, watch, etc). 

Below are a few potential use cases:

  1. Commuting to work - In this case, a single person transportation module (assuming no carpool) will show up at a predetermined time to take the person to/from work. This module will be spacious and comfortable (allowing for work to be done) for a single person commute. Once the module drops off the person, it immediately goes to its next pickup.
  2. Date night – a couple decides at the last minute to go out on a date. A 2 person transportation module arrives within 10 minutes of being summoned, and takes the couple to restaurant or Movie Theater. On the way, the couple decides to reroute to a friend’s house first to drop something off. The transportation module waits 2 minutes while the couple runs the item inside, and then returns to the module to continue the date.
  3. Family goes to the mall – A father, mother, and 3 children decide to go to the mall last minute. A 5 person transportation module is summoned, and arrives in 10 minutes. The family goes to the mall, but needs to run into another store first on the way. The family exits the module, goes into the store, and decides to shop longer than anticipated. Because the module uses minutes while waiting, the service subscriber sets up a rule indicating how long a module should wait before moving on to the next pickup. In this case, the pre-set 5 minute wait period is exceeded, the location sensors in the phone/watch indicate the family is a distance away from the module, so the module proceeds on to leave and pick up the next subscriber. The family then summons another module which arrives within 10 minutes after the family decides to leave the store.
  4. Family takes a trip – The same family of 5 decides to go on a trip from Denver, CO to El Paso, TX. Although a traditional 5 person module would suffice for the trip, the family decides to upgrade to a larger module that allows for reclining, relaxation, and sleeping for the 10 hour trip. The module picks up the family at 9pm, the module is loaded with luggage, and the family settles in for the night. Along the way there may be required breaks where the module is instructed to pull off the road for either bathroom breaks or snacks. The family arrives the next morning at 7am in El Paso refreshed and ready to start their day.
  5. Moving – a subscriber decides to purchase a large item at a local home goods/hardware store. In order to get the item home, a module configured like a pickup truck will be required. The pickup module arrives to pick up the person and the item, and returns them home.

What will be required to make these scenarios possible

Enabling a subscriber to select the module that best fits the transportation requirement will require some technology logistics on the back end to make it possible. Some of the challenges will be:

  1. Local “module barn” – A local warehouse storing these modules during times of low demand will be required. While at the barn, the modules will need to be cleaned and charged with electricity.
  2. Solar panels and storage – the module barn will require significant solar panels and electricity storage (capturing electricity during the day) to be able to charge the transportation module batteries at night.
  3. Significant battery range – to reduce the amount of “barn time” of the transportation modules, larger batteries/range will be required. Guessing up to 600 miles of range between charges will be required.
  4. Scheduling and logistics – an advanced scheduling and routing system will be required to ensure transportation modules meet Service Level Agreements and optimized asset utilization metrics.
  5. Cleaning – transportation modules will require video surveillance to ensure riders do not damage or excessively stain, soil, or leave trash in the transportation module. If it is observed that the module is not in satisfactory condition, the module must immediately return the barn for repair and/or cleaning at the subscriber’s expense.
  6. Optimal inventory of modules – the correct number and mix of modules will be required to meet SLA’s, and market demands (eg low end modules = low cost vs high end luxury modules = high cost).
  7. National/International service integration – just like there is collaboration between wireless carriers today when it comes to roaming, similar scenarios will be required with these new shared autonomous module operators. I should be able to use a service no matter which city I visit around the world if roaming contracts are handled properly. Initially, there will likely be many players that will ultimately be consolidated into a few much larger providers of the service over time.
  8. Integration with hyperloop – Elon Musk has indicated interest in building out a hyperloop high speed city to city transportation service. A local shared autonomous service could integrate into a hyperloop system to enable coast to coast travel without airlines or a carbon footprint.

Benefits of this approach

There are so many benefits that will happen as a result of this shared service model. They are:

  1. Benefits to subscribers:
    1. Much lower transportation costs - almost 1/3 of today’s cost. Electric vehicles have greater lifespan than Internal Combustion (IC) engines, and require much less maintenance. Operational costs greatly reduced (eg. Cost of gas).
    2. Much greater flexibility – Use the module you need when you need it. No longer constrained by the capabilities of the car you own (eg. I own a small car for commuting, but need a pickup to move something on occasion).
    3. Productivity – I can work on something else (or sleep) instead of focusing on driving.
    4. Convenience – The module I need when I need it where I need it.
  2. Benefits to government/society
    1. Fewer cars on the road – Traffic congestion should ease dramatically (no new highway expansions/widening).
    2. Fewer fatalities – Computers should do a much better job of transporting the public in comfort and safety. Insurance rates will drop.
    3. No more fossil fuels – transportation will be almost completely clean for the environment. No more gas stations.
    4. No more depending on foreign oil/governments – no more gas price spikes, wars to protect energy prices, etc.
    5. More effective use of real estate – no more HUGE parking lots required. Commercial properties can make much better use of the land. Downtown areas will no longer suffer massive parking shortages.

Summary

It is an exciting new world waiting for all of us. The advent of autonomous electric shared car services offers to dramatically reduce costs, clean up the environment, reduce government spending on roads/highways, and provide massive flexibility and convenience for consumers.