For decades, drivers have wistfully dreamed of weaning themselves from using environmentally unfriendly and unpredictably priced gasoline. Like most dreams, this appeared to be unrealistic and unlikely to transpire in the real world. However, recent developments in electric vehicles (EVs) have the potential to make these cars affordable to regular individuals, cutting back on gasoline consumption and the consequent air pollution associated with this form of energy use.
EV Manufacturer Tesla Motors, headed by PayPal co-founder Elon Musk, shipped more than 10,000 vehicles in the first quarter of 2015. This represents an increase of 55 percent from last year's first quarter and is more than any other EV producer has sold in the same period of time. Musk has announced his intention to ship 55,000 cars in 2015. Still, these numbers pale next to the number of gasoline-powered automobiles sold. For comparison, General Motors sold more than 200,000 vehicles in January 2015 alone. Related: Top 5 Richest Tycoons In Renewable Energy
The year after Tesla was founded, in 2004, Elon Musk invested $6.3 million to help the company get started on their developments. By 2008, they had their first sports car: the Roadster. The next year, the government loaned the company $465 million from an “alternative vehicle fund” to start producing the Tesla Model S. In 2010, Musk paid $42 million for a Toyota factory that was going to stop production. Since then, hundreds of millions of dollars were put into the factory to produce Tesla vehicles. This year, Tesla has already invested $1.5 billion in research and development, up from the $139.56 million reported in December of 2014. Musk predicts that by 2025, the company is going to be worth $700 billion, $675 billion more than what it’s worth today.
One reason for the slow uptake in EV adoption is the cost of the vehicles. The base Tesla Model S debuted at $69,900 in 2012 is a bit too high for the comfort zone of most consumers. Yet prices are expected to drop in a few years, enabling people who don’t have the luxury of dishing out that kind of cash to take advantage of this newfangled technology for not much more than they would pay for a comparable gas vehicle. In addition, they would save considerable money over the lifetime of their cars because it costs much less to charge an EV than it would to fill up the gas tank of a traditional model. Elon Musk has stated that most purchasers of Tesla's automobiles save $10,000 in fuel costs after five years. Related: How Much Money Can You Really Save With A Smart Home?
The key reason for the expected drop in EV sticker prices is a reduction in the cost of batteries. The price of batteries represents a large fraction of the total overall cost of electric vehicles. According to a peer-reviewed study on the costs of battery production, current prices per kilowatt-hour in electric vehicle batteries are as low as $300. Other estimates place today's prices at between $200 and $250 per kilowatt-hour for Tesla Motors. This is less than almost every prediction thought it would be in 2015. In some cases, current prices are even lower than was predicted for 2020! This trend is expected to continue especially since Tesla is planning to build a “Gigafactory,” which would be employ 6,5000 and be able to produce half a million batteries per year.
Besides cost, there are environmental benefits to be gained from replacing oil with cleaner energy. After all, the most significant source of air pollution in the United States is transportation. However, this raises concerns about whether or not electricity generated through fossil-fuel-powered plants offers any environmental advantages over gasoline. We must consider, though, that home electrical generation is a rapidly changing field in which older, more environmentally unfriendly power plants are being retired. At the same time, more and more electrical power is being generated through renewable sources (learn more), which are surely much cleaner than the combustion of gasoline.
Meanwhile, additional breakthroughs could come from Google and Apple, which have been toying with producing an electric car. Google's driverless car has been in testing for several years now. Besides holding the potential for cleaner, cheaper transportation, it is unquestionably cool. Apple's efforts are less publicly visible. It was only announced this year that it was working on an EV. Some in the industry, like the chairman of Mercedes-Benz, place little stock in Apple's ability to compete in the automotive space. He would do well to remember that Apple has a record of innovation and market disruption in an eclectic range of endeavors. Related: Has The Bakken Peaked?
Currently, Apple has a team of 200 people working on their electric vehicle but this could jump to 1000 if the development shows significant progress. Not much has been said about the expenses for this project, but the company is said to have $178 billion in cash on hand. This means that if they’re confident in their electric vehicle, they can easily put the money towards its production and development. Google has been more discreet about their budget so it isn’t known how much money they have put towards their self-driving car. However, we do know that a large part of their vehicle was made possible by a small startup company by the name of 510 Systems from which Google bought the intellectual property rights.
Going forward, we can expect plenty of new advances from people and companies that have already shaken things up in a wide array of industries: Elon Musk in the e-payments and space exploration fields, Apple in hardware design and home music consumption, Google in search engines and email, and many others. As EV tech matures, consumers can expect lower prices, improved vehicle ranges, reduced air pollution, and other benefits that we can only speculate about today.
By Maria Ramos for Oilprice.com
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