Of late, there has been a lot of buzz related to electric vehicles. Volatility in oil, and thus fuel prices has the world in search of an alternative that can reduce the consumption of gasoline, motor oil and other fossil fuels. An electric vehicle (EV) is one such alternative that is muscling in on the market. So what can EVs offer to compete with conventional vehicles?
An electric vehicle is powered by one or more electric motors instead of a conventional internal combustion engine. Based on the source and method of electricity production, EVs are divided into: a. EVs requiring a continuous electric supply source such as trolley buses. b. EVs running on an electric battery or a flywheel, these are also referred to as Zero Emission vehicles (ZEV’s) and c. Hybrid EVs (HEVs) that uses a combination conventional engine and an electric motor) and Plug in EVs ( PHEVs).
2014 Sales Chart for EVs - Click Image To Enlarge
If sales figures are an indicator, we see that the demand for EVs has risen at an incredible rate in the last few years. With around 320,000 new registrations in 2014, the total global count of EVs stood at around 740,000 vehicles with China, US and Japan having the highest EV growth rates of 120%, 69% and 45% respectively. Encouraged by growth rate of EVs, several automobile companies are investing in this technology. Related: U.S. Seizes On Venezuelan Weakness To Regain Caribbean Energy Foothold
Nissan is one such company that has invested heavily in developing and improving EV technology. The company has invested close to £1.4 billion (approximately $2 billion) in its facilities at Sunderland to manufacture EVs such as the highly successful all electric Nissan Leaf. The Chevrolet Volt, the Toyota Prius and Tesla’s vehicles are some other popular EVs available in the market today.
Top 5 electric car models
EVs are more economical than conventional vehicles in a longer run.
Although the purchase price of an EV is comparatively higher than a conventional vehicle, its operating costs are significantly less and would outweigh its initial purchase price in just a few years. EVs also deliver better results and lower costs when compared to regular vehicles, one of the reasons being that the cost of electricity is less than conventional fuel such as gasoline or diesel. In the US, EV owners can benefit from utility rate plans that provide low cost electricity during the night, resulting in additional annual savings.
According to a study conducted by Cambridge Econometrics, an average car user in UK spent £1,190 ($1758) on fuel in 2014. This spending can significantly drop by almost 50% by 2030 if car users switch to low carbon hybrid vehicles. Replacing conventional cars with EVs could actually result in annual saving of around £1000 ($1477) if deployed on a large scale and EVs could potentially cut UK oil imports by 40%. That’s a pretty good reason to go electric. The International Energy Agency further predicts that EVs would achieve cost parity with conventional IC engine vehicles by the year 2020 when battery costs touch $300 per KW of storage capacity. Related: How Much Money Can You Really Save With A Smart Home?
Also interesting to note is that in 2015, the average U.S. household will spend about $550 less on gasoline as compared to last year.
One major contributing factor for this reduced annual expenditure will be the increase in the number of EVs that are more economical which will reduce the number of gallons used. As per Cambridge Econometrics, hybrid electric vehicles (HEVs) do cost around £2800 ($4140) more than an average conventional car (ICE), however by 2025 this difference would be reduced to around £1200 ($1774). The total cost of ownership (TCO) of an EV is reducing with each passing year and by 2020, the TCO of HEVs and PHEVs are expected to be much less than the TCO of an average conventional car from 2010.
EVs provide much needed energy independence
The US, China and Japan are some of the biggest global net importers of oil, and it must be noted that these nations are also among the biggest investors in EV technology. Why?
Because these oil importing countries are susceptible to volatile oil prices and constant supply -demand disruptions, and EVs can help them reduce their dependence on oil imports and increase their energy independence. Interestingly, a group of more than 180 local and national companies in the US came together in 2011 to show their support for the development of EV policies and infrastructure. In a joint statement, the group demanded strong government programs to put more EVs on road and create more jobs. Related: Shell Betting Its Future On LNG
More Jobs and Incentives
According to the RMI, the EV industry can add as many as 1.9 million jobs in US alone by 2030. The biggest differentiating factor is that these jobs would be sustainable as employment created at the new manufacturing facilities, new charging stations and R&D would not be outsourced.
Apart from providing tax exemptions and refunds, some governments are even providing cash rebates to citizens purchasing EVs. In Ontario, consumers can get up to $8500 in cash rebates when purchasing a BEV or a PHEV. In British Columbia, cash rebates of up to $5000 are available on purchasing certain EVs.
Reduction in Emissions and health benefits
Earth’s average temperature has gone up by 1.4 degrees Fahrenheit over the last century and it is projected that it would rise by 2 to 11.5 degrees in the next hundred years. One of the biggest causes for the rising temperature is ever increasing air pollution from the conventional vehicles. In the US, the transportation sector contributed around 27% to the total greenhouse gas emissions.
Total U.S Greenhouse Emissions in 2013
Total Emissions in 2013 = 6,673 Million Metric Tons of CO2equivalent
EVs that are charged from the electricity grid would generate lower emissions than a conventional gasoline powered vehicle. In Britain alone, EVs could substantially reduce CO2 emissions from vehicles by 47% in 2030 and by 80% in 2050. Apart from reduced CO2 emissions, EVs also reduce nitrogen oxide and particulates that would lower the count of respiratory diseases. In fact, the associated health benefits of the resulting air quality improvements stand at around £1-1.2 billion to the UK’s economy. Going by these estimates, we can say that global health benefits could easily be around $50 billion.
However, there is an important issue that needs to be addressed.
In order to ensure an effective transition from a conventional vehicle to a PHEV or an HEV, governments need to develop a robust infrastructure for charging stations. They need to ensure that there are enough charging stations at regular distances and drivers do not have a fear of being left stranded. Charging stations at home, workplaces and public destinations can improve the market acceptance of EVs.
Norman Foster once said “Anything that reduces fuel consumption and cuts down on greenhouse gases is good news”. With its lower operating costs, lesser emissions and other related benefits, EVs are slowly and steadily changing the way people drive their cars.
By Gaurav Agnihotri for Oilprice.com
More Top Reads From Oilprice.com:
- Has The Bakken Peaked?
- What’s Really Behind The U.S Crude Oil Build
- Event Horizon: Major Catalysts In These Commodities This Year