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Gaurav Agnihotri

Gaurav Agnihotri

Gaurav Agnihotri, a Mechanical engineer and an MBA -Marketing from ICFAI (Institute of Chartered Financial Accountants), Mumbai, is a result oriented and a business focused…

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Can Electric Vehicles Take The Private Transportation Crown?

Can Electric Vehicles Take The Private Transportation Crown?

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

Source: Insideevs.com

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 

Source: Cleantechnica.com

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
Source: EPA

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

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  • David Hrivnak on April 16 2015 said:
    Well written and I agree. We now own two plug-in cars and am quite certain we will never Purchase another vehicle that is not a plug-in.

    The ability to drive 200 miles on $5 of electricity, electricity we can now produce from our rooftop solar. Then I can head to the drag strip and watch the gas cars in the rear view mirror.

    You are right EV'S are the future and that future is now.
  • Paul Klemencic on April 17 2015 said:
    My work shows that oil substitution can, and should, collapse oil prices to average global cost of $35. Use these numbers to calculate the result yourself --

    Consider EVs: The buyer of an EV can save about $10,000 in fuel cost over the vehicle lifetime (discounted). But replacing a conventional gasoline vehicle in the fleet with an EV, reduces crude oil demand and oil prices such that the EV buyer saves the oil products customers as much as $90,000 over the EV lifetime.

    Consider a widespread plan to deploy 100 million EVs (or equivalent substitutions such as mass transit, high speed rail, bike commuter pathways, ride sharing, biofuels etc.) Replacing 100 million vehicles in the global fleet of about 1100 million, would reduce demand for crude oil by 4-5 million BPD, and keeps demand for oil falling in the future as the penetration into the fleet keeps growing. (A conventional vehicle driven 15k miles per year at 20 mpg uses 750 gallons, about 18 barrels of oil).

    Take 4-5 million BPD of demand away from the global demand 90 million BPD, and oil prices collapse below $40 and stay there essentially for decades as demand keeps falling. Please note that the average global cost of oil production is about $35 per barrel; oil prices above that result in what energy economists call "wealth transfer".

    Oil products customers in major vehicle fleet countries (OECD + China + India +Brazil) = 70 million BPD) would save $500B yearly at $40 instead of $60 per barrel, and $1.0-1.5 trillion annually versus $80-$100.

    The savings per green vehicle (EV) deployed over a 15 year lifetime = $75,000 to $225,000 (not discounted). Check the numbers yourself.

    These numbers are very conservative; actual cost savings should be higher, because decreased demand idles refinery capacity and reduces refinery margins as well. (This really hurts the Koch brother's refining business.)

    Increasing the EV incentive payment to buyers/manufacturers to $15,000 from the current $7500 in the major fleet markets, would explode sales of EVs. Or use incentives for other oil substitutes.

    A crude oil tax (about $3-$5 per barrel) could pay for the increased incentives over an 8-10 year ramp. A higher tax ($10) could deploy 100 million green vehicles or equivalent substitutes within five years, substantially increasing the savings for gasoline, diesel, and jet fuel customers, with the savings overwhelming the cost of the tax.
  • William Leavenworth on April 17 2015 said:
    Our capacity to burn oil is increasing faster than oil is being created. At some point in this century, gasoline will become too expensive to burn in cars. Then we had better have good batteries in electric cars, or the era of personal long-distance transportation will become a memory.
  • Mike on April 18 2015 said:
    Everones point seem to be right out of the book. Just a couple of thoughts to think about. Once the electric car starts to grow in popularity so will its price. Will it be affordable? After two years the batteries will need to be replace and the old ones disposed off. On a trip waitng in line for a recharge and then once starting the charge waitng for a couple of hours will really not be pretty. The cost of replacement and maintainence or original purchase price for an electric car which is already higher than convential gasoline will grow and suddenly your thoughts about oil might change. Beyond that point while setting in your car look around. Everything in the car is made of plastic or an oil dirivitive. Look at your shoe laces, the drink cup on you desk, made of oil.The price of oil is here to stay yet there are those that have no idea about what is required to produce a barrel of oil or NGL to produce electricity, rail about price. Starbucks gets $40.00 a gallon for coffee. The reality is oil is very inexpensive vs. almost any other product. Alternatives will never work to the the degree of total domination of the eletrical energy market. The inconvienience to convert dc to ac with use of a converter and a battery pack to hold energy for service seems odd as an answer. Once again more batteries to maintain and dispose off, plus special housing needed for the battery pack, or one can choose to rewire their life to use DC. Think about your home and the cost involved in rewiring and purchase of new appliances in that home. "Yikes" More important than that however is a point that all alternative energy pusher probably have never considered. It is called stray electrical currents and the damage that is caused. Corrision is caused with this Phenomenon. All roads and buildings has metal rebar that will corrode inside of concrete. Bridges are bolted or welded togeather so as we drive and corrosion starts to appear is it safe? In the city of San Francisco electical trollies we banned due to this exact happening. Granted that was in 1915 and eletricity was comparatively new and small details like safety and proper grounds (even with proper grounds there are still some damaging currents) were not on their radar but when the water pipes beneth the street started to break, it became an issue. Then it was decided they would pull the trolly with mules. That lasted until the stinch off animal waste became unbearable. Methane gas can really smell and cause problems. Then products supported by oil came to the rescue. That story is told so that you might compare your thoughts with past history. Will electric cars actually be an answer? I have my doubts and I see it as a Danger to all. My words cannot sum it up nearly as good as those of Thomas Sowell a free market ecomomist. "Its hard to imagine a more stupid or dangerous way to make decisions than by putting those decisions in the hands of people who pay no price for being wrong." My final point is that the electric car lite enough to be effective oil products will be needed.
    Plastic cars with electric power. Kind of like a golf cart. Now about the price of oil. $30.00 will never happen. Mineral owners will simply set on it and wait until the price goes up. The only section of economy that has supported the US during the the last 6 years is the energy industry. Truly, are we willing to just trash it so Saudi Arabia can continue to support terroist organizations with the money we pay. The dumping of oil in our economy is an assult on our everday lives. Your support means you are as guilty as they. I live by lessons learned and I have learned that low bid is not always the best bid. It is the same with the price of oil. Profitability is not a bad thing. If your job is such that you can't afford $3.00 gasoline than get a new job. The US govt knows that we can afford $3.00 gasoline because we have been paying it for 6 years. Now that the price is lower do you beleive that they have not looked at raising the taxes on gasoline, say in the name of better roads. You know for shovel ready jobs that never occur. The point is your push for lower oil prices and limit oil production always at someone elses expense will never relate to $$ in your pocket long term. Big Brother is always watching.
  • Gubulgaria on April 21 2015 said:

    "Once the electric car starts to grow in popularity so will its price."

    I have my doubts about your economic expertise.

    And about Thomas Sowell's.
  • Sophia @transmission service adelaide on October 30 2015 said:
    As price of a petrol and diesel cars are growing up and electric cars are started popular in the people. People get attractive towards the electric cars.

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