The real cost of EVs
Given the stringent CO2 emission rules in Europe, manufacturers have no choice than to roll out electrification. It requires huge investments in a difficult market and it’s not sure if the customer can be convinced so quickly.
In the next three years, the electric vehicle (EV) will appear ‘en masse’ in the showrooms, on billboards and in the streets. To reach the goals set by the EU authorities the car industry has to sell at least a third of total sales as zero emission vehicles.
The problem is even more acute as sales of diesel cars (lower CO2 emissions) have slowed down heavily this last year.
All manufacturers have to spend a lot of money in the coming years in electrification. Apart from Toyota, which has the hybrid escape route temporarily, every other manufacturer announces a future full of electric vehicles and charging stations.
The Nissan/Renault/Mitsubishi Alliance, a pioneer in electric cars with the Nissan Leaf (most sold electric car until now) and the Renault Zoë, will roll out 12 new electric vehicles before 2022 upon specific common platforms.
Volkswagen was a cool lover of electrification until dieselgate happened. Now the Group has launched the biggest investment strategy ever, 44 billion euro to invest before 2023, 30 EVs before 2025 which have to be sold 3 million times per year.
The PSA Group, also lagging behind in electrification, has announced a 100% electrification (EVs and hybrids) of its entire portfolio in 2025.
According to analyst AlixPartners, manufacturers will invest 225 billion euro in electrification the coming 8 years, to compare with 20 billion the last 8 years.
This electrification will cause a profound change in our industrial organization of car production, in production and in maintenance. Especially the engine/gearbox part will be concerned.
A study of the UBS Bank dating back from 2017 compared a VW Golf with ICE engine and a Chevrolet Bolt EV. In the latter there are 35 moving pieces, in the first 167.
The absence of an exhaust system and the reduction of fluids makes that maintenance for the EV has to be done every 240.000 km, in the Golf every… 20.000 km.
Some manufacturers, like PSA and BMW, use the same platforms for their ICE and hybrid or EV cars. Others, like VW, prefer specific EV platforms, like EMB.
However, the necessary workforce and assembling time for an EV will be less. Productivity heightens with 20% when assembling an EV Volkswagen has ascertained in its EV-dedicated factory in Zwickau (East-Germany).
Nevertheless, the European Commission is not foreseeing a social disaster. Only 16.600 fewer jobs in a European car sector where 3,4 million are employed. The Commission even thinks that electrification will lead to a very light growth (+0,1%).
Others are not so confident. The FTI Consulting Institute estimates that the other kind of manufacturing and the difference in parts value (the engine is less important, batteries will be very important).
According to them there is a loss of 38% in production value for suppliers and of 17% for manufacturers. That would lead to 130.000 losses of work places in Germany, 16% of the total employment in the car sector.
The key factor is the place where the batteries are produced. Until now it’s the Asian factories and Tesla which produce them.
If Germany could import only 10% of the parts of an EV instead of 50% by producing the batteries here, 267.000 jobs could be gained and not lost, estimates FTI Consulting.
What about the consumer?
The industrial problems are already huge, but the biggest question is how the customer will react. People will have to be convinced to look differently at the cost of a car. When you look at the total cost of ownership (TCO), the electric car will be even cheaper.
However, the price stays a big hurdle until now and a second-hand market in electric cars is still microscopic, while a lot of people buy their car second-hand. Other worries still are charging time and range anxiety of an EV.
To change the system, the public sector will have to invest too. If we want the customer to switch to electric mobility the right conditions have to be provided for a comfortable use of the EV. Not only charging infrastructure but also special measures, like free parking or special EV lanes could speed up transition.
Public authorities are getting in a catch 22 situation here. They have to invest heavily in EV infrastructure, however, the revenues from taxes on ICE cars will diminish increasingly quick.
Last but not least, there is the environmental question. The EV is the best solution for the climate when electricity is produced in a sustainable way. Depending from the source, the CO2 footprint of an EV could vary from simple to double.
Apart from that, batteries are polluting. At the moment studies (from the European Environment Agency, among others) have shown that an electric car is twice as toxic for humans and water reserves than an ICE car because of the battery.
Rare metal consumption
Experts declare that this is due to the rare metal consumption and extraction to use in batteries and the use of non-sustainable electricity production. The sooner we have green energy and use less toxic rare metals, the better.
Classic car batteries can be recycled almost 100% and electric car batteries are on their way to matching that of classic car batteries with a 96 percent reusability score, as explained by Abigail Blake in ‘Understanding Electric Car Batteries‘.
We have to draw conclusions from dieselgate and avoid to be confronted with an ‘Electric-gate’ in 20 years. That would be the worse thing to happen, for the planet and for all living creatures.