2020: Is This the Year of the EV?

can be reached at pavel@aol.com
can be reached at pavel@aol.com
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The New Year is getting off to an “electrifying” start. Fiat Chrysler is debuting three plug-in hybrids at the Consumer Electronics Show. Ford says it’s sold out the First Edition version of its all-electric Mustang Mach-E. And Volkswagen expects to be selling 1 million a year by 2023, two years ahead of its original goal.

Coincidentally, 2020 marks a decade since the first two mass-market plug-in vehicles, the Chevrolet Volt PHEV, and the Nissan Leaf BEV, went on sale. Back then, they were little more than curiosities with no clear indication battery technology would catch on. Today, while battery-based vehicles still aren’t truly mainstream, sales did set a record last year, reaching about 5% of the overall U.S. market.

There’s reason to be optimistic the New Year will do even better, plug-in demand continuing to accelerate at a rapid pace. A recent study of 2,000 U.S. consumers by technology consulting firm West Monroe found 59% saying they “will buy an EV as their next car,” and 52% saying that will happen within the next two years.

Ford claims to have filled its order bank for the First Edition version of the Mustang Mach-E. (Photo: Ford)

There are plenty of reasons to be skeptical. Even the report author, Paul DeCotis, raised caution flags, citing obstacles like cost and a lack of public charging stations. That said, the barriers to entry are beginning to tumble.

Consider range. First-generation BEVs like the Leaf and Ford’s Focus Electric barely managed 100 miles between charges. Enough for most commutes or daily errands, sure, but Americans tend to buy vehicles that can handle their most extreme needs, so that wasn’t nearly enough.

Tesla transformed things with the Model S sedan which, today, can deliver over 300 miles with an optional battery pack. With rare exception – such as the new Mini Cooper SE – virtually all future BEVs will get at least 200 miles per charge, 300 being more and more common. And Cadillac President Steve Carlisle said last month he expects 400 to soon become the new norm.

Nikola Motors, the Phoenix-based zero-emission truck company, promises to reveal a radically improved lithium battery this year that it claims could double range while halving their price.

As with West Monroe’s forecast, Nikola’s December announcement generated a wave of skepticism. But even if it doesn’t pan out – and even if next-generation “solid state” batteries are indefinitely delayed — current battery technology is improving at a rapid rate, with greater energy density along with lower costs.

2018 Chevrolet VoltBattery prices have tumbled since the original Chevy Volt came out but still need to drop even more to reach price parity. (Photo: General Motors)

When the Chevy Volt PHEV first came to market, battery prices ran $1,000 a kilowatt-hour. By the time the Chevrolet Bolt EV debuted that was down to around $145 per kWh, according to GM President Mark Reuss. Automakers are typically reluctant to reveal such competitive data but there is widespread speculation Volkswagen is targeting less than $100 thanks to the high-volume sales it is aiming at.

To put that into perspective: Consider the Bolt EV’s roughly 60 kWh pack. In 2010, that would have cost $60,000. By 2017, that was down to around $9,000, and could soon reach under $6,000.

Don’t pop that leftover New Year’s champagne yet. The Boston Consulting Group estimates battery prices will need to drop still more, likely to around $70 per kWh or less, for all-electric vehicles to become truly competitive. The good news, according to GM’s Reuss, is that parity is likely to come “sooner than expected.” He’s not saying precisely when, but hints that could be before mid-decade.

And while today’s EVs may still carry a price premium, consumers get a bit of a break. Needing to build sales momentum – in part, to meet increasingly stringent mileage and emissions mandates – automakers have tended to absorb much of that cost penalty. There are also state and federal incentives to be factored in though, as sales rise, they’re starting to phase out. As of January 1, 2020, Tesla no longer can offer buyers any federal tax credits.

Public charging stations are opening at a rapid clip, most new ones going in at convenient locations like big box stores and restaurants. (Photo: Electrify America)

As to the other speed bump that West Monroe flagged, there clearly is a shortage of public charging stations, with less than 30,000 stations by the end of 2019, compared to 168,000 gas stations, according to the EPA. That’s less the case along the East and West Coasts, notably within California which is at the center of U.S. EV sales, but it’s still a challenge to find a place to plug in if you’re travelling through the American heartland, especially off of major interstates.

But the numbers are rising rapidly, companies like Electrify America, EVgo and ChargePoint investing billions in new stations and “electrifying” new ones almost on a daily basis. And they’re making sure chargers are easy to find, most new ones going in at big box stores like WalMart and Target, restaurants,  banks and other convenient locations.

That helps address another challenge: the fact that charging still takes longer than gassing up. But the latest models, like the Porsche Taycan, are cutting times down to less than half an hour. And, if anything, EVs have a distinct advantage in that most of the time they’re charged up at home or office, meaning owners start off with a “full tank” every day.

There’s yet another reason why 2020 could mark the start of a big EV growth curve. There will be a flood of new plug-based models coming to market this year, including both PHEVs like those three Jeeps, the Toyota RAV4 Prime and Lincoln Aviator Grand Touring, as well as an array of BEVs. The latter list includes the Tesla Model Y, the Ford Mustang Mach E, a yet-unnamed Cadillac SUV, the Rivian R1T and R1S trucks, VW’s ID.4, Audi’s Sportback and more. That means more options in more market segments, a key ingredient in peaking consumer interest.

There’s little doubt that more and more American motorists are considering electrified options, perhaps even the majority of buyers. We’re a long ways away from seeing EVs dominate the U.S. sales charts, but things are clearly moving in the right direction and 2020 could signal that this really will be the decade of the electric vehicle.

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can be reached at pavel@aol.com
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