Yves here. Since this article comes from OilPrice, one can expect them to be electric vehicle nay-sayers. Nevertheless, the tacit assumption among many policy makers is that drivers will choose or can be forced to use only EVs. Yet Toyota, admittedly a laggard in the EV race, has not gone full bore for fully electric cars because its believes that the market for EVs is far smaller than advocates believe. From Inside EVs in January:
Former Toyota CEO and current Toyota Chairman Akio Toyoda has long been a proponent of a mixed-fuel future—hybrids, gas engines, hopefully hydrogen eventually, and more… Now, Toyoda says that he believes EVs will soon begin to hit an unofficial market share cap across the globe.
According to Toyoda, that magic number is 30%. He claims that EVs will be capped, unofficially of course, at around 30% of all new vehicle sales. The rest of the market will be satisfied by hybrids, hydrogen fuel cells, and traditional combustion engines….
It’s not clear where Toyoda gets this figure, or if he has a certain date in mind for this cap to happen…
Last year, EVs accounted for around 18% of all new vehicle sales globally. That number is only expected to grow. BloombergNEF, for example, says that EVs will account for 44% of new vehicle sales by 2030 and 75% by 2040. This number, of course, will vary based on country, as some will likely fall behind on existing infrastructure needs.
As an automaker, Toyota has always been fairly conservative with its EV rollout. The brand has been a strong proponent of hydrogen, though it’s looking far into the future for the success of FCEVs. Today, it has accepted EVs as necessary to fill the gap between hybrids and FCEVs, but Toyoda says it will never completely fill the world’s needs—hence the company’s “multi-pathway approach” to the future.
Toyoda says that the infrastructure is one of the largest problems plaguing EV adoption. With more than 750 million people worldwide who lack access to electricity, there will surely be a market where combustion engines continue to exist, however, just because someone has access to electricity doesn’t mean that it is reliable, or that the grid can sustain an influx of EVs in a short period of time without improvements. And this is where Toyoda believes there is still room for hybrids, fuel-cell EVs, and traditional combustion-powered cars.
Having said that, this piece on the EV deterrents seems to go overboard on the purchase price of EVs. Most readers know China has some very competitive offerings that we in the West are not allowed to buy. It also points to long charging times. Some readers will counter with Chinese battery swapping stations. I recall this was under consideration as an option at the time of the very first kinda-sorta serious EV development in the US (I drove an EV prototype in 1993. It was very underpowered). The reason swapping was rejected was that the swapping stations would require markedly more real estate than a gas station and were thus considered too difficult and costly to site.
By Irina Slav, a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice
- Renault, China’s Geely, and Saudi Aramco are investing in new internal combustion engine technology.
- Renault and Geely are opting for an alternative way to achieve it, through fuel efficiency and other tech advancements in internal combustion.
- Affordability is one of the factors that make drivers loyal to the ICE technology.
Virtually every single forecast about the future of transport focuses on its electrification—on the idea that EVs will take over roads, displacing the internal combustion engine and making it history.
Not everyone agrees, however, and that includes Renault, China’s Geely and, as of last month, Saudi Aramco. The three are investing in a company that develops powertrain technology for internal combustion engine vehicles. The future may not be as electric as may expect.
Horse Powertrain came into existence at the end of May as a 50:50 joint venture between Renault and Geely. At the time, Renault’s chief executive said that the company would aim to become a leader in “ultra-low emission internal combustion engines and high economy hybrid technologies.”
Decarbonization, then, remains the top priority. Yet Renault and Geely are opting for an alternative way to achieve it, through fuel efficiency and other tech advancements in internal combustion rather than through total electrification.
It is no wonder Aramco is joining the party, especially in light of the recent performance of its EV darling, Lucid Motors. Lucid has seen its share price plummet from over $50 apiece to less than $9 in three years and has missed its own delivery target for the first half of this year even though it boasted record deliveries—of 2,394 cars.
The Saudi oil giant likes to spread its eggs across several baskets, and it looks like the ICE basket is still quite popular. People are still buying a lot more internal combustion engine cars than electric vehicles. A lot of EV drivers want to go back to their internal combustion engine car. Things are not looking good for the electrification of transport, with the normal glitches of new technology still being sorted out. However, they are looking as robust as ever for internal combustion.
“It will be incredibly expensive for the world to completely stamp out, or do without internal combustion engines,” Yasser Mufti, executive vice-president at Saudi Aramco who was in charge of the Horse Powertrain deal, told the Financial Times. “If you look at affordability and a lot of other factors, I do think they will be around for a very, very long time.”
Affordability is indeed one of the factors that make drivers loyal to the ICE technology. For all the efforts EV makers have been putting into lowering the price of their electric vehicles, and for all the government support of the technology, EVs remain costlier than comparable internal combustion engine vehicles.
Of course, affordability is only part of the car equation. Another is fueling or charging time and on this, the ICE car once again beats the EV. For all the talk about how convenient it was to charge your EV overnight in the comfort of your own garage, it has been dawning on forecasting EV bulls that globally, only a minority of drivers have a garage to charge an EV in, while most would need to rely on public chargers. Also, only a minority of drivers would be willing to spend hours charging their car overnight or not.
Perhaps the best testimonial to the enduring power of the internal combustion engine were the latest car sales figures from China. The world’s biggest market, China has been breaking records in EV sales. This seems to have created a perception that half of all cars in China are electric. In fact, the reality is quite different.
Xinhua reported earlier this week that the total number of cars on Chinese roads had reached 440 million at the end of June. Of these, the data showed, new energy vehicles had a share of 24.72 million. Of these, 18.13 million were plug-in electric vehicles—what we commonly call EVs, and the rest were hybrids. In percentage terms, then, EVs represent barely a 4.1% of the Chinese market. In other words, even in the world’s biggest EV market, with billions spent on charging infrastructure and making EVs dirt cheap, most drivers still prefer internal combustion vehicles.
“We believe that as far out as 2035, 2040 and even beyond 2040 we still see a significant number of ICE vehicles,” Matias Giannini, chief executive of Horse Powertrain, told the FT. “More than half for sure, and up to 60 per cent of the population will still have some sort of an engine, whether it is pure ICE, a full hybrid or a plug-in hybrid.”
The internal combustion engine has survived so long and remained the overwhelmingly dominant transportation technology for one simple reason: it has been superior to alternatives and its benefits have outweighed the costs consistently. It is at the cost-benefit analysis state that the EV revolution tripped and fell—because it seems that no one bothered to do that analysis. So the market made it for them, with the EV surge celebrated loudly last year slowing down before the year was even over. Horse Powertrain may yet acquire new shareholders.