Does it make sense to buy a new gasoline car now?

[rkbabang]

Really interesting article with some reason world Model X experience: https://www.edmunds.com/tesla/model-x/2016/long-term-road-test/2016-tesla-model-x-range-and-charging-while-towing-a-trailer.html

 

The comments are fascinating as well. 

 

petec - You in California?

 

There is a Tesla dealer near me, I can see it from the top of the hill in my back yard, so maybe ~1mi away?  With that I still don't see any driving around.

 

I think the predictions are correct, look at my earlier comment about average vehicle age.  Think about it this way.  Even if a EV is cheaper to buy and run than an IC you have to wait until that cycle of car purchases runs through.

 

For example right now it costs gas and some minor repairs for my vehicles.  Let's say $2k per year total.  There is zero motivation to change unless repair costs are through the roof, or I can get something to replace it at the same price.

 

I buy vehicles cash upfront.  If you lease or finance then it's just a monthly payment question.

 

I think this message board isn't a good sounding board on a lot of these things because:

1) Most people on here are wealthy

2) Most are up to date with tech and are willing to pay up for new things

3) We keep up on advancements

 

This is true for most consumer products.  Look at any thread, the comments don't represent anything close to what most people do.  I think that's why you see EV's at 30% of vehicles in 15 years, even if in wealthy educated circles they're popular.

 

 

Just for another non-CA datapoint.  I'm in southern NH and I see Teslas everyday.  There are a ton of them on the road here.  Mostly the Model S, I see Model Xs once in a while, but certainly not every day.

 

[oddballstocks]

Really interesting article with some reason world Model X experience: https://www.edmunds.com/tesla/model-x/2016/long-term-road-test/2016-tesla-model-x-range-and-charging-while-towing-a-trailer.html

 

Yeah, I agree that long road trips and especially towing is not for ecars yet.

 

Some people do long trips, but I'd hate to sit hour or even 40 minutes on a long trip to charge the car.

 

If I get Model 3, I'm still gonna do long trips either with second gas car (if I have it) or a gas rental.

 

For someone like you who does long trips often, it's probably not a match.  8)

 

I'll just do the value thing.  Once EV's take over the world and IC prices crash I'll buy IC's for next to nothing and drive cheaper than if I'd picked up an EV.

 

If I had to go back to commuting (which is hell, shouldn't be imposed on anyone..but I digress) and there was no public transit and I couldn't ride my bike I'd consider an EV.  At that point an EV self-driving is like buying a personal bus.  I get that use-case, and I'd guess for a lot of drivers in cities that is the only use-case.  Driving back and forth on a fixed path daily.

 

[petec]

 

petec - You in California?

 

 

London.  (Or London, England as you guys refer to it!)

 

NB the 30% figure relates to the % of new sales, not the % of fleet.  In other words it relates to flow, not stock.  I don't see why, if EVs are cheaper and better for a majority of users (big if, I grant you) they wouldn't be a majority of new cars sold.  Potentially a big majority.  And if they were (to go back to the OP) the value of used ICE vehicles would be toast.

[crastogi]

I'm currently in the market for a new family car. With all the talks of electric / driverless / ownerless cars, does it make sense to buy a gasoline car right now? Will gasoline cars lose much of its resale value in the future? I'm worried that a used gasoline car (non-exotic) 5-10 years form now could be pretty much worthless... Would it make sense to just lease a car given how the technologies are changing fast? (Electric cars with the current range / charging infrastructure do not make sense for us.)

 

Thanks.

 

Yes!  Buy 3 years old and drive it til the wheels fall off.  If all the electric cars are coming, gas is going to get cheaper!! And they can still repair gas cars 10 years from now

 

 

[Cardboard]

I find interesting that some people dismiss out of hand the comments mentioned by Sculpin. If you know anything about power generation and what goes into lithium batteries and brushless motors, you realize quickly that there is a huge problem for mass adoption.

 

Raw materials is definitely a problem: lithium, cobalt, silver, copper, rare metals for the magnets, etc. For some of them, there is simply not enough raw material in existence and for the others a full switch means astronomical pricing. The only way for this to work out is for substitution of at least some of them and today's technology or I would guess even 10 years out does not allow it.

 

Power generation and transmission is another huge problem. Solar is nice but, it is only available during the day and guess when people will be charging their batteries for the most part? Wind power would alleviate some of that but, it is not cheap and not getting cheaper unlike solar. Hydro is pretty much fully exploited.

 

So you are left with natural gas and nuclear to generate baseload power. These are also the only ones that you can choose to locate quite closely to large users or cities. Renewables are located where nature decides so you have to take into account transmission losses. Also, cycles in these plants are only 30 to 40% efficient or no better than your gasoline engine and one of the few ways to get them into the 60% range is to recuperate heat via steam. So all these losses in the chain do add up and make it less "green" than you are lead to believe. Studies have been made on this but, carefully read all the assumptions.

 

Then you have these neat concepts of using excess wind or solar power to refill an hydro reservoir to normalize power capacity. I mean, how much does cost this "battery" or an enormous pumping system, digging a hole on top of a mountain, then building a generating station? You can't simply say we will use existing hydro dams because they are already in use today and were designed for a specific purpose.

 

Then we hear of another concept or a massive decline in car ownership due to autonomous/car sharing. It sounds neat in theory once again but, rich humans tend to be selfish. They want their own car, own home, own everything. I see more and more BMW,'s Lexus, and other expensive cars as time passes. And if GDP is to continue to grow then I have a hard time believing that people will get poorer. There are a lot of cheap ways to travel today such as Uber, car pooling, subway, buses, yet I see no evidence of people abandoning their own car.

 

Cardboard

 

 

[stahleyp]

Gentlemen, we live in the Heartland - not "flyover country". ;)

 

 

[Jurgis]

Gentlemen, we live in the Heartland - not "flyover country". ;)

 

Yeah, oddball complains about coastal elites and then tells us that there's Tesla dealer < 1 mile from him.

 

I live in one of these coastal cities and my closest Tesla dealer is 20 miles away. Repair center too.  :'(

 

You guys have it good in the Tesla Heartland.  8)  :P

[stahleyp]

Gentlemen, we live in the Heartland - not "flyover country". ;)

 

Yeah, oddball complains about coastal elites and then tells us that there's Tesla dealer < 1 mile from him.

 

I live in one of these coastal cities and my closest Tesla dealer is 20 miles away. Repair center too.  :'(

 

You guys have it good in the Tesla Heartland.  8)  :P

 

There is one about 5 miles from me. :P

[clutch]

Thanks everyone for interesting discussion.

 

Just to add, I bought my previous two cars used with cash. I like to try out different cars so I dony drive them till death and sold both of them in less than five years I bought them.

 

I know buying a used car is a financially better choice than buying a new car. However, I'm at a point in my life where we don't want to worry about buying and selling a used car (lack of warranty, possibility of buying a lemon, dealing with shady people, etc.). So, I wanted to buy a new car but worried about the resale value 5 years from now.

 

Nobody mentioned that Volvo is going full electric or hybrid from 2019. So I think the tipping point might be sonner than later... I'm leaning toward leasing more and more...

 

[Cardboard]

Going full electric or hybrid are two different worlds. And Volvo sells a tiny amount of cars. Makes it for an interesting headline but, little substance regarding a transition. By the way EIA just reported record gasoline demand.

 

Regarding your decision, leasing is cheaper than buying with financing if you are looking to own a new car every 3 to 4 years. This way you always own something new, are always under full warranty and have no worry about residual value. However, you need to not exceed the mileage allowance. And you have to compare with buying using financing since you can always invest your cash. Also buy the insurance that they offer for small scratches as they will mount you a bill if you return the car after the lease and do not continue doing business with the dealer.

 

I figure it is cheaper since you are forced to return to the dealer who leased you the car. If you buy, they may never see you again. Plus, they tend to call you a few months to a year before your lease term to switch to a brand new lease with no penalty and at often enticing rates. Recurring business is excellent for them.

 

Cardboard

[Ross812]

People buying EV's & governments subsidizing EV's should examine some of the materials & mining practices behind some of the key components in these vehicles. Are there much better options with NG or just continuing to increase efficiencies in ICE's? Just skeptical of a lot of the hype these days in this field...

 

"That IF you ignore mining and energy security. 2/3rds of Cobalt comes from DRC which uses 7yr old child labour in extraction, China is the largest producer of refined the Cobalt and controls the market for Rare earth metals(approx 90%). Why do we want to transfer the Wests energy security to China that can manipulate or cut off supply as they did in 2011 when prices when up 2000-3000% for some rare earth metals. Greens just want to exchange one source of energy for another without examining the inherent problems with this new source. Environmentally its a disaster with Chinese rare earth mining villages a toxic wasteland where cattle die and their water is to toxic to drink. Of course EVs and Greenies don't want to respond or acknowledge the environmental damage of mining and extraction of REEs, Cobalt & Copper.(especially in China where environmental protection is scant)

 

Then there is the problem of rising prices for these materials if demand for EVs is anything near projections. Plus subsidies will have to be eliminated as they not fiscally sustainable if EV develop beyond their niche status. Fuel taxes lost will be in the 10s of billions in many countries. (38 billion pounds in the UK alone per yr)

 

Cost of EV's are compared to oil which is taxed to death - without those taxes EVs make no sense. By comparison if we converted our vehicles to NG and charged the vehicles overnight using NG compressors an equivalent litre of NG fuel would be about 30c. (NG is priced wholesale through Enbridge) Emissions comparison would be far different with NG Cars vs EVs vs Gasoline as well as much lower cost to run with NG. When subsidies are eliminated for EVs they make even less economic sense."

 

Then there is this opinion. Should make those looking to invest in EV's pause to examine the veracity of the claims....

 

The Inconvenient Truth About Electric Vehicles

 

Submitted by Gary Novak via Science Errors blog,

 

An electric auto will convert 5-10% of the energy in natural gas into motion. A normal vehicle will convert 20-30% of the energy in gasoline into motion. That's 3 or 4 times more energy recovered with an internal combustion vehicle than an electric vehicle.

 

Electricity is a specialty product. It's not appropriate for transportation. It looks cheap at this time, but that's because it was designed for toasters, not transportation. Increase the amount of wiring and infrastructure by a factor of a thousand, and it's not cheap.

 

Electricity does not scale up properly to the transportation level due to its miniscule nature. Sure, a whole lot can be used for something, but at extraordinary expense and materials.

 

Using electricity as an energy source requires two energy transformation steps, while using petroleum requires only one. With electricity, the original energy, usually chemical energy, must be transformed into electrical energy; and then the electrical energy is transformed into the kinetic energy of motion. With an internal combustion engine, the only transformation step is the conversion of chemical energy to kinetic energy in the combustion chamber.

 

The difference matters, because there is a lot of energy lost every time it is transformed or used. Electrical energy is harder to handle and loses more in handling.

 

The use of electrical energy requires it to move into and out of the space medium (aether) through induction. Induction through the aether medium should be referred to as another form of energy, but physicists sandwich it into the category of electrical energy. Going into and out of the aether through induction loses a lot of energy.

 

Another problem with electricity is that it loses energy to heat production due to resistance in the wires. A short transmission line will have 20% loss built in, and a long line will have 50% loss built in. These losses are designed in, because reducing the loss by half would require twice as much metal in the wires. Wires have to be optimized for diameter and strength, which means doubling the metal would be doubling the number of transmission lines.

 

High voltage transformers can get 90% efficiency with expensive designs, but household level voltages get 50% efficiency. Electric motors can get up to 60% efficiency, but only at optimum rpms and load. For autos, they average 25% efficiency. Gasoline engines get 25% efficiency with old-style carburetors and 30% with fuel injection, though additional loses can occur.

 

Applying this brilliant engineering to the problem yields this result: A natural gas electric generating turbine gets 40% efficiency. A high voltage transformer gets 90% efficiency. A household level transformer gets 50% efficiency. A short transmission line gets 20% loss, which is 80% efficiency. The total is 40% x 90% x 50% x 80% = 14.4% of the energy recovered before the electrical system does something similar to the gasoline engine in the vehicle. Some say the electricity performs a little better in the vehicle, but it's not much.

 

Electricity appears to be easy to handle sending it through wires. But it is the small scale that makes it look cheap. Scaling it up takes a pound of metal for so many electron-miles. Twice as much distance means twice as much metal. Twice as many amps means twice as much metal. Converting the transportation system into an electrical based system would require scaling up the amount of metal and electrical infrastructure by factors of hundreds or thousands. Where are all those lines going to go? They destroy environments. Where is that much natural gas going to come from for the electrical generators? There is very little natural gas in existence when using it for a large scale purpose. Natural gas has to be used with solar and wind energy, because only it can be turned on and off easily for backup.

 

One of the overwhelming facts about electric transportation is the chicken and egg phenomenon. Supposedly, a lot of electric vehicles will create an incentive to create a lot of expensive infrastructure. There are a lot of reasons why none of the goals can be met for such an infrastructure. The basic problem is that electricity will never be appropriate for such demanding use as general transportation, which means there will never be enough chickens or eggs to balance the demand. It's like trying to improve a backpack to such an extent that it will replace a pickup truck. The limitations of muscle metabolism are like the limitations of electrical energy.

 

Electrons are not a space-saving form of energy. Electrons have to be surrounded by large amounts of metal. It means electric motors get heavy and large. When cruising around town, the problems are not so noticeable. But the challenges of ruggedness are met far easier with internal combustion engines. Engineers say it is nice to get rid of the drive train with electric vehicles. But in doing so, they add clutter elsewhere, which adds weight, takes up space and messes up the suspension system. Out on the highway, the suspension system is the most critical factor.

 

These problems will prevent electric vehicles from replacing petroleum vehicles for all but specialty purposes. The infrastructure needed for electric vehicles will never exist when limited to specialty purposes. This would be true even with the perfect battery which takes up no space and holds infinite charge.

 

 

 

To be fair, fossil fuels have their inefficiencies too. Look up well to wheels cost. Combustion is ~25% efficient, refining 88%, transportation, 96%, and recovery 93% efficient. So the IC is 19.6% efficient from recovery to kinetic energy. I think the hope is for more local electricity to be produced through solar in the coming years. There really isn't a need to store the solar energy if it can be sent back through the grid and used for industrial processes and HVAC during the day and cars are charged via non solar electricity at night. 

[petec]

I find interesting that some people dismiss out of hand the comments mentioned by Sculpin. If you know anything about power generation and what goes into lithium batteries and brushless motors, you realize quickly that there is a huge problem for mass adoption.

 

People didn't think there'd be enough oil for global adoption of kerosene lanterns back in the 1880s!  I have read quite a bit on this and I don't think raw materials will be a hard block on adoption.  Some prices will rise (I own a small amount of COPX for this reason - literally my only speculative position!).  I'd be interested to see hard evidence that contradicts this?

 

Power generation and transmission are not huge issues.  Moving all passenger cars to the grid would add 20-30% to demand in most countries - not a killer.  And what is an electric car if not a movable battery?  Cars are used 4% of the time on average.  They will be plugged in while we are at work and they will smooth out spikes in supply from solar (in the day) and wind (24/7).  Cars will actually be able to feed back into the grid, for example in the early morning and late evening before and after the commute, when the sun's not shining.  Electric cars are a solar enabler, rather than part of the problem.

 

There are a lot of cheap ways to travel today such as Uber, car pooling, subway, buses, yet I see no evidence of people abandoning their own car.

 

My second car has already been rendered obsolete by Uber.  My wife uses our main car to commute, but even that would probably be cheaper with Uber, so really the reason we own it is for very occasional long distance trips.  If Uber and the like build out its network density - which is quite likely as cars go autonomous - owning a car will become prohibitively expensive for us by comparison.  I am not saying this works everywhere in every country or that the world will change tomorrow.

 

Re: your other post, Volvo is indeed tiny.  But most manufacturers have major EV programmes.  BMW just announced the conversion of a plant in Oxford to build electric minis, for example.  EU emissions regulations coming into force in 2021 are very tight, probably can't be met, and will drive fines that exceed automakers profits, so they are very focussed on this.  The UK and France have banned ICE sales past 2040; Germany and India have discussed doing the same past 2030; China is hugely in favour of electric.  Automakers can see which way the wind is blowing and are investing accordingly.  Volvo's announcement is more likely to be the first than the only.

 

Pete

[boilermaker75]

 

My second car has already been rendered obsolete by Uber.  My wife uses our main car to commute, but even that would probably be cheaper with Uber, so really the reason we own it is for very occasional long distance trips.  If Uber and the like build out its network density - which is quite likely as cars go autonomous - owning a car will become prohibitively expensive for us by comparison.  I am not saying this works everywhere in every country or that the world will change tomorrow.

 

Pete

 

We travel to LA a few times a year to visit our daughter. We used to rent a car; Uber has made car rental in LA obsolete for us. It is much cheaper to Uber than rent a car. Hell, the parking alone when we went somewhere costs more than the Uber does now!

[petec]

I've just done a VERY scientific study.  I just got a taxi back to work from my physio - 1.3 miles in central London.  Spotted 12 fully electric cars and I was looking at my phone half the time, not the road.  No way that would have happened 2 years ago.

[Liberty]

When I walk around my neighborhood I see a couple Volts, a couple LEAFs, sometimes a Tesla, and a Mistubishi i MiEV. Not Bolts yet, but my parents have friends that own one and my parents can't stop talking about it since they test drove it.

[oddballstocks]

I've just done a VERY scientific study.  I just got a taxi back to work from my physio - 1.3 miles in central London.  Spotted 12 fully electric cars and I was looking at my phone half the time, not the road.  No way that would have happened 2 years ago.

 

That's crazy.  I had to drive around for a few hours yesterday in Pittsburgh traffic, zero electric cars.  I did see a Prius, that sort of counts..

 

I guess it makes sense in England.  England is about the same size as Pennsylvania.  If I was landlocked to an area the size of PA then range isn't much of a problem.  You can get from one side of the island to another on one possibly two charges at most.

[Jurgis]

I guess it makes sense in England.  England is about the same size as Pennsylvania.  If I was landlocked to an area the size of PA then range isn't much of a problem.  You can get from one side of the island to another on one possibly two charges at most.

 

You should visit California sometime...  8)

[petec]

I've just done a VERY scientific study.  I just got a taxi back to work from my physio - 1.3 miles in central London.  Spotted 12 fully electric cars and I was looking at my phone half the time, not the road.  No way that would have happened 2 years ago.

 

That's crazy.  I had to drive around for a few hours yesterday in Pittsburgh traffic, zero electric cars.  I did see a Prius, that sort of counts..

 

I guess it makes sense in England.  England is about the same size as Pennsylvania.  If I was landlocked to an area the size of PA then range isn't much of a problem.  You can get from one side of the island to another on one possibly two charges at most.

 

Agreed.

 

That said, someone just drove a Tesla NY-LA in 52 hours.  Google maps says it should take 42 hours, which presumably doesn't include stops.  I was surprised that these times were so close.  (The record for a petrol car is 20 hours, but that includes cans of fuel in the back which I don't consider comparable - a Tesla could go a lot further if you put another battery in the truck, or towed one.)

 

You can't blink in London without seeing a Prius.

[Packer16]

I think you are observing the "big city" difference from the rest of the country(ies).  From observation the commuting experience by car or by most other means in large cities & surrounding areas is pretty poor so anything to make it better folks are open to & they have the money to spend to for it vs. the rest of the country where the experience is not so bad & the folks are more budget constrained. 

 

Packer

[rkbabang]

I think you are observing the "big city" difference from the rest of the country(ies).  From observation the commuting experience by car or by most other means in large cities & surrounding areas is pretty poor so anything to make it better folks are open to & they have the money to spend to for it vs. the rest of the country where the experience is not so bad & the folks are more budget constrained. 

 

Packer

 

You have a point. People in the urban/suburban areas tend to forget that rural areas are always the last to get innovations which require economies of scale or physical infrastructure.  I was just watching Ozark on Netflix (a great show) and in one scene shortly after moving there from Chicago the teenage daughter tells her parents that she's "just going to take an Uber" somewhere and a few moments later is distraught to find out that there is no Uber.

 

[Cardboard]

Looks to me like the urban fellows are having second thoughts as well:

 

https://finance.yahoo.com/news/tens-thousands-people-canceled-tesla-052159896.html

 

https://energynow.ca/2017/08/oil-rises-record-gasoline-demand-allays-shale-boom-worries/

 

Cardboard

[sculpin]

From the FT yesterday....

 

https://ftalphaville.ft.com/2017/08/03/2192188/electric-vehicle-realities/

 

Electric vehicle realities

 

Izabella Kaminska

Electric vehicles (EVs) are all the rage. But they’re also fast becoming the sacred cows you can’t criticise for fear of being shredded by the EV, renewable, and tech lobbies.

 

Questioning the cost structures of the industry in general is not allowed in public forums. My colleague Jonathan Ford discovered this recently when he dared to question the economic realities underpinning the renewable sector.

 

So what are the EV champions failing to tell us? Is it all good news? Or is there an element of public relations deflection to consider as well?

 

In the spirit of non-consensus thinking, it’s time for FT Alphaville to ask just how green electric cars really are. Are policies to ban diesel and gasoline cars at some arbitrary point in the future likely to unleash a barrage of negative externalities that no one’s yet even thought about?

 

Brian Piccioni and team at BCA Research offer a good starting point to our questions on Thursday, in a report entitled Electric Vehicles Part 1: Costs of Ownership.

 

The bad news for EV fans is their work determines that the cost of ownership of an EV still far exceeds that of an internal Combustion Engine Vehicle (ICEV), even after subsidies are accounted for.

 

With numbers crunched, a comparison between the Chevy Bolt EV and two equivalent ICEVs, the Chevy Sonic and the Open Astra, over 100,000 miles, shows that there’s no denying EVs are still more expensive than ICEVs.

 

Three points come up in particular.

 

1) Excluding subsidies, the net expense difference is about $16,000 in the US, $18,500 in Germany and $13,200 in France.

 

2) After subsidies, the difference is about $6,600 in New York State, $13,900 in Germany and $6,000 in France.

 

3) Even if electricity were free (which of course it isn’t), after subsidies, the difference in cost of ownership in NY would be $3,400, $3,200 in Germany and $600 in France.

 

With respect to the Bolt specifically, the analysts note GM believes it’s losing some $9,000 with every Bolt it sells. The automaker would need manufacturing costs to be cut by about $14,750 — 34 per cent — to make the vehicle competitive with GM’s Opel Astra in France.

 

The numbers above can thus be adapted for a “What If…” scenario, wherein GM actually begins selling the Bolt at average corporate profitability.

 

In that case the numbers get even more bleak. Excluding subsidies, a Bolt would be $26,900 more expensive in the US than the equivalent ICEV, $29,300 more expensive in Germany and $24,000 more expensive in France.

 

So where’s the cost coming from?

 

There are additional manufacturing costs for “Pure Play” EV vendors like Tesla, meanwhile, because unlike integrated auto manufacturers, they can’t use many of the same components from ICEV production, limiting economies of scale.

 

But the common denominator for all EVs is the cost of batteries, say the analysts, since that’s a commodity. It’s also the key factor behind the faster rate of depreciation of EVs versus ICEVs.

 

Here, arguably, some significant issues are being overlooked. For example, while the consensus view is that EV battery prices have been experiencing price declines over the past few years (in the order of 8 to 14 per cent), the analysts themselves could not find any evidence to support that position.

 

Some confusion is probably also occurring on the comparables. While some reports claim battery cells cost $145/kWh, the analysts stress this is not the same thing as a battery pack, which comes as a fully assembled unit with wiring, electronics and a cooling system. In the case of the Bolt, GM lists the cost of its battery pack as $15,734, so about $262/kWh.

 

From the report:

 

Peer reviewed research suggests the cost of the battery pack is about 50% greater than the cost of the battery cells, however, we note the same article suggests that ratio will remain the same as battery prices drop. This is unlikely as there is no reason to believe the largely mechanical battery pack will decline proportionately any more than the cost of an engine or transmission will decline. Most likely, the battery pack assembly, excluding the cells, will decline only slightly.

The analysts further suspect it may be part of GM’s commercial strategy to subsidise the battery packs so as not to show EV buyers that a replacement battery is overwhelmingly expensive.

 

Given the Bolt comes with a 100,000-mile guaranty and an 8-year warranty on the battery, however, the analysts believe it’s highly unlikely many consumers will spend $15,734 (plus labour) to replace the battery on an eight-year-old EV. This allows GM to sell them below cost, since it’s unlikely to sell many replacements. Accordingly the analysts note: “We believe that most likely the actual cost of the battery pack of the Bolt is much higher than $15,734.”

 

Nevertheless, when it comes to degradation, GM’s own expectation is that depending on use, the battery may degrade as little as 10 per cent to as much as 40 per cent of capacity over the warranty period.

 

Battery durability is at least as important as price when it comes to the overall cost of ownership.

 

Overall, batteries currently don’t last much more than 100,000 miles and yet 18,300 miles per year is the average UK mileage for a company car. Assuming a normal distribution, the BCA analysts predict up to half of all EV drivers may experience degradation sooner than the eight year guarantee because of surpassing the 100,000-mile limitation on the warranties.

 

On the battery degradation issue specifically, BCA’s analysts suspect the industry is being far too optimistic about how much better batteries are getting year to year. The view that batteries are getting longer lasting, they say, flies in the face of what every consumer has experienced with mobiles phones, notebook computers or any other cordless device.

 

Frustratingly for the EV industry perhaps, if durability did indeed get significantly better, there would still be a cost: prior-generation EVs would plummet in value.

 

Battery demand risk

 

But the biggest threat to the economics of batteries may, ironically, come from increasing demand for EVs.

 

This is a really important point.

 

The counterintuitive logic is based on the assumption that large scale manufacturers — the sort that have lots of access to cheap labour and cheap dirty fuel (China ahem) — will rush to compete in the sector for political strategic reasons. But rather than driving down costs by way of innovative practices or technological shifts, they’ll do so because of their access to cheap resources (both human and energy) and general willingness to undercut competitors by selling batteries at a loss.

 

This is a path, BCA points out, China already took with the solar industry, one reason why solar companies across the board are having trouble keeping afloat. If China were to follow a similar route with batteries — mass producing at a loss for the sake of gobbling up market share — the strategy could result in heavy losses for battery manufacturers leading to even bigger expenses from sunk costs.

 

The other ghastly consequence is that a race to the bottom on subsidisation is likely to encourage the opposite of innovation — flatlining innovation rather than accelerating. To the contrary, carbon-intensive industries and sectors currently being penalised by taxes are likely to innovate far more quickly, leading to a perverse scenario wherein the rate of innovation in the fossil fuel sector (on emissions, costs and overall harmful consequences) begins to outstrip that of the renewable or electric sector.

 

Credit where it’s due

 

Batteries aside, BCA note, it should be slightly cheaper to manufacture EVs versus similar ICEVs, due to the reduction in complex moving parts. This cost reduction is slightly offset, however, by the need for more robust chassis and suspensions due the weights of the batteries,the requirement for electric powered air conditioning and regenerative braking. (On the suspension front, here’s a fun catalogue of Tesla cars with broken suspensions).

 

But beware the impact on government finances

 

Nevertheless, most people are encouraged to buy EVs because of the fuel subsidies or free parking promises. Yet is difficult to assess how long EV subsidies will persist. Fundamentally, the economics dictate that they can only really be affordable to governments as long as the number of vehicles sold remains small. If EV sales accelerate swiftly, these subsidies would get very costly for government coffers very quickly — straining public finances if not creating massive implied contingent liabilities.

 

To wit:

 

For example, about 2 million new passenger cars are registered in France every year. If only half of those were EVs, subsidies would total $7.2B. Money for roads, infrastructure maintenance, policing, and so on have to come from somewhere, and if ICEV sales decline substantially, European governments’ huge gasoline tax revenues would also deteriorate; in such an environment, it is reasonable to assume that EV subsidies would eventually disappear and be replaced by taxes.

On that basis, when electric car subsidies start eating into the funding that’s available for other vital government services, public perceptions of EV efficiency will change markedly.

 

And we haven’t even ventured into issues such as the carbon-burn transfer to power plants (the electricity has to come from somewhere, whether it’s on or off-peak); lithium mining energy and pollution costs; infrastructure costs; reduced public accessibility and convenience for those who don’t own a dedicated parking spot; haulage inefficiency costs; barrel displacement costs for the EV subsidising states (for as long as planes need jet fuel and ships need fuel-oil, gasoline will still be produced as a byproduct, and its discounted rate will be a boon to nations who don’t encourage electric vehicle policy) and last and not least, the productivity costs associated with longer refuelling times.

 

[boilermaker75]

Closest Tesla dealer to me is 60 miles. I visited this dealer on Saturday to learn more about the model 3 and to see when I might be able to take delivery. The position I am in the queue has delivery between March-May 2018 if I choose the $49,000 or greater version. Since I live in the midwest, I might wait for the all-wheel drive, which would be delivered to me in the last quarter of 2018.

 

They are really pushing the model S. That made me feel like I was in a car dealership. Discounts especially for the 70D, which with tax rebate would place the price in the mid 70s. I was starting to get serious about the model S to where we were finding a configuration I would want in inventory somewhere. Than I asked to test drive one. They do not do walk in test drives and I would have to schedule and come back. That is when I said I would wait for the model 3.

 

I was also taken aback by  comments they were making about the model 3 to get me to buy a model S. Comments like we haven't seen the model 3 yet who knows if it will be work the money while the model S is proven!

[Jurgis]

Closest Tesla dealer to me is 60 miles. I visited this dealer on Saturday to learn more about the model 3 and to see when I might be able to take delivery. The position I am in the queue has delivery between March-May 2018 if I choose the $49,000 or greater version. Since I live in the midwest, I might wait for the all-wheel drive, which would be delivered to me in the last quarter of 2018.

 

They are really pushing the model S. That made me feel like I was in a car dealership. Discounts especially for the 70D, which with tax rebate would place the price in the mid 70s. I was starting to get serious about the model S to where we were finding a configuration I would want in inventory somewhere. Than I asked to test drive one. They do not do walk in test drives and I would have to schedule and come back. That is when I said I would wait for the model 3.

 

I was also taken aback by  comments they were making about the model 3 to get me to buy a model S. Comments like we haven't seen the model 3 yet who knows if it will be work the money while the model S is proven!

 

Yeah, the typical car dealership attitude. Which sucks.

 

I don't like very much Tesla's attitude to push more expensive configurations (apart of AWD) to the top of the queue. I understand it, but I don't like it.

 

If you wait for AWD, you pretty sure lose federal tax rebate. Which I think is a rather big hit to price... Your call though.

I have mostly decided that I'm not buying if I can't squeeze into the tax rebate cohort.

 

Additional data point: for people who don't want autopilot, there are older used Model S online at ~$45K price range, some even with good options. Clearly it's the oldest Model S configuration, so FWIW.

[boilermaker75]

Closest Tesla dealer to me is 60 miles. I visited this dealer on Saturday to learn more about the model 3 and to see when I might be able to take delivery. The position I am in the queue has delivery between March-May 2018 if I choose the $49,000 or greater version. Since I live in the midwest, I might wait for the all-wheel drive, which would be delivered to me in the last quarter of 2018.

 

They are really pushing the model S. That made me feel like I was in a car dealership. Discounts especially for the 70D, which with tax rebate would place the price in the mid 70s. I was starting to get serious about the model S to where we were finding a configuration I would want in inventory somewhere. Than I asked to test drive one. They do not do walk in test drives and I would have to schedule and come back. That is when I said I would wait for the model 3.

 

I was also taken aback by  comments they were making about the model 3 to get me to buy a model S. Comments like we haven't seen the model 3 yet who knows if it will be work the money while the model S is proven!

 

Yeah, the typical car dealership attitude. Which sucks.

 

I don't like very much Tesla's attitude to push more expensive configurations (apart of AWD) to the top of the queue. I understand it, but I don't like it.

 

If you wait for AWD, you pretty sure lose federal tax rebate. Which I think is a rather big hit to price... Your call though.

I have mostly decided that I'm not buying if I can't squeeze into the tax rebate cohort.

 

Additional data point: for people who don't want autopilot, there are older used Model S online at ~$45K price range, some even with good options. Clearly it's the oldest Model S configuration, so FWIW.

 

If the tax rebate is available when they contact me about the rear wheel drive version I'll probably take it. Otherwise I will  defer my final decision as to whether to purchase or not to when the AWD is available.