Hey folks, Brian Cooley with another one of your emails about high tech cars and modern driving, and this one comes in from [INAUDIBLE] who shall we say, is not a huge buff of electric cars, he says I don't see much benefit of EVs to consumers especially at this stage of their development Due to range anxiety, cost and charging times.
Those are the big three frame points.
With the slew of EVs crowding the market days, are internal combustion cars in a real existential crisis?
Or are Evs being force fed to consumers by regulators and car brands when there's no actual need Or I think you mean demand for them.
This is a really contentious issue Raul.
Let's face it, electric cars plug in, or pure electric, are something of an artificial market.
They have to be because they are not a brain dead, straight-forward, economic slam dunk.
It's still cheaper to buy and run a combustion engine car, but more about that in a moment.
So you get these incentives to come in to try and cover the gap, if you will, in terms of affordability and desirability.
Those incentives come in many ways, don't just think about the federal tax incentive.
You do have that, $10,000 in the US on many of these cars.
You've also got state tax incentives Some states also give you rebates.
That's very different from an incentive, you get that period, no matter your tax return.
Then there's HOV lane access.
Saving money is one thing.
Saving time, I think people even like that more.
Other incentives include car makers that want to sell their cars without penalty in the 12 clean states have to sell a certain percentage of zero emission vehicles.
And car makers have to be willing to lose money on each electrified car they sell now to build future market position.
That's also incenting you, they're selling you a lost leader.
So this is a huge packet of incentives beyond what just touches the consumer.
And that creates a very different world than if it was a car that was out there doing it on its own.
Now, in these plug ins of all kinds, are still a tiny part of the market, below 1% of the US market at the end of 2016.
For that full year's sale, it was about 0.09%.
And you might say, okay, this isn't going anywhere.
They've been on the market for years, this is all they can do.
But here's the thing.
Look out.
Tipping Points Ahoy!
The folks over at Bloomberg New Energy Finance, who did some of the best research on this stuff, have found a lot of interesting turning points.
Battery prices have come down over a third in the last year or so.
That can mean a car that is cheaper or that can mean a car that has more range without getting more expensive.
But here's Or can split the difference.
The car maker loses a little less, and you get a little more mileage for the same price.
By 2022 a full EV will be as economical as a gas engine car in terms of total cost of ownership, projects Bloomberg.
And by 2040, 35% of all new chars being sold world wide Will be plug in vehicles.
That's a very big difference from the 1% we have in the US, for example.
By the way, they also project these tipping points lead to the next big crash in oil prices, at the scale of what happened in 2014, but that's the beyond scope of this show.
Look [INAUDIBLE] just about every plug in vehicle on the market, and most of them more than once.
And I can tell you why I believe they are the future.
Because of their clean running, even though there are upstream emissions, I got that.
They're incredibly fun torque-y behavior, they're very quiet, and we're starting to the point now where range is solving for charge anxiety.
It's not perfect yet, but once you add in this tipping point.
Of them being cheaper in the total cost than a gas engine car, I think things start to change very quickly, and the incentives will no longer be the necessary crutch.
By the way, to know more about how incentives are about to change in the US, check out our recent Car Tech 101 on the end of them that is just starting to happen.
