Writing on the Wall for Internal Combustion

December 7, 2017

batteriesbloom

Battery prices tumbling. More and more countries, and now, California – preparing to ban Internal Combustion Engines (ICE) in autos.

Bloomberg:

The kind of battery that powers electric vehicles is now the cheapest it’s ever been thanks to a global ramp-up in production.

Lithium-ion battery packs are selling at an average price of $209 a kilowatt-hour, down 24 percent from a year ago and about a fifth of what it was in 2010, a Bloomberg New Energy Finance survey shows. The rate has further to fall — reaching below $100 a kilowatt-hour by 2025, according to a report by BNEF analyst James Frith.

That’s a magic number for the electric car business. According to Frith, $100 is widely seen as “a tipping point in the adoption of EVs.”

The price estimates are based on a BNEF survey of more than 50 companies, and their decline reflects a rise in battery manufacturing and “the economies of scale that come with it,” the report shows. Developers of stationary storage systems — like the kind that back up rooftop solar panels — can expect to pay 51 percent more than automakers because of much lower order volumes.

Forbes:

Gasoline and diesel-powered vehicle bans are accelerating: China, several European nations, and India have announced bans on internal combustion engine (ICE) vehicle sales will commence between 2025 and 2040. Now, America’s largest vehicle market may join the global trend of banning fossil fuel vehicle sales .

More than 2 million new vehicles were registered in California last year, the most of any state, and 5% of California’s new vehicle sales in the first quarter of 2017 were electric vehicles (EVs). Under a new legislative proposal, every new vehicle sold statewide would have to be zero emission. California Air Resources Board (CARB) Chair Mary Nichols’ recently indicated Governor Jerry Brown has asked CARB to consider banning new ICE sales, and Assemblyman Phil Ting announced he will introduce a bill banning ICE sales by 2040.

But even with surging EV sales, is it realistic to mandate all new vehicle sales be electric? And even if this mandate is feasible, is it good policy?  The short answer is yes, it’s feasible, and the benefits will be immense.  But the long answer is that it will require reworking our transportation energy system, along with continued technology innovation and smart public policies.

chevybolt

California’s climate policies have cut electricity emissions 26% since 2014, but transportation emissions have remained stubbornly high.  Passenger vehicle tailpipe emissions grew 4.5% from 2014-2015, increasing transportation’s total share to 37%.  With petroleum refining and oil extraction, that total grows to 50% of statewide emissions.  These trends must be reversed to hit the state’s aggressive target of 40% emissions reductions below 1990 levels by 2030.

California’s 2030 emissions target will only be achieved with large-scale vehicle electrification .  The state’s analysis suggests more than 4 million electrified vehicles must be on the road by then, and CARB Chair Nichols says to meet the state’s the state’s 2050 target, “we have to pretty much replace all combustion with some form of renewable energy by 2040 or 2050.”

Local air pollution and public health concerns are also driving California’s EV embrace.  Motor vehicles are the state’s largest source of poor air quality, contributing to asthma, a host of other health problems, and premature death.  While California has made great progress, residents still suffer from the some of the dirtiest air in America with eight of the worst cities for particulate matter pollution and seven of the worst cities for ozone pollution.

Global economic competitiveness is also at stake for California.  China, the world’s largest auto market, is hastening the electric age of transportation with 336,000 EVs registered in 2016 alone – the most globally – and a suite of government policies which increase that number daily.

While some consider banning ICEs a heavy-handed government mandate, this and other EV transition policies could end up being smart economic policy.  California is already showing clean technology manufacturing upside from the transition.  The state’s vehicle exports value increased three-fold over 2013-2016, from $600 million to $2 billion, largely driven by Tesla sales.  Meanwhile, Tesla’s Model 3 reached new performance milestones, such as a 310-mile range battery option, and will exponentially increase output from Tesla’s in-state manufacturing facilities.

 

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