I was driving my daughter to school today and I had NPR on. We were going to pick up her boyfriend at Dunkin Donuts near the high school so she was sitting in the back seat to be with him, leaving me in control of the radio.
The program was about the future of cars, and I learned enough to be worth repeating. There was a panel of industry experts, the most interesting of whom was Margo Oge, formerly with the EPA and currently on the board of Volkswagen.
When I came in, one of the guys was talking about Tesla, saying that people were expecting progress a lot faster than they were likely to see it. Tesla still has technical problems and isn’t near the economies of scale necessary to be competitive in the very low margin automobile business, so this could take a while.
Oge replied that the electric car revolution wasn’t likely to really come from Tesla. The industry’s immediate future is in Europe. What it has been triggered by is what is sometimes called Dieselgate, where VW falsified Diesel emissions data. (You may not be aware of just how big VW is: for part of 2017, they were the world’s largest automaker.) That was a big deal here but a bigger deal there. VW had bet strongly on Diesel and against electric but as a result of this scandal they’ve now started investing in electric, very heavily. They account for nearly half the worldwide automobile industry’s investment in electric at the moment, to the tune of about 40 billion dollars.
Partially as a result of the scandal, it is now legal for European cities to prohibit Diesel cars within city limits because of air quality. That is scaring the living crap out of Diesel car manufacturers.
There are two other factors that will boost the adoption of electric cars.
One is that a lot of young people in urban areas would rather share vehicles than own them, so the individual market for automobiles is likely to shrink. If you’re using cars just in an urban area, electric is ultimately more cost-effective than the alternatives.
The other is China. China has wanted to become a car manufacturing nation but has had problems thus far. Electric is a way to sort of leapfrog into the industry, not start way behind everyone else. And of course they have major air quality issues and insane amounts of demand over supply to the point where people get the opportunity to buy cars through a lottery.
There was a little talk about driverless cars. Oge pointed out something else interesting: Automobile technology has basically improved incrementally for about the last century but has developed drastically within about the last seven years, specifically in the areas of electric cars and driverless cars. That could make using traditional assumptions about trends less reliable.
I found it all interesting mainly because of the economics, what’s driving what kind of development and deployment. I didn’t have my eye on the VW Diesel scandal as a catalyst.