November 29, 2020
Oil prices are down and bans on automobiles powered by internal combustion engines (ICE) are up – way up. But don’t be fooled; there is plenty of life left in the ICE.
To be sure, there’s lots of momentum propelling the electric-vehicle market, including the recent inclusion of Tesla in the S&P 500. But oil-fired cars are here to stay, and there are five big reasons why. Before I get to them, though, a quick review of the bans.
On November 17, British Prime Minister Boris Johnson announced a ban on new gasoline- and diesel-powered vehicles that will take effect in 2030. Several other European countries have announced similar measures, including Norway, which has declared that by 2025, all new cars sold in the country must be zero-emission (meaning all-electric or fuel cell). Here in the U.S., California Gov. Gavin Newsom signed an executive order in September that bans the sale of new gasoline-powered vehicles in his state by 2035.
These moves have helped fuel the belief that, as one analyst put it, “the combustion engine is dead.” That claim is dubious for several reasons.
The first and most important is price. EVs are still too expensive for low- and middle-income consumers, as was made clear to me during a recent visit to Costco. Displayed near the entrance was a brand new EV, the Chevy Bolt. The price was a jaw-dropping $46,450. For that much cash, consumers could buy a brand new BMW 3 series. Or they could pick up a Mercedes-Benz C-class for less than $39,000. In fact, for the price of a single Chevy Bolt, thrifty shoppers could buy a pair of Toyota Corollas, which sell for about $18,000.
The second reason is mining. Replacing all the ICE vehicles in the U.S. with EVs would require stunning amounts of commodities like cobalt, lithium, and copper. The scale of the demand can be understood by looking at a letter that Professor Richard Herrington of the Natural History Museum in London sent to the British government last year. Herrington and his colleagues looked at the U.K.’s climate goals and the requirement that all its vehicles be converted to electricity by 2050. Doing so, they found, would require the entire world’s production of neodymium, three quarters of the world’s lithium production, and at least half of the world’s copper production during 2018. And remember, that’s just for the U.K.!
The U.S. has about 276 million registered motor vehicles, or roughly nine times as many vehicles as the U.K. Thus, if Herrington’s numbers are right, electrifying all U.S. motor vehicles would require roughly 18 times the world’s current cobalt production, about nine times global neodymium output, nearly seven times global lithium production, and about four times world copper production.
The third reason that the ICE will stick around has to do with a basic metric in physics: energy density. Yes, batteries are getting better and so are the cars that use them. But today’s batteries are still no match for oil when it comes to gravimetric energy density, or the amount of energy contained per kilogram.
Gasoline and diesel contain about 80 times more energy per unit of weight than the best lithium-ion batteries. Even if you assume that EVs are twice as efficient as ICE automobiles, the energy density of gasoline and diesel is still 40 times better than that of batteries. I could add a host of other reasons why we will continue using oil in transportation, including its relatively low cost, abundance, geographic distribution, and ease of handling. Add oil’s value in industry – for lubrication, and the fact that it can be turned into products ranging from cosmetics to shoelaces and bowling balls to milk jugs – and it becomes apparent that oil will be with us for a long time to come.
Fourth, internal combustion engines keep getting smaller, faster, more efficient, and more powerful. In 1908, Ford Motor Company launched the Model T. In 2011, the company unveiled its new 3-cylinder turbocharged 1-liter engine, the EcoBoost. The new engine is 28 percent lighter than the engine in the Model T, produces about 16 times as much power per liter of displacement, and is more than twice as fuel-efficient.
The final reason the ICE will endure is the ease of refueling. EVs like the Tesla or Chevy Bolt require owners to keep a special recharging unit at home or rely on public charging stations, which are still relatively scarce. Drivers of ICE vehicles can refuel their rides at any of the 115,000 service stations in the country. Furthermore, unlike EVs, which can take hours to recharge, ICE vehicles can be refueled in less than five minutes.
In short, the ICE has dominated the transportation sector for more than a century because it meets consumers’ needs on the critical issues of cost and convenience. Yes, EVs will gain market share in the years ahead. But to paraphrase Mark Twain, the claims about the death of the ICE have been greatly exaggerated.
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