To EV or not to EV?
By: Carter E. Anthony, CFA
In 1912, Thomas Edison developed the first electric vehicle in the United States. It had 15 two-volt batteries and a 30-volt electric motor pushing it to 25 miles per hour, an incredible speed for the time.
With a price tag double the cost of a similar gas-powered automobile and Henry Ford’s mass production of the Model T, the demand for electric vehicles was scuttled.
Interestingly, the most popular developer of electric vehicles today, Tesla, is named after Edison’s nemesis, Nikola Tesla.
Today, electric vehicles are said to cost $10,000 less to maintain than gas-powered vehicles. EVs don’t have transmissions and clutches, the two most expensive parts of a car to repair.
However, the first EV introduced by Tesla, its original Roadster in 2008, was priced at $109,000 easily outdistancing the price of a new highly popular Corvette.
Today, auto manufacturers are producing EVs for as little as $31,000, similar to the average price of a gas-powered vehicle.
In an effort to affect climate change, the government is subsidizing the purchase of EVs by $8,000 per vehicle.
So where does this bevy of batteries go? The batteries are under the floor of the EV. If you are a driver who likes to speed up in curves, you will like the lower center of gravity as you hug the road.
However, if you are in an accident expect your insurance premium to rise as you do more damage due to the weight of the batteries.
Battery life is 300,000 miles; replacement cost is $22,500 if needed. If your EV breaks down, it has to be put on a car hauler, no towing, pushing or pulling.
The Ford F-150 Lightning pickup has become the darling of electric pickups. Production at the Ford Rouge facility is sold out and Ford is working to bring two other plants on line.
In anticipation of the Lightning, Ford’s (F-NYSE) stock price has risen from $8+ this year to $20+ yesterday.
All car companies are making some kind of projection about EV production. BMW’s EV production will be 20% of all cars by 2023; Volvo will be 100% EV by 2030.
Depending on the EV, the traveling capacity is 250-500 miles. There are about 50,000 public charging stations in the United States.
It takes a Level 3 charger, the strongest, 30 minutes to fully charge an EV. It takes a Level 2, the household standard, 8-10 hours.
Electrify America (Volkswagen), Blink (BLNK-NDQ) and ChargePoint (CHPT-NYSE) are three companies building charging networks. Tesla has its own network for Tesla’s only. Smartphone apps contain directions to charging stations.
There are concerns that few seem to want to address. More electricity will be needed, not less, to produce the electric grid to charge the growing number of EVs.
Mining for the materials to build the batteries, cobalt and lithium, is expensive and environmentally sensitive.
Sixty percent of the cobalt mined in the world comes from The Congo, much of it mined with hand, shovel and hammer by impoverished individuals.
The largest lithium deposits in the world are in Afghanistan, a country the U.S. abandoned.
Afghanistan’s Taliban is looking favorably upon the Chinese to mine these deposits. And then there is the question of how to dispose of the spent batteries.
From a more practical standpoint, a couple in the San Francisco Bay area had their home burn to the ground from charging two EVs in their garage overnight.
The fire from the batteries was so hot the firemen could not get close enough to put the fire out. Due to incidents like this, municipal authorities across the nation are considering banning EVs from covered parking decks.
Regardless of the unintended consequences, it seems more EVs are in our future.
While still only between 2%-3% of all vehicles on the road, the number is growing exponentially. Prices are coming down and battery power is going up.