Global Trend

Battery-Electric Cars, Less Than Meets the Eye
 
As highlighted recently in the Financial Times, the number of passenger vehicles is expected to climb by roughly 65 percent to 1.8 billion by 2040.  Notably, the majority of the world’s cars will remain powered by gasoline.1  Specifically, the Facts Global Energy consulting firm estimates only 10 percent will be accounted for by battery-electric cars and a further 20 percent by hybrids, which burn gasoline to charge the batteries.  And as the Trends editors have long insisted, this will continue to drive rising oil and gas demand.
 
This is likely to surprise many given the hype around Tesla, the flagship of electric vehicle producers.  In fact, that hype has caused many analysts to forecast a structural decline in oil consumption, because they assume a huge proportion of the electricity used to charge batteries would be produced by wind, solar, and hydroelectric.

Most forecasts simplistically assume that an inevitable decline in battery prices will make electric car sales explode.  But the reality is more complex. The truth is that the shift towards electric won’t happen unless it’s supported by continued government incentives.

Norway, for example, owes its success to the hundreds of millions of dollars each year in tax revenues diverted towards subsidies making it almost free to drive an electric car.

Today it is normal for a Norwegian to buy a subsidized electric car for daily use, in addition to a gasoline vehicle for trips.  Without such a subsidy, sales would fall.  Anyone who questions this only needs look at the experience of Denmark; when subsidies were dropped in January 2016, electric car sales plunged 80 percent from the previous year!

More importantly, the fate of oil demand will not be decided in the OECD but in Asia, which is only beginning to see the mass adoption of automobiles.
Today, Asia accounts for only about one-third of the global light vehicle fleet of 1.1 billion.  Facts Global Energy expects growth in that region over the next twenty-five years of more than 500 million units, which is bigger than the growth in the rest of the world combined.  By 2040, almost half of the cars in the world will be driven in Asia.

Unless something totally unexpected happens, the internal combustion vehicle will continue to dominate for at least the next two decades.  The recent exit of the United States from international climate-change agreements will help ensure that trend.

This implies that the number of electric and hybrid- electric cars on the road will grow from 2 million today to 600 million in 2040; that’s a cumulative rise of 30,000 percent!  And that steadily growing share of the world’s automobiles will be represented by three groups of electric vehicles.

Most common today, of course, are hybrid-electrics, which combine batteries, electric motors, and internal-combustion engines. Although these vehicles have many virtues, including high efficiency, all but the plug-in hybrids ultimately draw all of their power from petroleum-based fuels.

The second group is battery-electric vehicles (BEVs), such as the Nissan Leaf and the Tesla Model S, which are now reasonably common.  While the electricity they use to charge their batteries comes primarily from fossil fuels like coal and natural gas, BEVs are advantageous because they use that energy more efficiently than a car with an internal-combustion engine.  Assuming the grid will move to more renewable power and more nuclear energy, BEVs are appealing to environmentalists.

The third, and potentially most promising category consists of fuel-cell electric vehicles (FCEVs).  While they are just emerging, the Trends editors believe FCEVs represent the electric vehicles that most people will ultimately select as their principal car.  Forward-looking carmakers are now producing both BEVs and FCEVs, but not without considerable controversy and competitive posturing, which only makes the situation more confusing.

Going forward, we will consider the relative benefits of the different technologies and how electric personal transportation is evolving.

Hybrid and battery electric vehicles are already commonplace and their principles of operation are well understood.  Fuel-cell electric vehicles are still a rarity, though, so let’s focus on how they work.

Rather than relying on combustion to drive pistons that then power an electric generator as in a hybrid car, a fuel-cell vehicle uses electrochemistry to generate electricity directly. In most cases, this involves combining compressed hydrogen gas stored on-board with oxygen from the air.  Alternatively, hydrogen for the fuel cell can be produced from a liquid fuel using what engineers call a “reformer.”  The main product of the chemical reaction in the fuel-cell is electricity to power the vehicle; the by-products include water, which is discharged through the tailpipe and nitrogen that entered the fuel-cell along with the oxygen in the air.  There is no combustion, so typically high temperatures are avoided and smog-inducing oxides of nitrogen are not produced.  When compressed hydrogen is used, there is no carbon in the fuel, so neither carbon monoxide nor carbon dioxide is emitted from the tailpipe.

Most importantly, fuel-cell electric vehicles are more than three times as efficient as today’s average gasoline-powered automobile. Both compressed hydrogen and reformed liquid fuel provide a range and refueling time comparable to those of conventional automobiles.  That’s a big advantage relative to today’s BEVs.
 
Compressed hydrogen fuel can be produced in a variety of straight-forward ways, ranging from electrolysis of water to steam-reforming of natural gas.  And like a BEV, the drivetrain of a FCEV produces far less vibration and noise than a hybrid or a conventional internal combustion vehicle.

A fuel-cell version of the Hyundai Tucson SUV has been offered for lease in California since June 2014.  And a four-door sedan called the Mirai, has been both sold and leased by Toyota since October 2015.  In 2017, Honda released a new FCEV in California based on the commercial version of its Clarity fuel-cell prototype.
 
Today, fuel cells are expensive, mostly because of the need for precious platinum catalyst and a lack of large-scale mass production.  However, new research published in the journal Advanced Materials Interfaces, highlighted a very promising nanoalloy, which would reduce the platinum needed for an automotive fuel-cell by 90 percent.2  According to the researchers, a nanoalloy fuel-cell would use about the same amount of platinum used currently in a gasoline car’s catalytic converter.  An even more promising platinum-free technology is called hydroxide exchange membrane fuel cells (HEMFCs); it was described recently in the journal Nature Nanotechnology.  HEMFCs are already on target to meet U.S. Department of Energy FCEV mass-adoption cost targets of $30 per KW or $2400 total for a small car fuel-cell.3  Better yet, HEMFCs should be able to use liquid methanol and ethanol, without the cost, weight and heat of a hydrogen- reformer.

What’s the bottom line?  Gasoline and diesel automobiles will dominate the transportation market for at least the next two decades, especially in high-growth Asian markets.  However, the combined global fleet of hybrid-electric, battery-electric, and fuel-cell electric vehicles will grow by a factor of 300 or more.  Over the next decade, these three technologies will battle each other for dominance.

Given this trend, we offer the following forecasts for your consideration.

First, because fuel-cell electric vehicles will be less expensive to operate, they will cut deeply into the sales of both hybrids and BEVs by 2023.

As of June 2017, methanol manufactured from U.S. natural gas costs about $1.16 per gallon.  On a thermal energy-equivalent basis, that’s about the same as gasoline at $2.32 per gallon.  However, because of the dramatically higher efficiency of fuel cells versus an internal combustion engine, that’s equivalent to gasoline at about $0.77 per gallon.  Assuming 25 miles to the gallon of gasoline, the internal combustion engine costs $9280 to drive 100,000 miles.  While the clean methanol fuel-cell car costs just $3,048 for the 100,000 miles.  Meanwhile the real-world cost of electricity for a Tesla Model S works out to $0.034 per mile or $3400 for 100,000 miles.  The $352 difference between the Tesla and the hypothetical FCEV is trivial in the real-world.  However, the dramatically shorter refueling time is real?as is the FCEV’s far greater range and the need to replace the Tesla’s batteries every eight years at a cost of $12,000.  That raises the operating cost of the Tesla BEV to about $15,000 per 100,000 miles versus $3,048 for the FCEV and $9280 for the internal combustion engine.
 
Second, the rise of on-board hydrogen production from methanol will eliminate the advantage BEVs and hybrid-electrics have in terms of widespread refueling infrastructure.

Today, battery-electric automobiles can be refueled at home and in many other locations. Meanwhile, there is a severe shortage of stations offering compressed hydrogen.  On the contrary, methanol can be easily deployed everywhere that gasoline is sold.  A typical filling-station sells three grades of gasoline plus diesel.  By simply replacing one grade of gasoline with methanol, the station would be able to handle fuel-cell electric vehicles.  And since methanol is easily and cheaply produced from natural gas and shipped in existing tanker trucks, the challenge is simply scaling-up production and distribution to meet growing demand. 

Third, FCEVs will maintain a huge advantage over lithium-ion BEVs in terms of refueling time.

After fueling for just five minutes, a Methanol fueled car could easily have a 1,000-mile range with a fifteen-gallon fill up.  But, even after charging for six hours, the Tesla only has a 250-mile range.  While special-purpose DC chargers can cut this to thirty minutes, thirty minutes versus five minutes is a difference that most people will not accept.
 
Fourth, so-called “flow batteries” which recharge as fast as FCEVs and traditional gasoline vehicles could level-the-playing-field with FCEVs.

By swapping liquid electrolyte at updated “flow-battery filling stations”, BEVs with flow batteries could eliminate the biggest time and infrastructure barriers to BEV adoption.  However, such batteries will make the kind of lithium-ion batteries used in today’s hybrids and BEVs obsolete. In short, it would turn Tesla’s lithium-ion “giga-factory” into a millstone around the company’s neck and require writing-off a huge investment in battery manufacturing capacity.

Fifth, FCEVs will dominate heavy-duty and long-haul applications, as well as Personal Aviation Vehicles, even before grabbing a big share of the mass market for automobiles.

BEVs are well-suited for light-duty vehicles and are emerging for use in delivery trucks and buses on routes of modest range. The problem with trying to power larger, longer-distance vehicles with batteries is that more battery mass must be added to do so. That in turn requires the vehicle to be outfitted with a bigger motor, a stronger suspension, and better brakes to maintain the same performance, all of which add more weight, which means even bigger batteries are required. It’s a vicious circle that eventually becomes unsupportable when designing a large vehicle with the range to which commercial drivers are accustomed. In contrast, fuel cells can be used to power virtually any size vehicle, from compacts cars to long-distance tractor-trailer rigs.  Similarly, because they are light, quiet, energy-efficient, and clean, fuel cells also meet the requirement for VTOL transportation laid out by the UBER Elevate project highlighted in our June 2017 issue.
 
References
1. Financial Times, March 21, 2017, “Electric Cars Pose Little Threat to Oil Demand,” by Cuneyt Kazokoglu. ⓒ 2017 The Financial Times Ltd.  All rights reserved.

https://www.ft.com/content/502c4e3c-0d80-11e7-b030-768954394623?mhq5j=e3

2. Advanced Materials Interfaces, July 7, 2017, Vol. 4, Iss.13, “High Specific and Mass Activity for the Oxygen Reduction Reaction for Thin Film Catalysts of Sputtered Pt3Y,” by Bjorn Wickman, et al. ⓒ 2017 John Wiley & Sons Inc.  All rights reserved.

http://onlinelibrary.wiley.com/doi/10.1002/admi.201700311/full

3. Nature Nanotechnology, December 2016, “Activity Targets for Nanostructured Platinum-Group-Metal-Free Catalysts in Hydroxide Exchange Membrane Fuel Cells,” by Yushan Yan, et al. ⓒ 2016 Macmillan Publishers, part of Springer Nature.  All rights reserved.

http://www.nature.com/nnano/journal/v11/n12/full/nnano.2016.265.html