Little to be gained by imitating other nations, but costs to taxpayers could be substantial
The list is growing of governments thinking about banning gasoline-powered vehicles: China, California, France, Germany, Norway, India. Most say they’re shooting for a ban by 2040, some as early as 2030. Should Canada follow suit?
This my sound like a silly question, but the Canadian government announced in May that it is preparing a zero emission vehicle strategy that will be introduced in 2018. According to Ottawa, transportation – mostly cars and trucks – accounts for about 24 per cent of national greenhouse emissions.
That’s a big number.
“By putting more zero emission vehicles on the road, we are investing in the future of cleaner transportation for all Canadians,” Transport Minister Marc Garneau said at the time.
“More zero emission vehicles on the road” doesn’t sound too radical, but if the trickle of national governments planning an internal combustion engine ban turns into a flood, would anyone bet against the Trudeau Liberals going with the flow?
As the Liberals craft their zero emission vehicle strategy, and perhaps ponder restricting or banning gas-powered cars, there is a very important question policymakers should be considering: What is the role of Canadian policy if the electric vehicle industry is on the cusp of technological and business model “disruptions” that dramatically accelerate the electrification of transportation?
Does Canada want to spend billions subsidizing the adoption of one electric vehicle technology and associated infrastructure (think charging stations) only to have the industry take a sharp turn in a different direction?
And a different direction – or directions – is entirely possible because there are three major disruptions waiting to potentially transform the industry.
One – Super Batteries
Forecasters like Stanford lecturer Tony Seba and Bloomberg New Energy Finance think existing Lithium-ion battery designs still have dramatic cost reductions and range increases ahead of them.
My experts beg to differ. As I have written in a number of columns, leading American electro-chemistry scientists like Dr. Yi Cu and Mike Toney of Stanford, and Halah Ardebelli of the University of Houston, believe Li-ion is rapidly approaching its theoretical maximum. Cu expect Li-ion costs to drop by 50 per cent over the next 10 years and energy density (range) to rise by 50 per cent.
After that, new battery chemistry will be needed. Fortunately, scientists think those chemistries will be ready for commercialization in a decade, maybe sooner. If we allow some time for regulatory approval and for automakers to design the new batteries into their vehicles, range will likely increase from four to 20 times current distances.
Imagine a Tesla Model S with a 10,000 kilometre range. That would be a game changer, especially if the new batteries are lighter and cheaper than Li-ion.
Two – Mobility as a Service (MaaS)
Seba released a study in May that garnered worldwide attention. In it he argued that beginning in 2020 huge fleets of autonomous EVs would begin to replace private of ownership of automobiles because the MaaS model would lower the cost per mile travelled by a factor of 10.
The average American family would save $5,600 a year.
Within just one decade, by 2030, Seba estimated that 95 per cent of all miles travelled in the US would be accomplished using MaaS.
Now, that’s a radical prediction and my experts punched all sorts holes in Seba’s thesis, including their belief that Level 5 fully autonomous EVs won’t be available until 2025 to 2028.
But Dr. Fred Beach, executive direct of the Energy Institute at the University of Texas in Austin, says that Seba’s math checks out and if you add a few years onto the forecast, he’s in the ballpark.
Watch for MaaS to start in crowded mega-cities like Vancouver, Toronto, New York, and Los Angeles where traffic congestion has a high cost and solving the problem provides significant value for consumers.
Three – China
China is in the news these days because a government deputy minister let slip that the biggest market in the world is working on an ICE ban. This much bigger news than the announcements by France and Germany because China has also said it plans to dominate global EV manufacturing.
What better way to do that than by partially protecting (some foreign automakers are being allowed to set up EV factories) the domestic market for domestic companies?
Between 2008 and 2013, China drove down the cost of solar photovoltaic panels by 80 per cent. “They fundamentally changed the economics of solar all over the world,” Amit Ronen, director of the Solar Institute of George Washington University, told the Scientific American.
If China does for EVs what it did for solar panels, Canadian may be driving high quality $20,000 EVs with a ranges 1,000 kilometres in less than two decades.
That’s a guess on my part, but it would only take the Chinese reducing the cost of a Tesla Model 3 equivalent EV by half and tripling the range.
A paltry achievement when compared to solar panels.
If just one of the three scenarios comes to pass, EV adoption could increase significantly. If all three occur, then the transportation sector could experience its own “iPhone moment.”
But the iPhone was really a mini-computer that happened to make phone calls. If a standard cell could do six things, the iPhone could do 6,000 things. That provided so much value that consumers gladly paid more for the product.
Competitors quickly launched their own “smartphones” and last year 1.5 billion were sold around the world.
If EVs experience their own iPhone moment over the next decade or so, Canada might be wise to bide its time, watch which way the wind is blowing, and let private investors and markets do the heavy lifting without risking taxpayer dollars.
Or, a bolder strategy would be to anticipate where EV technology is headed and carve out a niche where Canada has a competitive advantage. In EV technology suited for cold weather climates, for instance. Or heavy duty EVs suited for resource development, like mining or logging trucks.
But what Canada should not do is simply imitate California or Norway and heavily subsidize both electric vehicles and the infrastructure that supports them.
The odds are very good that EVs will be cost-competitive with ICE vehicles sooner than we think. Canada can be innovators or laggards, depending upon our appetite for risk, but we should not be imitators – the benefits of that strategy are few and the costs are high.