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Four reasons electric vehicle sales will surge – Goldman Sachs

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Electric vehicles – currently languishing at just 3 per cent of the global auto market – have been named alongside solar PV, onshore wind and LEDs as one of four current “winning” low-carbon technologies with the potential to begin “bending the emissions curve”, in a recent Goldman Sachs report.

The report predicts that EVs – that is both hybrid and pure electric cars – will make up more than one-quarter of the global car market within just 10 years, their numbers growing from around 1 million today to around 25 million in 2025.

“Over the next 10 years, our sector analysts forecast sales to increase by a (compound annual growth rate of 26 per cent, expanding market share from 3 per cent today to 22 per cent in 2025,” the report says.

But as the report also notes, such significant market growth will require equally significant changes to key market drivers like cost and performance, before consumers will become inclined to make the change. Fortunately, Goldman auto analysts believe these changes are underway, courtesy of four key technological shifts, illustrated in the graph below.

Screen Shot 2016-02-02 at 12.07.37 PM

 

As you can see, Goldman analysts predict a 60 per cent plunge in battery costs over the next five years – from $14,250 today to $5,250 in 2020 – and a 70 per cent boost to EV performance, including battery range, weight and capacity.

The graph also shows that analysts believe the range of a low-performance electric car battery – currently around 160km and a key barrier to mass market adoption – will increase to an average of 275km by 2020.

The average capacity of an EV battery, meanwhile, is forecast to increase by 10kWh over the same period, while the average battery weight is expected to be cut in half – from 250kg now to 120kg in 2020.

Alongside falling battery costs and vast technological improvements, the report also highlights the importance of favourable “sub-nation regulatory” support in the uptake of EVs and the shift away from hybrid models and towards pure electric “grid-connected” cars.

“In London, for instance, the Ultra-Low Emission Zone will from May 2016 onwards no longer exempt hybrid vehicles from the Congestion charge,” it notes.

“Similar policies, favoring grid-connected vehicles over hybrids have recently been put in place in California and Beijing.”


  

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  • Bungarra

    When the penny drops that one can stop paying fuel taxes, have a back up battery for the house in you car – especially the shopping / school trolley that does not ravel very much, and charge the whole lot up from the solar on the house roof and also stop paying the electricity companies, things will change rapidly. Could be as big a revolution as the arrival motorized cars and trucks. However road maintenance could become a major political issue.

    • Jacob

      But Uber is legal in NSW, ACT, so people can do away with parking issues.

      • Bungarra

        That is so OK, but we do not all live in the inner city. I was referring to the dual use of the car battery as a backup to the house batteries is a cross subsidy to the whole system.

        • Jacob

          You mentioned road maintenance.

          • Bungarra

            Part of the fuel taxes we pay are supposedly to pay for roads. Less fuel sold, no fuel sold for home charged vehicles, so society will need to get funds from else where. Now if registration fees or road tools get to the level to pay for the infrastructure, I would expect a huge political revolt.

          • Will Davis

            Yeah um, no. Road maintenance is paid for by general taxation, IE: EVERY taxpayer. Not fuel duty. It already works this way and nobody is revolting over it.

          • neroden

            Probably that’s why he said “supposedly”.

    • Alastair Leith

      i can see BMW et all building that shopping/school electric trolley into their new toorak tractors 😉

  • Andy Colin Hook

    In 10 years, the EVs will account for a lot more than 25% of card sold. Once their simplcity, ease, energy cleanness and general superiority to ICE cars spreads, the change will happen pretty quickly. As soon as batteries come down a bit more …
    I want one! They don’t even sell them here!

    • Jacob

      Where is “here”.

    • Alistair Spong

      I agree with you Andy – the simplicity of electric cars isn’t stated enough. No fuel injection systems , oil changes , coolant /radiators/hoses , no expensive cambelts, exhaust systems, possibly no gearbox or auto transmission – no cylinder head to blow – the list is endless .
      What will be interesting is when batteries drop to the price point that makes DIY conversions cost effective for individuals (rather than mass production cars ) so instead of a rebuild of the ICE , it becomes common practice to bolt in an electric motor and adapter plate .

      • neroden

        DIY conversions are already cost-effective — I know a bunch of people who’ve done them. The thing is most people don’t actually want to tinker with cars. If you like that sort of tinkering, buy some lithium batteries, a motor, and a chassis you like, and you can be ready to go in a few months.

    • Alastair Leith

      50c to fill the battery vs $50 to fill the tank.

      all other things being similar (recharge time is a metric this report seems to omit but the no servicing is already a clear win as you say) it’s a no brainer and will sell as quickly as rooftopPV or quicker I expect.

      • trackdaze

        It’ll cost more than 50c to fill up after you factor in the Grande latte, wild berry wholemeal muffin, maybe a hero roll for lunch and the neccessity of gym membership as a consequence of the ten minute charge time. A:-)

        • Alastair Leith

          graphene in some form or another will kill the gyms within a decade though — mark my words fast charge is on it’s way. They already charge busses in China in 15s each stop. Switzerland is prototyping it and designing the network they’d need.

          • trackdaze

            Not many will lament gyms demise due to fast charging but the Slushy?!

  • adam

    the report references this:
    The Great Battery Race: Framing the next frontier in clean technology

    Is this a public report? Can’t find it.

    I do not know of a battery tech review report that looks at ground up basis for battery cost declines, all I’ve seen “consult manufacturers” rather than produce hard data and given that it’s hard to see past the bias/buzz effect.

  • Jacob

    Electric cars have very rapid acceleration. No matter how cheap petrol gets, a lot of voters will prefer electric.

    • Alastair Leith

      and regenerative breaking lowers the cost penalty for impatient or ‘offensive’ driving styles . tail-gater and rev-head heaven lol

  • trackdaze

    Figures seem robust. I would think the 160km range from a 20kw battery is a bit optimistic. Maybe 120km.

    If the numbers stack up I would suggest 25% is fairly conservative.

  • trackdaze

    Hi Sophie, might need to confirm how electric market is 3%?

    I have approx 550k ev’s include phev’s sold into an 88M light vehicle market? Might stack up if it includes (very)mild hybrids such as the Prius with a <2kwhr battery?

  • john

    350 km distance and cost ATM in AU is $50 k plus, if these come to market.
    We are talking about the new offering now.
    GM Bolt is offering 350km travel and cost 50K perhaps in AU.
    This sounds high to someone who buys a $30 k vehicle, look at the underlying cost of ownership service fuel for instance.
    If the owner of the car has PV and backup then obviously the cost to charge is going to plunge.
    This is only 1 of the offering that are going to emerge to compete in the area because engineers know the inherent efficiency of electric power and know this is the best solution for automotive transport.
    Slowly the information will filter through to the consumer, who is not expected to understand the technology, because they buy a car on an emotive basic to project their image, hardly a rational decision based method, but that is the situation of the transport vehicle with present marketing exercise.

  • Ian

    The Nissan leaf uses about .2 KWH/ km , ergon general tariff 24.46c/KWH = 4.9c/Km. Nissan micra 6.5 l /100km petrol price $1.20/l fuel cost =7.8c/km. Nissan Leaf purchase price $57000, Nissan Micra purchase price $15 500.

    Scheisse, back to the drawing board!

    • David Osmond

      The Nissan Leaf is much bigger and higher spec’d than the Nissan Micra. The Nissan Pulsar Hatch SSS is a more comparable car, costing $29,668, in comparison to the Leaf’s $39,990 (not $57k as you state). The Pulsar uses 7.7L/100km.

      For a typical driver doing 15,000 km/yr, that works out as $735/yr for the Leaf, and $1386/yr for the Pulsar. So the Leaf costs about $10k more, but saves $650/yr in fuel costs. The Leaf also has substantially lower servicing costs too. The economics for EVs is starting to get very close. And for someone who drives more than average, or can use cheap off-peak electricity to charge the Leaf overnight, or even better their own PV generation during the day, then the savings get even better for the Leaf.

    • GearsOfWoe

      I’m more than a little tired of EV critics comparing EVs to some tiny stripped down car with exaggerated fuel efficiency. Seriously, a Micra? Maybe a Veras, but more realistically an CUV like the HR-V, CX-3 or Mitsubishi RVR.

      My LEAF cost the same as comparable mid-sized 5-passenger vehicles and my gas savings over the next 10 years will cover thefull purchase price!

    • Will Davis

      Except for one thing. The leaf costs $29,010, not $57,000. So I say to you, Scheiße! Back to YOUR drawing board!