Electric vehicles' price point is a pain in the ask
Plus, the full picture on Amazon's renewable, and Japan gets jittery
The other tipping point in EV adoption
For a while now, the talk around the relatively slow adoption of electric vehicles in the U.S. has been about so-called “range anxiety,” where potential buyers hesitate because they worry about getting stuck without access to a charge. With this in mind, EV boosters are hoping for a tipping point where plentiful charging stations will increase enthusiasm to ditch gas-guzzlers.
But there is another tipping point that’s still to be toppled: that EVs are just plain pricey compared with their internal-combustion competitors. That’s according to a new poll by Cox Automotive, owner of Kelley Blue Book, Autotrader.com and other enterprises, which found that the cost of EVs — which averages about $60,000 — is the biggest concern of potential consumers, with many also worrying about higher monthly auto loan payments.
That’s the bad news. The good is that a large component of the cost of EVs — batteries — is coming down, having fallen from $140 per KW hour in 2020 to $132 this year, according to a report by BloombergNEF. This comes on top of an 89% drop since 2010. This drop, though, is somewhat threatened by current supply chain political issues that have led to rising prices for battery ingredients, many of which come from China.
Another confounding factor in the price of EVs is the fact that they are actually cheaper to build than their internal-combustion equivalents. Instead of the relatively complicated technology of gasoline and diesel energy engines, the basic EV ingredients are batteries and an electric motor (or motors if the vehicle has four-wheel drive). However, most models so far — think Tesla (TSLA) — have been upscale and, for many, a pain in the pocketbook. Increased commitment by mass-market manufacturers such as Ford (F), General Motors (GM), Volkswagen (VWAGY) and Nissan (NSANY), promises to bring the median price down to a more affordable level.
With that, and more chargers, America’s pitiful EV adoption rate — less than 3% while European countries range from 6% to an incredible 75% in Norway — could be a thing of the past.
Beware of press releases that only bring good news
Among the major tech companies — Think Apple (AAPL), Microsoft (MSFT), Alphabet/Google (GOOGL) and Meta/Facebook (FB) — Amazon (AMZN) now stands out as being the largest corporate buyer of renewable energy in the world, having just announced 18 giant wind and solar projects in the U.S., Germany, the U.K., Italy, Spain and Finland. The new initiative adds to its aim to power 100% of its business operations with renewable energy by 2025 — five years earlier than its original 2030 commitment.
Impressive, certainly, but unlike its techie cousins, it’s not the be-all and end-all. Yes, Amazon’s web of warehouses, servers, offices and retail outlets, such as Whole Foods (WFM), will now be clean and green, but it leaves out a major component of its operations: getting its goods to its customers. That means airplanes, trucks and, perhaps most important, the black smoke-belching boats used to transport goods from around the world.
And that’s why Kara Hurst, the company’s vice president of worldwide sustainability, added this quietly qualifying sentence to the news release: “Significant investments in renewable energy globally are an important step in delivering on The Climate Pledge, our commitment to reach net-zero carbon by 2040, 10 years ahead of the Paris Agreement.”
In other words, 15 years beyond this week’s happy news. For instance, a just-released report by environmental organizations Stand.earth and Pacific Environment, shows that goods imported by boat to the U.S. by Amazon, along with Walmart (WMT), Target (TGT) and IKEA between 2018 and 2020 accounted for 20 million metric tons of carbon dioxide equivalent emissions. And it’s a belching menace that is not going to end soon, with shipping companies being slow to move away from the heavy fuel oil used on container vessels.
As for aircraft — Amazon operates about 80 — it’s also going to be a slow process. Despite progress to so-called sustainable aviation fuel (SAF), pollution will only drop by about 20% per plane. It will only be with the arrival of electric aircraft — not expected to happen for two decades — that transport by air will be carbon-free.
Meanwhile, trucks are the company’s most promising sector in reducing pollution. Earlier this year, it announced it has ordered 100,000 all-electric vehicles from EV startup Rivian (RIVN), whose IPO last month saw its stock price soaring. And, according to Business Insider, it began making deliveries by EVs in Los Angeles in early 2021 and is expanding to other cities.
In other words, beware of press releases boasting of being clean and green. True, Amazon’s announcement is good news, but it’s not the complete package.
Why Japan is getting jittery about its climate pledge
With the average price of gasoline in the U.S. now hovering at about $3.50 a gallon – and the price of energy across the globe causing much nail-biting among governments, corporations and consumers — forecasters are floundering to assess the reverberations of the rising prices. Will pain at the pump drive consumers to EVs? Will oil companies keep squeezing supplies as their eyes gleam over increased profits? And will nations worried about shocks to their economies back off from commitments to lower carbon emissions?
The latter appears to have already happened, with Bloomberg reporting that Japan — which is almost completely dependent on fossil fuel imports for its energy supply — is backing away from its pledge, made at last month’s COP26 climate conference in Scotland, to draw back to coal- and natural gas-generated electricity. Most immediately, the Tokyo government, which oversees renewable energy production that is relatively puny 10% of consumption, wants to avoid a shortage of fuel this winter after fears of nationwide blackouts last winter.
Is this just a short-term panic or a potentially permanent problem? In a country that is a conflicting mixture of caution and innovation, it’s hard to pinpoint the eventual outcome. On one hand, the Japanese, in the form especially of Toyota (TM), were at the forefront of hybrid car innovations. On the other hand, the same company has been ultra-slow to move to fully electric vehicles. Meanwhile, Japan’s nuclear industry, which used to produce about 30% of its energy needs, has been decimated by concerns following the devastating Fukushima nuclear accident in 2011.
However, Tokyo does have fairly ambitious plans for renewables, hoping to raise the proportion to about 25% by 2030, with billions being poured into the initiative. It is also slowly restoring its nuclear output, which was reduced to zero following Fukushima.
Eventually, the Japanese and others hope, the pieces will come together and today’s tension between a renewables industry still very much in its infancy and fossil fuel behemoths being rocked by the reverberations of its rise will reach an equilibrium. That and governments — many of them in Asia — being unnerved by populaces that have become accustomed to the prosperity long established in the Western world.