November 19th, 2018 by Cynthia Shahan
This presentation — video and text summary below — is not the freshest one from CleanTechnica Director Zach Shahan. However, it is as relevant today as when the presentation was delivered live in Dubai, UAE, last year. Furthermore, at ~25 minutes, it is a bit longer than a typical presentation, which provides more room to run somewhat deeply and broadly into the topics. The downside of the presentation, Zach notes, is that he was horribly sick for a week or two leading into this.
Ben Pullen, managing director of Global EVRT, runs a series of events to accelerate the adoption of electric vehicles. He pulled together the speakers for a special e-mobility session of Intersolar Middle East. Zach took the stage first to kick of the session with talk of sustainable mobility, inflection points, Tesla (of course), the benefits of e-mobility, life with an electric car, and our service-oriented future.
Starting off the show, Ben highlighted that the Dubai government target is for 10% of all government and new vehicles to be electric by 2020. He also pointed out that the e-mobility conferences he was involved in would be supplemented by a big EV road trip organized by Global EVRT. The 2018 road trip has now come and gone, but a 2019 trip is scheduled for January 17–24.
Ben then introduced Zach. “We’ve got Zachary Shahan, the managing director of CleanTechnica and EV Obsession, two of the most widely read websites on cleantech and electric vehicles. And he’ll be introducing the electric vehicle market as we know it today — but more importantly giving us a taste of what’s to come in 2020.”
Zach then rolled into his 30 minute presentation, which I’m dividing up below based on numerous core points.
When an inflection point hits, years or decades of progress is revealed
Zach explains the electric vehicle market as a slow-moving transition … until now. Bubbling underneath it has been dramatic technological innovation and trends. Under the surface of the quiet waves of the EV battery market, EV battery prices have been improving dramatically, but sort of quietly (unless you are looking at the trends as CleanTechnica does). With many disruptive, transformative technologies, there’s a dramatic improvement for decades or for years under the surface, so to speak, before an inflection point in the market.
While the technology is improving, one becomes used to slow growth. Zach informs, “I think a lot of people take for granted how much the technology has improved.” 1% of new cars on the market have been EVs. Because of the cars that have been on the market for several years, people have developed misconceptions. Zach explains, “When we think of EVs, people often think they have a lower range than you need or they’re too expensive.”
“Generally, people don’t notice — that the range has been improving at a significant pace, the price has been coming down at a significant pace, and once we get to a certain inflection point — that all counts. That all means something.
“So, up till now, we can say it doesn’t count, it’s only one percent of the market. This is a criticism you see over and over. … Up until this year, we didn’t really have long-range affordable electric cars. We had cars with medium range. We had expensive cars like Tesla with long range. But we are now hitting this phase of long-range affordable electric cars.”
Then comes the disruption
“And this is the inflection point more or less. This is the point where anyone who’s been forecasting based on that past is going to be massively disrupted, massively proven incorrect. I mean, if you’re following an industry closely, you’ve been seeing that trend arriving, but if you’re not following the industry (which almost nobody is), you don’t — I don’t think you have an appreciation for how ready this market is to explode.
“So, these are cars that have announced longer range and affordable prices. The Renault Zoe was actually the first on the European market, with about 150 miles of real-world range last year and an affordable price tag. And the Chevy Bolt (or Opel Ampera-E) arrived at the end of last year in the US. And then, of course, this year, Tesla has started producing the Model 3.”
Nothing like this in the history of any market.
The Model 3 had over a 100,000 reservations before it was shown. Nobody had seen the car. That is something that we perhaps forget now. No one in the general public had seen the car and more than 100,000 people put down reservations of $1,000 each.
Zach, one of those people putting down an early-morning reservation, explains, “We knew the range was going to be over 200 miles. We knew the price was going to be $35,000. And we knew it was going to be a Tesla.”
Within a few weeks, the reservation total had risen up to a few hundred thousand, and at the time Zach gave this presentation, Tesla had 455,000 reservations (net).
“Half a million reservations for a $35,000 car. There’s nothing like this in the history of the world. There’s nothing like this in the history of any market.”
What does that mean? It can mean many things, but one key message was that the market was at an inflection point. “This is a dramatic sign that the market is here,” Zach claims. “If you haven’t recognized it right now, you have to understand that the wave is rising and we’re going to see, we’re going to see it bust out.”
It’s not only about Tesla
“What Tesla has done is driven other automakers to get to this point faster. Not that they couldn’t have, but they didn’t — they either didn’t think they could or they didn’t want to. I mean, technically, it’s a huge financial threat for these large automakers to transition quickly. If it was a 30-year transition, they’d be fine. To transition in a few years from gas cars to primarily plug-in electric cars threatens engine factories they’ve invested billions of dollars into, threatens IP they’ve spent decades developing, threatens careers decades or hundreds of years combined.”
Zach delves into the concern, the threat to many auto companies who came from an expertise in engines and that potential and present disruption and challenge to their career.
He notes that some are more open to it than others. “Volkswagen has potentially arrived as a leader and they plan to electrify. They plan to have fully electric, they plan to have 50 fully electric models by 2025 and 30 more plug-in hybrids of 30 or 50 … 80 plug-in vehicles by 2025.” He also notes EV announcements from BMW, Daimler, and Volvo.
Charging — fast chargers, long-distance driving, convenience, and inconvenience
Historically, every fully electric car that can fast charge can do so at a rate that lets you maybe drive for two hours on the highway and charge for one hour. (Not very viable for a long trip.)
Tesla carved out a Different route. Tesla produced superchargers that are twice as fast at charging. So you can drive for a few hours and charge for maybe 45 minutes and they place them specifically in between major cities that you would be doing long-distance driving on. So, they’ve enabled through thousands of these charging ports that potential for long-distance travel.
Huge potential market for fast charging leaders
Zach details a huge opening for early leaders in superfast charging. He notes, “I think anyone looking at the market has to look not only at what fast charging has been but what it should be and needs to be.
“If you consider this an inflection point — which is what I’m going to get to in a second — if you consider this an inflection point in an EV market, the growth potential for superfast charging is insane. The growth potential for superfast charging to satisfy the customers who are ready to buy the long-range affordable cars hitting the market — it’s going to grow tremendously over the next few years.”
“I think we too easily discount what an S-curve is. Look at the adoption of cars, dishwashers, color TV, microwaves, and cell phones up to 5% — this is a chart of that. If I had to start up with this amount, this growth, I’d be pretty happy. But this is not disruptive growth.”
He further details, “People think you’re crazy if you’re projecting the high percentages you end up seeing once you hit that inflection point.
“This is a famous chart of technology adoption for different popular technologies, and I tried to pull out how you see this growth up to a few percent and how that changes when you hit an important inflection point.”
Again highlighting the half a million reservations for the Tesla Model 3, Zach advises, “If you don’t see that as an inflection point in this market, you’re missing the story, you’re missing the market, and you’re missing a tremendous market opportunity if you’re in that kind of career.”
But consumers don’t go wild for a new technology just from reading the specs. Social movements and consumer shifts happen through human connections. “What does it actually take for a new technology or product to take over the market? It takes a few people in your network to tell you to think about it, basically.” It takes a few people making a simple case for why it’s important. “Think of computers, cell phones, smartphones — it was basically a couple of core benefits at first that led to these transitions.
“Two benefits stand out — convenience and fun. The fun of gaming, the convenience of writing something on the computer and not having to take the paper out and throw it away as you made a mistake. These kinds of small conveniences and fun factors led to the adoption of the technology that led to people saying this is great you should get it. …
“I think it is incredibly important that we face up to the global warming challenge. This chart is scary as hell — it shows we are putting societal existence at risk. But most people are not going to ever look at that chart. They’re not going to understand how much pollution harms people’s health. No matter how many reports come out about the thousands — the tens of thousands or millions — of people that globally dying from pollution. This doesn’t drive action. I think we should highlight the benefit of clean air, the benefit of a more beautiful city, a city that is quieter and cleaner, and that we don’t have to worry about our kids getting cancer,” but he emphasizes that’s not what will lead to mass adoption, as only a small percentage of consumers buy on such principles.
Zach shares what he believes will drive mass adoption: “These are the factors 1. instant torque, bloody awesome. … And convenience.”
97 or 98 % of charging is done at work or at home
There’s a lot more convenience to waking up every day and having a fully charged car and never having to go somewhere to charge — or maybe three or four times a year having to go somewhere to charge. Zach shares, “There’s a lot of nuance to this. People have different living environments and situations — but even at a certain stage, if you live in a block of flats or apartment buildings and you have convenient charging where you live, it’s going to be more convenient to drive an electric car than to go to a gas station.”
There’s no going back to gas
Zach adds that, after driving a smooth and silent EV, you feel like you’re driving a tractor — a rumbling exploding machine — when you drive a gas car again. People will learn that in time, but they first have to get into an electric car and have their first experience. That’s where the fun comes in — it entices them into the cars. That has been a key to Tesla’s success — enticing people in. People then get in the car, they smile, they laugh, they enjoy themselves as they never expected.
The dropping costs of batteries
There’s much more in the presentation, but as a final note for the article, there’s the matter of price. The price of batteries recently dropped 40% in the course of a couple of years. Right after that, a major oil organization in its major annual energy outlook reported that it expected another drop in battery prices of 40% by 2040. Ridiculous.
Zach interviewed Michael Liebreich, the founder of Bloomberg New Energy Finance, right after that projection. Lieberich highlighted that it was completely insane that they would project that the same price decrease we saw in 2 years we would see next over the course of ~22 years.
Battery prices have been falling fast, and they are reaching the point where electric cars are the same price as “comparable” (if they really could be comparable) gasoline cars. However, the game doesn’t stop there — battery prices will almost definitely keep dropping, crushing the polluting competition.
A former Saudi oil minister noted years ago, “The Stone age came to an end not for a lack of stones, and the oil age will come to an end not for a lack of oil.”
Drive on sunlight, Drive on sunshine.
Back to inflection points and disruptive technology, Zach then closes with the following:
“So you can’t look at the change we’ve had between now and 2008 or from 2000 to now and expect that that is going to represent change we are going to have between now and 2020 or between now and 2025.
“Because electric cars are now hitting an inflection point where they are going to shock people who think that they are far off into the future, and of course they can be powered by solar energy, and we can drive on sunlight, drive on sunshine. One of my favorite phrases.”