Electric Vehicles: Tesla Charges Ahead – 4/1/16

With the unveiling of Tesla’s new Model 3, electric vehicles might finally be ready for the mass market. Announced on Thursday, an EV will be at a reasonable price of $35,000 before the $7500 or so in subsidies, and already Tesla has over 134,000 reservations. In other words, more reservations than total sales of all other Tesla cars combined.

If the Model 3 is successful, then it could be a historic turning point for the auto industry. Musk’s plan was always to use Tesla Motors to “expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy”, a plan which seems to be working as GM launches the Chevy Bolt at the end of this year to compete with the Model 3. GM is also looking to sell the Bolt, its own EV, to the masses at $30,000 or less minus federal tax credits after Tesla demonstrated that there are indeed profits to be made from electric cars once economies of scale drive down expenses relative to the sticker price.

The importance of economies of scale will hopefully overcome the fact that after a manufacturer sells 200,000 electric cars for use in the U.S., future cars sold are only eligible for 50% of the tax credit for two quarters and 25% for the following two quarters before ending entirely. This subsidy will quickly fall off for Tesla given the volume of sales it is trying to achieve. Meanwhile, conventional car manufacturers are preparing to bring their own cars to market in the next few years; cars that will be eligible for the subsidy. Unfortunately for Tesla Motors, but fortunately for its competitors, the subsidy will also be available for competing electric vehicles.

The rise of electric cars is supposed to mean significant emissions declines,but it is commonly argued that the electricity for making and running the cars will still have to come from dirty power plants anyway. A blow to this pessimistic argument came from a report from the Union of Concerned Scientists saying that, even taking into account emissions from manufacturing and electricity generation, electric vehicles produce significantly less lifetime emissions for U.S. drivers.

Analyzing cradle-to-grave emissions of EV’s includes two important components: the source of the electricity used to charge the car and the resources used to make Li-ion batteries.

The report shows that an EV will produce lower global warming emissions than a car getting 29 mpg – the average fuel efficiency for new cars – no matter your location or utility. In addition, as I wrote in my previous post, Coal Scorched, natural gas use is replacing coal as the fuel of choice for electricity producers. Since natural gas burns substantially cleaner than coal, driving an EV will have actually have even lower emissions over its lifetime. The UCS estimates that cars running on electricity produced from natural gas-fired power plants will have lower lifetime emissions than a 50-mpg gasoline car.

The production of lithium-ion batteries is very energy-intensive and unlikely to get much more energy efficient in the short-term so the main concern should be if the savings on operational emissions offsets the additional manufacturing emissions.  Using the Nissan Leaf and the Tesla Model S for their model, the UCS found 4,900 miles and 19,000 miles of driving, respectively, would be enough for a total offset. So even after manufacturing the battery and using coal as a power source, the UCS found that modern EV’s are cleaner than most gasoline-powered vehicles on the road today.

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