ENERGY WATCH #1 - October 30, 2018
The news from the EV and battery front continues to be mind-blowing. The repercussions for the energy sector, especially oil, will be fundamental.
Against all expectations, Tesla produced highly positive third-quarter results, which convinced even the greatest skeptics that EVs are the future.
“Musk hails breakthough quarter as Tesla redefines future of transport”, summarized Giles Parkinson on Reneweconomy.com.
“Tesla delivered a profit per share (US2.90/share) where most analysts were expecting a loss. It posted free cashflow of $US881million, ending years of outflows. It produced as many cars (84,000) as it did in the whole of 2016, and produced higher than expected margins (more than 20 per cent) on its “mainstream” Model 3.”
Investment bank Macquarie hailed the Tesla results “as a major turning point, and Bloomberg analysts said the result “blew away” expectations.”
Elon Musk in his turn “pointed to a new future for road transport and shared mobility, and highlighted just how far the company was ahead of its rivals”.
Tesla says it will begin deliveries of the Model 3 to China and Europe early next year, and hopes to have lowered the cost of production enough to make it possible to profitably produce the promised $US35,000 version of the Model 3 within six months.
Musk also spoke of the new models that are on the way: “He has approved a prototype of the Model Y (a crossover SUV) and production will begin in 2020. The Tesla semi is moving forward, and he is particularly excited by the Tesla pick-up (ute).”
Musk talked of “shared electric and autonomous future, where ride hailing and shared cars will become the norm, just like Uber, Lyft and AirBNB. He imagines a Tesla fleet augmented by privately owned Tesla EVs that will provide a pool of shared vehicles.”
“I do know for sure that Tesla will operate its own ride hailing service, and compete with Uber and Lift directly,” Musk said in the earnings conference call. “We will be able to allow customers to add or subtract their car to the (company) fleet at will. Any customer will be able to share their car.”
Musk said Tesla is now far ahead of other car manufacturers. “Tesla is valued at more than $US50 billion, comparable with the biggest US car-makers even though it still makes just a fraction of their production.
But in the categories it competes in, it is riding high. Tesla says the Model 3 is now the number 1 car in terms of sales revenue in the US, and number 5 in unit numbers. Tesla is beating the BMW 3 in Germany, and is more advanced than any other car maker in EVs.”
Musk noted that the Model 3 delivers the most efficiency per kilometre and the lowest cost per kilowatt-hour. “That makes it difficult for other companies to compete with Tesla – we have the lowest cost battery, and most efficient car.”
“We made the investment in the Gigafactory , they didn’t,” Musk said. “We made a lot of effort at making the most efficient powertrains, they didn’t. That is what has put us into such a strong competitive position today.”
Even highly skeptical analysts, like Andrew Left from Citron Research, “a vocal and long-term Tesla short-seller who had predicted the stock would slump to $US100 a share”, said he had changed his position because Tesla was “smoking” the rest of the industry. “Elon Musk has made such a sideshow of himself that people started to forget about — including myself — the underlying business,” Left said on Bloomberg TV. “It’s a revolution that I actually underestimated — the way people are buying these cars.”
Note also that Tesla has just sealed a deal to build its Gigafactory 3 in Shanghai. As Cleantechnica writes, “Tesla is speeding up factory construction [in China] due to Trump-instigated trade tariffs.”
Tesla intends to produce the Model Y and Model 3 in Shanghai. Production capacity of the factory will be 250,000 vehicles a year.
But the story is about much more than Tesla. As Tesla is battering the conventional car market, the incumbent car manufacturers have no choice but to join the race.
VW on 25 October has come out with a promise to build cars that are as good as Tesla’s, but at half the price.
VW CEO Herbert Diess said on German television: “We will come in 2020 with vehicles that can do anything like Tesla and are cheaper by half.”
VW already has a whole all-electric series planned, which it says it will market under the I.D. Vizzion brand. “It will start off with an all-electric hatch codenamed “Neo” and aims to have 25 per cent of the global EV market in coming year.”
“We have invested €30 billion in electromobility, we have already rededicated a plant in Zwickau, and we are building an electric vehicle plant in Shanghai,” Diess said.
Although electric vehicles are likely to cost more at first, Diess says that “truly highly attractive vehicles” would come in 2019/2020, “which will be an alternative for many customers in terms of price, performance, range, and chargeability.”
From the end of 2019, the first all-electric models of VW’s ID series will be off the line at the car-maker’s Zwickau plant. VW expects 1,500 production EVs to be produced each day from 2020. Currently, the only VW cars manufactured in Zwickau are the Golf and Golf Variant.
At present, VW is building around 10.7 million cars a year worldwide, with Zwickau not expected to meet the demand for electric vehicles. To that end, VW intends to expand its Foshan factory in China with a view to an all-electric production line producing 100,000 EVs a year by 2020.
The EV revolution will not only hit the oil sector hard, it will also have a huge impact on the electricity market through vehicle-to-grid technologies. These are still in an experimental phase, but progress is being made.
In Germany, Nissan has just announced that its Leaf car has been qualified by the German regulator to function as a power producer!
Nissan has worked with energy supplier Enervie and transmission system operator Amprion “to qualify the Leaf for all the German TSO regulatory requirements for primary power regulation”, reports the website The Driven.
What this mean is electric cars like the Leaf can be used to help stabilise the grid and smooth out power delivery which can be a problem for power companies using renewables with their fluctuating power delivery.
The TSO’s approval “means the Leaf can be integrated as a regulating reserve for the German electricity grid.”
Nissan hailed the test success as “a breakthrough in the establishment of Vehicle-to-Grid (V2G) technology which will shape the way we all generate and receive electricity.”
On the website Cleantechnica Steve Hanley notes that “Selling electricity back to the grid can put some serious cash in the pockets of electric car owners. In an experiment in Denmark last year, the average payout to owners was over $1,500. That’s nothing to sneeze at and could drive down the total cost of ownership of an electric car dramatically.”
But he adds that “There is a debate about whether allowing EVs to have a two way conversation with the grid is good for batteries. Many people believe V2G shortens battery life. Tesla CTO JB Strauble has said his company is not a strong supporter of V2G because the battery chemistry for EV battery cells and grid storage cells are different. But a study from last year suggests V2G technology may actually extend battery life.”
Bridie Schmidt from The Driven reports on another technological advancement: Electric cars – and aircraft – could one day have carbon fibre bodies that store energy in place of batteries, while being up to 50 per cent lighter, researchers from Sweden have said.
A study conducted at the Chalmers University of Technology “has shown that the incredibly lightweight and strong material can be used as a battery electrode, presenting game-changing implications for EV makers”, notes Schmidt.
Leif Asp, Professor of Material and Computational Mechanics at the university, who heads the research group, published the study last week saying that the research showed that carbon fibre could also be used to harvest energy. “A car body would … be not simply a load-bearing element, but also act as a battery.”
“It will also be possible to use the carbon fibre for other purposes such as harvesting kinetic energy, for sensors or for conductors of both energy and data.”
“If all these functions were part of a car or aircraft body, this could reduce the weight by up to 50 per cent.”
The technology, which uses a slightly more flexible form of carbon fibre, would not only be lighter than existing lithium-ion technology, but safer, “as they would also not contain any volatile substances,” the research said.
Source: Chalmers University of Technology
Concerns about using a flexible form of carbon fibre for a car body would not be a problem, says Asp, but requires automakers to rethink their approach to EV design.
“The key is to optimise vehicles at system level – based on the weight, strength, stiffness and electrochemical properties. That is something of a new way of thinking for the automotive sector, which is more used to optimising individual components,” says Asp.
There are, however, question marks about efficiency compared to lithium-ion technology, notes Schmidt. Asp says that the benefits outweigh the loss of energy. “Structural batteries may perhaps not become as efficient as traditional batteries, but since they have a structural load-bearing capability, very large gains can be made at system level.”
Meanwhile, British manufacturer Dyson, known of course for its vacuum cleaners, has decided to build an EV factory in Singapore.
The company has long hesitated between England and Singapore for the location of its factory, but Cleantechnica reports it has finally decided to choose the latter. Construction will already begin in December. The first vehicles will roll off the assembly lines in January 2021.
The move is especially significant as it shows that EV production does not have to be limited to car manufacturers. As EV production is so much simpler than that of ICE (internal combustion engine) cars, any industrial manufacturer can enter this game.
The rapid development of the EV market will no doubt give policymakers the confidence to take measures to discourage the use of polluting ICE cars.
The latest city in Europe to announce a future ban on ICE cars – following the likes of Paris, London and Oslo – is Madrid.
The Spanish capital is now implementing a plan (announced earlier), known as “Madrid Central”, that “will see all cars and motorbikes that are not either all-electric or hybrid, or possessing a minimum environmental classification, banned from the city’s central streets during the day.”
“Exceptions will be made for residents, or visitors with a special permit, who may continue using their high emissions vehicles until they purchase a new car. The ban also includes restrictions on parking cars on streets – residents must keep their old high emissions cars parked in a car park.”
The ban starts as of November 30, 2018, according to the City of Madrid’s website. Service providers to the downtown district will be given a grace period of 2 to 6 years to transition their fleet to low emissions vehicles – by 2020 for vehicles weighing less than 3.5 tonnes, and by 2025 for those over 3.5 tonnes.