Energy Investing - Why EV penetration will be slow and limited - Energy Investing - InvestorVillage


This is a semi-private group. You are free to browse messages, but you must be a member of this group to post messages. Join This Group

Group: Energy Investing   /  Message Board  /  Read Message

 
 






Keyword
Subject
Between
and
Rec'd By
Authored By
Minimum Recs
  
Previous Message  Next Message    Post Message    Post a Reply return to message boardtop of board
Msg  358341 of 362689  at  10/12/2021 12:00:07 PM  by

hf6e


Why EV penetration will be slow and limited

 Some thoughts on the dynamics of EV penetration into the car fleet. Could be totally wrong and EVs are “immortal”. But EVs are different “animals” than ICE cars, and this is important in determining their longevity in the hands of the current driver population.
----------------- 

In another post we discussed that average wholesale car value post Covid went from 12K to 18K. Exact numbers do not matter; let’s say the average ICE car on the street is worth 15K (just a number).

On the other hand when you drive around you see cars barely worth 1K-2K-3K. These cars are one repair away from “death”. Their owners are facing the “fix it or scrap it” choice.

Keep in mind that it does not really matter if the “fix it or scrap it” cost/decision is born/made by the owner or the insurance. Ultimately the owner pays for insurance.

-------------- 

So, at what EV value an EV owner faces the “fix it or scrap it” choice?

EVs are still young and mostly under manufacturers warranty (currently 8 yrs ~100K? miles for the battery). We are told EVs are very “reliable”, do not break down easily etc because of the electric motor. May be it is so, but the issue is not “cumulative repair cost” over several years and owners, but the “last repair” in the hands of the last owner.

The critical issue for EVs is the battery. It appears that out of warranty cost of battery replacement for Teslas is ~15K (not a new but reconditioned battery). Add some small body or other damage and the bill gets to 15K-20K.

https://www.currentautomotive.com/how-much-does-a-tesla-model-3-battery-replacement-cost/

https://www.findmyelectric.com/blog/tesla-battery-replacement-cost-explained/

This means that while the average ICE car on the street is worth ~15K, the EV worth 15K is a “zombie EV”, one repair away from death.

In other words EVs will never penetrate the bottom 50% of the vehicle market. Someone who pays 15K-20K to buy a car will not give this money to buy an EV without extended transferable battery warranty.

Adding extended warranties after the EV purchase, close to manufacturer warranty expiration, does not solve the problem. The cost will be born by the then owner. The only way to help EVs penetrate the bottom 50% of the market is very long manufacturer’s warranties (15 yr, 200K miles). This will raise substantially the price of new EVs, so that the original “rich” owners subsidize the “poor” subsequent ones. Currently the reverse happens the poor through tax subsidies subsidize the rich.

Until these very long warranties become available EVs will have a “short life” past warranty, with a very rapid value depreciation. Most likely they will be going for “recycling” before they even break down (due to sub par battery). The logic will be, get the high EV “scrap value” and buy a decent ICE car. Moreover to “push” EVs into the lower 50% of the market we will have to retrain neighborhood mechanics to service EVs. OK may be….

------------------ 

So, assuming

1) EVs are going only after the top 50% of car market

2) A two car family will want at least 1 ICE car (for range/size/optionality)

3) Some people will never buy an EV

The potential EV market is not more than 20%-25% of the total vehicle market (in the US). In other countries the target market is probably smaller.

In other words, we may be worrying too much about

1) The need to upgrade the electrical grid.

2) Lithium supply (In a few years lithium will be recycled from old EVs)

3) Demand hit for hydrocarbon fuels. The 20% of EVs on the road will be running on coal (China) or natural gas (US/Europe).

 


     e-mail to a friend      printer-friendly     add to library      
|  
Recs: 64  
   Views: 0 []
Previous Message  Next Message    Post Message    Post a Reply return to message boardtop of board

Replies
Msg # Subject Author Recs Date Posted
358343 Re: Why EV penetration will be slow and limited doomonyou 8 10/12/2021 12:13:10 PM
358345 Re: Why EV penetration will be slow and limited saintsinneridiot 2 10/12/2021 12:27:58 PM
358346 Re: Why EV penetration will be slow and limited EsotericPath 34 10/12/2021 12:34:59 PM
358348 Re: Why EV penetration will be slow and limited zzsdxv 5 10/12/2021 12:44:20 PM
358354 Re: Why EV penetration will be slow and limited nickgeo 4 10/12/2021 1:05:04 PM
358356 Re: Why EV penetration will be slow and limited us2u001 20 10/12/2021 1:10:05 PM
358362 Re: Why EV penetration will be slow and limited go2fish 14 10/12/2021 1:23:10 PM
358372 Re: Why EV penetration will be slow and limited Bearcatbob 8 10/12/2021 2:12:39 PM
358420 Re: Why EV penetration will be slow and limited ---- Had the PREVIEW in 2020 Pipeless_Pauper 3 10/12/2021 4:37:35 PM
358506 Re: Why EV penetration will be slow and limited & is a gas driven EV more efficient than an ICE on gas? Resilience 3 10/13/2021 3:11:05 AM


Financial Market Data provided by
.
Loading...