Predicting The Future

Forgive me for starting with what is a pretty oft repeated truism, but we are living through a period of unprecedented change. I do, however, feel that it is important to keep it in mind when trying to figure out what to focus our time and efforts on in order to plan for the future. It makes making predictions hard, whilst simultaneously highlighting the importance of at least attempting to make them, and by extension, not being afraid to make predictions for fear of getting it wrong - the process itself is a useful exercise.

The area on which I have been focusing most when it comes to the future is transport, and more specifically light vehicle transport. It’s a huge and - to me at least - fascinating subject. It occupies a frightening amount of my waking thought, and I feel it is an area in which some of the greatest disruption in the coming decade will be seen.

Tesla really has to take a lot of the credit for kick-starting what will prove to be an enormous shake up of the automotive industry, and you get the feeling that they are only just getting started. In typical Silicon Valley style, they have also managed to tempt a number of businesses with similar outlooks in to the game. Google and Apple, for example, are both showing strong signs of wanting in on the action having seen the success of Tesla based on relatively minimal resources. The cash piles of both companies should represent a considerable source of concern for the incumbent players in the industry, yet they appear to be showing limited appetite for making changes in response. 

This leads to the first of my predictions, in that I think we will see one or two very high profile casualties in the form of large automotive companies going bankrupt or losing significant market share as a result of their failure to adapt - their Kodak moment. If I were in to betting, I’d pick Fiat Chrysler Group as being the first of these, in spite of their scale today. CEO Sergio Marchionne just does not seem to have an eye sufficiently on the future (presumably not aided by his plans to retire by 2018), and is desperately seeking merger opportunities to try to save the company and its meagre market cap relative to its notional size. Far more likely will be a scenario in which the company is broken up and sold off in pieces, with some of its brands surviving, and some quietly dying as they arguably deserve to do - other automakers make better examples of many of Fiat Chrysler’s products at a lower cost.

Ultimately what I think some of the established automotive players are failing to recognise is that there is an inexorable march of 'technification' in the industry. Car companies have shown relatively little innovation in their ~120 year history, in that the basics of four wheels and power from an internal combustion engine with input from a driver has remained broadly unchanged. That framework has seen incremental improvement over the years, but rarely anything more than that, strides in safety and moderate efficiency improvements notwithstanding. Today we have several huge disruptive forces being applied to the industry as a result of technological advances. Both the way the vehicle is powered (electrification) and the way it is controlled (autonomy) are being significantly shaken up. Entries to the market from tech companies will drive this.

Predicting the pace with which electrification will take over is inherently difficult. Many will point to the way in which Ford’s Model T quickly disrupted the horse and cart, but I think it is an over-simplification to rely too heavily on that analogy. The electric car has to compete with a powerful and established incumbent which also happens to be backed by the interests of the oil industry, making it all a lot more nuanced than a simple replacement of an option that was clearly and viscerally worse. There are still valuable parallels to draw, however; cities across the world were becoming knee-deep in horse manure in the early 20th century with considerable health concerns as a result. In much the same way, we are apparently only now fully recognising the impact of internal combustion on human health, with air quality in cities an increasingly hot topic. As a driver of change, this is likely to prove far more influential than climate change, even if that should be our greatest motivation. 

I’m still prepared to stick my neck out and make a prediction here all the same: 95-100% of light vehicle sales will be electric by 2030. Many will show scepticism at this, but I feel it is that inevitable. When you break it down it makes sense. The only way in which today’s electric vehicles are arguably worse than those powered by combustion is the perceived range limitation. Each of the solutions to this issue are improving exponentially: battery energy density, battery cost, and availability of charging infrastructure. At the high end of the market, Tesla has a car with a range of 300+ miles which is quieter, smoother to drive, cheaper to maintain and around a tenth of the cost to fuel versus the most efficient diesel or petrol equivalents. Oh and they’re staggeringly quick. With current technology, namely Tesla’s own supercharger, 15 minutes of charging will replenish about 150 miles of range. So for the sake of a 15 minute stop (and bearing in mind that an average diesel or petrol fuelling stop will take around 10 minutes once you have pumped the fuel and paid), you have 450 miles of range. At an average of c.60mph, this is around 8 hours of driving - far more than most would consider doing in a day. The only thing holding back a surge in demand for Teslas is the availability of charging that is that quick. Three major considerations here: 1. Technology is being announced right now that represents a 2-3 fold improvement in that charging power, 2. The four largest automakers in Europe recently announced their intention to begin work on 400 charging stations Europe-wide at the improved rate of charge, 3. Private companies such as US-based ChargePoint recently announced their own equipment at that power rating. Add to that rapid improvements in battery energy density and rapidly falling battery costs, and you start to see how 2030 seems almost distant for a prediction of +95% sales of electric vehicles.

The challenge therefore is to meet the infrastructure demand so that this future can be realised. It is in all of our interests, after all, whether it is climate change, energy security or air quality that is closest to your heart. Whilst public rapid charging is very important for longer journeys, the vast majority of charging will be top up charging whenever a car is stationary, be that at home, at work or at the shops etc. The average mileage per day in the UK is 20-30 miles, so a Nissan Leaf or a Renault Zoe will require around 5kwh of energy per day to cover that mileage - the equivalent of running an oven for 1-2 hours. And before you start to worry that we do not have enough generating capacity to cope, consider this: oil refinery in the UK draws enough electricity to power every car (if it were electric) in the country - as we transition away from refining oil, all the energy we need and more will become available without needing to install more capacity. 

About the author

Hamish is a business developer and sustainability advocate with a particular interest in energy (how it is produced and how it is consumed).

Hamish’s passion is for positive change in the world. He clearly sees the benefits of transitioning to a low carbon future, and directs all of his energies to contributing to the changes we need to make happen for a healthy and prosperous future.