The Future Of cars: Batteries Included?

Elon Musk, founder and CEO of Tesla, has done what GM couldn't when, 20 years ago, EV1 was introduced as the first (failed) mainstream, all-electric car. Tesla has moved electric vehicles (EVs) from cult to elite status. Seductively designed and impressively engineered, the nearly $100,000 Tesla is a must-own for one-percenters.

Could Tesla, in particular, with its to-be-released cheaper plug-in sedan, along with the other dozen major EV manufacturers, be the portent of an automotive revolution that finally displaces the vilified internal combustion engine? Or has Musk created—no small feat—a modern Maserati? (The latter celebrates its centennial on December 1, 2014.) At present, the wisdom of the stock market gives Tesla a value approaching that of GM, which produces as many cars in a week as Tesla does in a year.

One thing is certain about the future of personal transportation: People like it. So, in two decades, there will be 1 billion more cars on the road, up from today's 800 million. Even in America there will be more cars. It turns out that the notion that bicycle-loving millennials eschew cars is wrong; the downturn in auto ownership breathlessly flagged by New Economy mavens turns out to have, instead, been about money. As the Great Recession slowly recedes, millennials are buying cars and surveys show they want them roughly as much as their boomer parents did. (Different styles to be sure, but there's no evidence they'd prefer to bike, hitchhike, take the bus or walk.)

For Tesla's aspirational acolytes, however, the future is obviously one where most cars will depend on batteries of electricity, not barrels of oil. Is this likely?

For cars, the future is determined by realities in two domains. First, physics determines what engineers can do at a price that most people will pay. Second, psychology determines what people want and pay for.

Start with psychology. Consumers want cars to provide five things well: comfort, convenience, reliability, safety, and style. All of it, and cheap. Real-world data show that fuel economy and environmental attributes are valued, but only a tiny niche elevate them to the detriment of cost and the five core attributes. And now there is a sixth attribute that surveys show young buyers often value more than fuel mileage—digital features and connectivity.

If consumers bought cars like commodities based solely on maximally efficient transport, the world's roads would resemble a dystopian future of identical Chiclet-like pods. The truth is most car buyers have little interest in what's under the hood (whether the propulsion comes from oil, corn alcohol, lithium batteries, or gerbils on tread mills), provided the six energy-gobbling attributes are delivered in the right mix at the right price. In this mix the solution to delivering fuel efficiency is always technology; for those who dream of a pure electric utopia, it is the battery-electric car.

The problem is that mass-producing better batteries is, put simply, really hard. Batteries are not good at storing energy compared to a steel gasoline tank. (We know how hard it is, in part, because the Obama administration spent $2 billion on stimulus subsidies for companies to build new battery factories in America. That experiment yielded neither a technological nor a domestic production revolution.)

We also know how difficult it is because of the inherent differences in the physical chemistry in the molecules used to store energy. Pound for pound (and pounds matter) the chemicals that comprise gasoline store 40 times more energy than the best chemicals in batteries. Gasoline is not only more dense but also remarkably safe, easy to store, and portable. Ask a chemist: if you started with a blank slate to design a near-ideal way to store energy for a mobile platform, you'd invent the oil molecule.

Such physics disparities are revealed in practice. A Tesla battery pack, plus motor, weighs over 1,500 pounds. A loaded fuel tank, plus motor, in a Mustang weighs just over 500 pounds. To offset this weight penalty, the Tesla uses a lot of aluminum. It bears noting, too, that aluminum consumes energy to fabricate (20-fold more than steel) that for all practical purposes it is solid electricity. Aluminum saves oil, in other words, by burning coal and fracked natural gas.

In addition, batteries are expensive. Driving 200 miles on kilowatt-hours, using 40 kWh, uses just $5 of electricity; each fill-up, on the other hand, costs about $90 when you include the amortized battery cost. Driving 200 miles in a VW GTI uses $15 of gasoline and $0.25 of steel, amortized. Such vast differences can only be disguised with subsidies.

As battery advocates rightly retort, there is always better technology. Although this is true, the underlying difference in energy density—hydrocarbons vs. electrochemistry—is locked in the physics of the associated atoms and molecules. No venture capital, government subsidy, or computer magic can change that. Technology, it is also true, gets better, and faster, in the use of gasoline.

A recent National Academy of Sciences study found that the R&D roadmap to a battery that is, say, two times better at any price is still unclear. But a two-times better internal-combustion engine is already available at a low price. Volvo, to name one example, recently unveiled a prototype tiny 4-cyclinder 450 hp engine, rivaling fire-breathing racecars. And that's with yesterday's technology. The inherent design of an internal combustion engine is far from tapped out.

There is a simple race in play, one between combustion chemistry and battery chemistry. Both will improve. The former has enormous inherent advantages. The only reason you'd subsidize the latter over the former is because you believe the world is running out of oil, or that batteries lower the use of hydrocarbons. Neither scenario is plausible in the near future. As America's shale engineers have shown, the world is awash in oil. From a macro-resource perspective, there is no significant difference between the two vehicle futures—at the scale of fuels and hydrocarbons required in a world of tens of trillions of annual vehicle miles.

Still, there is a revolution in personal transportation coming, from silicon, software and new materials. Software (when combined with new classes of sensors) will yield better real-time traffic control. This is not a minor issue. Congestion is not only annoying and mind-numbing, but costs us 100 million barrels of oil a year in America alone. Super-computing software will also unveil mysteries of combustion that will translate into improve engine designs and software-controlled combustion with the potential to at least double average combustion efficiency. (Indeed, big data software is already enabling design of radical new classes of lightweight, high-strength materials that will do more for the average car than aluminum did for Tesla.)

Batteries will get better, too. And better, cheaper ones will enable the ubiquitous deployment of the hybrid architecture that so dramatically improves gasoline engine efficiency in city driving. Overall, technology will lead to far less fuel used per person-mile, though person-miles will grow faster for quite some time yet.

What about “black swan” technology? Radical new technologies are inevitable, but largely unpredictable. Once they emerge, given the scale of global transportation infrastructure, adoption and deployment takes decades, not years. If one were nonetheless betting on a black swan, visible hints do suggest what is possible. One can imagine a vehicle's body panels fabricated from electricity-storing technology that could be recharged wirelessly and frequently from opportunistic points in urban areas. Highways would still run on gasoline, but city driving will one day reach the all-electric dream. One day.

Meanwhile, Tesla broke yet more new ground this month as the first electric vehicle to make it onto Car & Driver's iconic annual Top 10 list, joining a $60,000 Corvette and Porsche. But you can bet the 99 percent will be buying cars more like another on that list: the VW Golf GTI. At half the price, the GTI matches the Tesla's 0-to-60 mph and goes 1,500 miles on a barrel of oil.

One is tempted to paraphrase Winston Churchill: Hydrocarbon-burning internal-combustion engines are the worst way to propel vehicles, except for all the others. Except the truth, in this case, is that hydrocarbons may represent the best way.

This piece originally appeared in RealClearPolitics

This piece originally appeared in RealClearPolitics