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Released May 30, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--There is wide agreement that electric vehicles (EVs) have an important role in decarbonization. But that agreement has caused some misconceptions and unwarranted concerns, an analyst with Enverus (Austin, Texas) said earlier this month at a conference organized by his company.
Speaking at Enverus' EVOLVE conference May 17, Carson Kearl, an associate in Enverus' Intelligence group, projected that 65% of new vehicles sold in 2030 will be electric; by 2035, that number will rise to over 80%.
Last year, more than 10 million new vehicles sold globally were powered by electricity, according to the International Energy Agency's Global EV Outlook, released last month. Sales this year are expected to jump 35%, to reach 14 million units by year-end 2023, the agency predicted.
EV doubters have pushed back on a number of fronts, Kearl said, including:
Regarding EV costs, he projected that cost parity with internal combustion engines (ICEs) will be reached within three years or less for most models. "Battery costs have declined by a factor of five since 2013," falling from about $500 per kilowatt-hour in that year to about $100 today. Continued, more gradual price declines are forecast through 2035. He told conference attendees that EVs are expected to reach sticker cost parity with comparable ICEs by 2025.
On the subject on "range anxiety," he acknowledged that "a lot of people have range anxiety when it comes to purchasing EVs." But battery energy density, a critical factor in vehicle range, has grown by seven times since 2010. "Rapid innovation" is expected to continue, he said. "We believe it will be commonplace to see EVs with a range of over 500 miles before the end of the decade."
The second popular misconception is that the grid "can't handle large-scale EV adoption." It's a common misperception, he continued, that widespread adoption of EVs will double or triple electric demand in the U.S. He says this misconception stems from the erroneous belief that most EVs need to fully recharge their batteries most days of the week. But the average U.S. driver only drove about 30 miles each day over the 2019-2022 period, regardless of whether they were driving an EV or an ICE. Given that the average EV range is over 300 miles, the average EV owner would only need to fully recharge their vehicles about once per week, he said.
Kearl said "in a worst-possible scenario," the Electric Power industry's concern, that every EV owner will come home at the same time and begin recharging their vehicles, could led to a near doubling of demand for a three-hour period during weekdays. However, he said technology solutions like "smart charging" and battery management could sharply lower that peak demand and spread it over a longer timeframe. This should alleviate concerns about EV recharging overloading distribution networks and causing them to fail.
"Charging impact can be minimal," he said.
And, while Kearl didn't specifically address how changing work patterns could affect EV-driven electricity demand, it's possible that workplace trends could help further alleviate grid-overload concerns. The COVID-19 pandemic opened the potential for remote work to a degree thought unimaginable in 2019. Surveys have shown that certain categories of workers who can work away from the office strongly prefer to do so. A certain percentage of those workers may be EV owners or would like to become EV owners in the future. Remote workers who own EVs could choose to recharge their vehicles during off-peak hours, such as 9 am, when electricity prices are lower.
Many electric utilities already offer customers what are called time-of-use (TOU) price options, where electricity prices vary with the time of day. The aim of those rates is to encourage customers to use electricity in off-peak periods, such as in the morning or late at night, when supplies are plentiful and prices are low. A number of utilities that don't already offer TOU rates are working to introduce them. Although Kearl did not address the TOU issue, how much EV electric demand could be shifted to off-peak hours, thus alleviating strain on the grid depends on how effectively utilities communicate with their EV-owning customers about TOU rates.
Finally, the Kearl tackled EV supply-chain inefficiencies, specifically the availabilities of critical minerals like lithium, nickel and copper, as well as EV battery production capacity. These concerns "are the most prominent challenge of EV adoption at large scale," he said.
But Kearl said for the most part, such concerns are overblown. Battery production capacity is slated to outpace demand in North America and the world. By 2030, he projected, battery production capacity is scheduled to triple, which should alleviate concerns.
Turning to metals, he said the availability of copper and lithium are "tier 1" concerns, and nickel was a "tier 2 concern." The copper market "will be undeniably tight" over the next decade, but extensions of existing copper mines, and recycling copper, could close any supply-demand gap for copper for the next decade.
The nickel market also is expected to be tight until recycling capacity starts coming online by the middle of the 2030s. "The known reserves of nickel are ample to supply the market until relative circularity is achieved," sometime near the middle of this century.
Demand for lithium is expected to rise sharply, by over five times, to the mid-2030s, he projected, acknowledging that lithium supplies are expected to be "extremely tight" in the middle of the 2030s, "as supply struggles to keep up with exponential demand" growth. But he said he felt confident that a variety of alternate options, including direct lithium extraction from brines and advances in battery technologies and chemistries, could alleviate supply-demand pressures.
Three subject-matter experts from Industrial Info took issue with Kearl's predictions, most importantly on how widespread EV deployment could affect the electric grid and the ability for lithium supplies to grow as fast as demand.
Britt Burt, Industrial Info's vice president of research for the Global Power Industry, said, "the electric grid in the U.S. needs to increase by three times to support the economy-wide move towards decarbonization. EVs are not the only new load: there's massive new demand coming from data centers, oil and gas rigs getting electrified, the steel industry electrification, and the electrification of homes through heat pumps. Combined, all this new demand will outstrip the existing grid's capacity. The grid in its current state will not support this transition."
To demonstrate this, Burt noted that Industrial Info is tracking nearly 1,500 proposed U.S. transmission & distribution projects that are scheduled to begin construction by the end of 2027. The value of these projects is about $80.2 billion.
David Pickering, Industrial Info's vice president of research for Industrial Manufacturing, which includes EVs, said he believes Kearl is "severely downplaying" the spike in lithium demand. "The industry expects lithium mining will have to grow from about 120,000 tons of production per year to about 3 million tons per year just to satisfy the need for lithium-ion batteries for EVs. That is major jump and geopolitics will play a large part in this as the largest untapped lithium resources are in Africa, where China is deepening its hold and influence. This could be a major problem in the future. China could easily reduce or even cut off that supply, which would be a major problem for the balance of the globe."
Joe Govreau, Industrial Info's vice president of research for the Metals & Minerals industry, added: "Regarding metals and minerals demand, battery metals are concerns for sure. China currently dominates that market, but my thinking is the industry will adapt and keep pace with the changes. For example, Elon Musk started construction on a lithium refinery outside of Corpus Christi, Texas."
He continued: "More than half of the world's lithium reserves are in Chile and Australia. Chile is in the process of nationalizing its lithium industry. There will be bumps along the way for sure."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Speaking at Enverus' EVOLVE conference May 17, Carson Kearl, an associate in Enverus' Intelligence group, projected that 65% of new vehicles sold in 2030 will be electric; by 2035, that number will rise to over 80%.
Last year, more than 10 million new vehicles sold globally were powered by electricity, according to the International Energy Agency's Global EV Outlook, released last month. Sales this year are expected to jump 35%, to reach 14 million units by year-end 2023, the agency predicted.
EV doubters have pushed back on a number of fronts, Kearl said, including:
- EVs are too expensive and inconvenient
- The electricity grid won't be able to accommodate the surge of EVs, and
- Supply-chain problems will be a limiting factor keeping EV growth below expectations.
Regarding EV costs, he projected that cost parity with internal combustion engines (ICEs) will be reached within three years or less for most models. "Battery costs have declined by a factor of five since 2013," falling from about $500 per kilowatt-hour in that year to about $100 today. Continued, more gradual price declines are forecast through 2035. He told conference attendees that EVs are expected to reach sticker cost parity with comparable ICEs by 2025.
On the subject on "range anxiety," he acknowledged that "a lot of people have range anxiety when it comes to purchasing EVs." But battery energy density, a critical factor in vehicle range, has grown by seven times since 2010. "Rapid innovation" is expected to continue, he said. "We believe it will be commonplace to see EVs with a range of over 500 miles before the end of the decade."
The second popular misconception is that the grid "can't handle large-scale EV adoption." It's a common misperception, he continued, that widespread adoption of EVs will double or triple electric demand in the U.S. He says this misconception stems from the erroneous belief that most EVs need to fully recharge their batteries most days of the week. But the average U.S. driver only drove about 30 miles each day over the 2019-2022 period, regardless of whether they were driving an EV or an ICE. Given that the average EV range is over 300 miles, the average EV owner would only need to fully recharge their vehicles about once per week, he said.
Kearl said "in a worst-possible scenario," the Electric Power industry's concern, that every EV owner will come home at the same time and begin recharging their vehicles, could led to a near doubling of demand for a three-hour period during weekdays. However, he said technology solutions like "smart charging" and battery management could sharply lower that peak demand and spread it over a longer timeframe. This should alleviate concerns about EV recharging overloading distribution networks and causing them to fail.
"Charging impact can be minimal," he said.
And, while Kearl didn't specifically address how changing work patterns could affect EV-driven electricity demand, it's possible that workplace trends could help further alleviate grid-overload concerns. The COVID-19 pandemic opened the potential for remote work to a degree thought unimaginable in 2019. Surveys have shown that certain categories of workers who can work away from the office strongly prefer to do so. A certain percentage of those workers may be EV owners or would like to become EV owners in the future. Remote workers who own EVs could choose to recharge their vehicles during off-peak hours, such as 9 am, when electricity prices are lower.
Many electric utilities already offer customers what are called time-of-use (TOU) price options, where electricity prices vary with the time of day. The aim of those rates is to encourage customers to use electricity in off-peak periods, such as in the morning or late at night, when supplies are plentiful and prices are low. A number of utilities that don't already offer TOU rates are working to introduce them. Although Kearl did not address the TOU issue, how much EV electric demand could be shifted to off-peak hours, thus alleviating strain on the grid depends on how effectively utilities communicate with their EV-owning customers about TOU rates.
Finally, the Kearl tackled EV supply-chain inefficiencies, specifically the availabilities of critical minerals like lithium, nickel and copper, as well as EV battery production capacity. These concerns "are the most prominent challenge of EV adoption at large scale," he said.
But Kearl said for the most part, such concerns are overblown. Battery production capacity is slated to outpace demand in North America and the world. By 2030, he projected, battery production capacity is scheduled to triple, which should alleviate concerns.
Turning to metals, he said the availability of copper and lithium are "tier 1" concerns, and nickel was a "tier 2 concern." The copper market "will be undeniably tight" over the next decade, but extensions of existing copper mines, and recycling copper, could close any supply-demand gap for copper for the next decade.
The nickel market also is expected to be tight until recycling capacity starts coming online by the middle of the 2030s. "The known reserves of nickel are ample to supply the market until relative circularity is achieved," sometime near the middle of this century.
Demand for lithium is expected to rise sharply, by over five times, to the mid-2030s, he projected, acknowledging that lithium supplies are expected to be "extremely tight" in the middle of the 2030s, "as supply struggles to keep up with exponential demand" growth. But he said he felt confident that a variety of alternate options, including direct lithium extraction from brines and advances in battery technologies and chemistries, could alleviate supply-demand pressures.
Three subject-matter experts from Industrial Info took issue with Kearl's predictions, most importantly on how widespread EV deployment could affect the electric grid and the ability for lithium supplies to grow as fast as demand.
Britt Burt, Industrial Info's vice president of research for the Global Power Industry, said, "the electric grid in the U.S. needs to increase by three times to support the economy-wide move towards decarbonization. EVs are not the only new load: there's massive new demand coming from data centers, oil and gas rigs getting electrified, the steel industry electrification, and the electrification of homes through heat pumps. Combined, all this new demand will outstrip the existing grid's capacity. The grid in its current state will not support this transition."
To demonstrate this, Burt noted that Industrial Info is tracking nearly 1,500 proposed U.S. transmission & distribution projects that are scheduled to begin construction by the end of 2027. The value of these projects is about $80.2 billion.
David Pickering, Industrial Info's vice president of research for Industrial Manufacturing, which includes EVs, said he believes Kearl is "severely downplaying" the spike in lithium demand. "The industry expects lithium mining will have to grow from about 120,000 tons of production per year to about 3 million tons per year just to satisfy the need for lithium-ion batteries for EVs. That is major jump and geopolitics will play a large part in this as the largest untapped lithium resources are in Africa, where China is deepening its hold and influence. This could be a major problem in the future. China could easily reduce or even cut off that supply, which would be a major problem for the balance of the globe."
Joe Govreau, Industrial Info's vice president of research for the Metals & Minerals industry, added: "Regarding metals and minerals demand, battery metals are concerns for sure. China currently dominates that market, but my thinking is the industry will adapt and keep pace with the changes. For example, Elon Musk started construction on a lithium refinery outside of Corpus Christi, Texas."
He continued: "More than half of the world's lithium reserves are in Chile and Australia. Chile is in the process of nationalizing its lithium industry. There will be bumps along the way for sure."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
