#8 - No Hablo Eléctrico
Shocker….the guys who spend their days pedalling oil burning supercars aren’t that fond of the electric car movement currently sweeping the globe. It’s a hard one to refute…..the shift by main stream manufacturer’s into the electric and hybrid arena has definitely signalled the end is nigh for the traditional gas powered car. The days of new V12 Lamborghini’s and Ferrari’s echoing through tunnels in the South of France while flames belch out their backsides is coming to an end. And while the product offering from nouveau automotive powerhouses such as Tesla is impressive, both in terms of efficiency and performance, it leaves the heart feeling somewhat cold and underwhelmed. You see….you lose the combustion engine, you lose the noise and with it one of the most visceral senses that make cars what they are. But that’s not what our real beef with electric is about.
It is extremely naïve to question climate change and the huge impact we are having on our Global Ecosystem through the burning of fossil fuels………we aren’t for a second going to challenge that. What we will contest however is the idea that electric energy and propulsion are the future of a sustainable civilisation as we know it.
Taking it back to the cause, the shift to alternative fuel is based on 2 key factors. The harmful side effects from the burning of fossil fuels combined with the finite nature of them. Let’s not forget, the damage they do is equally pertinent to our inability to use them forever……we’ve all seen Waterworld. So the key to achieving a sustainable power source for future generations is finding one that is truly accessible and renewable……and I’m afraid that’s where the idea of an electric car falls down.
Electricity as a power source is not 100% renewable (even when it is generated from sources such as solar, wind or geothermal) and that’s principally down to the way we store it. Battery technology has come on leaps and bounds over the last 10 years to create lighter, smaller and ultimately more efficient batteries, but the components used in their production still remain finite raw materials. The lithium ion battery market is expected to grow by 22% per annum for the next 5 years and be used in 70% of all battery production but the real question to ask is how sustainable and/or achievable is that. 75% of the world lithium resources sit within the “Lithium Triangle” made up of Argentina, Bolivia and Chile. Not only are these politically sensitive areas but the extraction of the raw material is also not the most simple of processes. Looking at other constituents of batteries, 65% of all cobalt production occurs in the Democratic Republic of Congo and 65% of flake granite used is mined in China. So not only are all these raw materials scarce but our ability to extract them to meet current and future demands is and will continue to be challenging. Elon Musk’s goal to source 100% of raw materials sustainably and ethically in North America seems a stretch when the only Lithium brine operation in the US produces a meagre 1,000 tonnes per annum, Cobalt hasn’t been mined in the US for over 40 years and the graphite produced by the US is pretty much a donut.
Then there is the actual electricity supply required to meet the insatiable demand. In the UK, if every car owner on the road today switched to an electric car, it would result in a ~50% increase in peak energy required from ~61 gigawatts (GW) per annum to closer to 92 GW per annum. As a fairly substantial net importer of energy already and a country that is about to exit the EU (slow clap), how will we be able to get anywhere close to satisfying that demand.
Where can we find 30 GW of energy per annum? Well an average nuclear power plant such as Hinkley can generate just over 3GW per annum. However they take on average 20 years to build at a cost of £20bn a pop. Alternatively, 10,000 wind turbines could cover the same energy shortfall and they only cost £3mm a piece…….goodbye beautiful countryside. Excuse our cynicism but the future for the electric car does look a little bleak when you take the rose tinted specs off.
So what is the answer? In our eyes the long term bet is hydrogen. We say long term as it’s not the answer for today or even tomorrow but in a similar vein to where electric vehicle technology was 10 years ago, the green shoots for the hydrogen revolution are there and all it needs is a little more refinement and investment. Why? Well for one hydrogen is the most abundant element in our universe and the only waste product to come out of a hydrogen fuel cell car is good old H2O. What’s more, the refuelling times are the same as conventional combustion engines and it is relatively easy to upgrade the existing petrol station infrastructure to accommodate a hydrogen “fuel pump”. What adds further gravitas to the argument is that we are finally starting to see car manufacturers committing to building production hydrogen cars with Honda, Hyundai and Toyota all leading the charge. Yes there are issues with it…..at the moment refining Hydrogen into a compressed gas form for consumption is an energy intensive and expensive process. That said, we said the same about electric energy 10 years ago and look at the rate of development there.
So while we will all eventually have to succumb to the death of V10 and V12 petrol engines, driving around in a water powered Lambo does sound pretty cool. Just make sure you have an old V12 powered one alongside it in the garage to keep it company.
Happy Motoring,
CC’s Investment Team