THE BIGGEST BET IN AUTOMOTIVE HISTORY.

By Peter M. DeLorenzo

Detroit. Back in the fall of ’76, when my misguided experiment at getting into the retail side of the auto business in East Lansing went up in smoke, I realized then that my calling wasn’t dealing with upside-down “ups” and the churn and burn of a high volume auto store that operated on the premise of getting people into new cars, whether they could afford them or not (they usually couldn’t).

Not only did I not like it, I detested every minute of it. But the parting words to me by the General Manager before he let me go were classic, as he said that “I just marched to a different drummer.” (Truer words were never spoken, by the way. -WG). 

From there my life adventure took me on a wild ride through advertising and ultimately this website, and though I have learned and experienced a lot over the years, I’m still savoring the ride. And why not? There’s still plenty to do and see and experience, and there’s no point sitting on the sidelines waiting for things to happen.

But as someone who was fortunate enough to witness Detroit’s Golden Age up close and from a front-row seat, it’s no secret that the looming transition to alternative propulsion is cause for a great deal of consternation. Make no mistake, electrified propulsion is cool and all that, but there is something decidedly missing from the equation. Yes, the instantaneous torque is indeed impressive, if the bragging rights of having blistering acceleration is all you’re after, but beyond that, what? There is simply no visceral appeal and no sound and fury. I loved slot cars as a kid, but that was a long time ago.

The reality for most people is that in the coming transition to fully electric vehicles – unless confined to the urban slog – will only thrive as second vehicles. Yes, if you rumble around the city and that is all you demand from your vehicle you will certainly be able to do just fine with a fully electric vehicle as your only mode of transport. But if you venture out on longer trips, the notion of planning a trip around charging stations is not something that most people are going to want to put up with. Where’s my sense of adventure, you might ask? My sense of adventure is just fine, thank you, but stopping for extended periods of time on a road trip to recharge is not my idea of a good time. 

And during the winter months, the effort to live with a fully-electric vehicle in frigid temperatures - with a reduced range by half - is simply unacceptable. Oh, you haven’t heard about range reduction in the freezing cold? You probably haven’t if you’ve only listened to electric car zealots bragging about the advantages of their vehicles. But make no mistake, in the cold weather parts of this country electric vehicle drivers are in for a rude awakening. Want to use that heater? The range goes down. How about those heated seats and that heated steering wheel, if you ordered those options? The range goes down.

That’s why I have to shake my head when I hear all of the rosy predictions about the coming Age of Electrification. I see global auto manufacturers dumping hundreds of billions of dollars on electrification, whether forced to by government regulations or in the blue-sky belief that it’s What’s Next, but the realities of this looming transition don’t exactly jibe with these massively aggressive plans. According to a report from the Manhattan Institute by Mark P. Mills, entitled “The New Energy Economy: An Exercise in Magical Thinking” those realities are sobering. In fact, they’re downright ugly. Here are just a few:

·      Hydrocarbons supply over 80% of world energy: If all that were in the form of oil, the barrels would line up from Washington, D.C., to Los Angeles, and that entire line would grow by the height of the Washington Monument every week.

·      A 100x growth in the number of electric vehicles to 400 million on the roads by 2040 would displace 5% of global oil demand.

·      Renewable energy would have to expand 90-fold to replace global hydrocarbons in two decades. It took a half-century for global petroleum production to expand “only” 10-fold.

·      Replacing U.S. hydrocarbon-based electric generation over the next 30 years would require a construction program building out the grid at a rate 14-fold greater than any time in history.

·      Efficiency increases energy demand: since 1995, energy used per byte is down about 10,000-fold, but global data traffic rose about a million-fold; global electricity used for computing soared.

·      Since 1995, total world energy use rose by 50%, an amount equal to adding two entire United States’ worth of demand.

·      For security and reliability, an average of two months of national demand for hydrocarbons are in storage at any time. Today, barely two hours of national electricity demand can be stored in all utility-scale batteries plus all batteries in one million electric cars in America.

·      Batteries produced annually by the Tesla Gigafactory (the world’s biggest battery factory) can store three minutes worth of annual U.S. electric demand. And, to make enough batteries to store two-day’s worth of U.S. electricity demand would require 1,000 years of production by the Gigafactory.

·      Every $1 billion spent on data centers leads to $7 billion in electricity consumed over two decades. Global spending on data centers is more than $100 billion a year—and rising.

·      Over a 30-year period, $1 million worth of utility-scale solar or wind produces 40 million and 55 million kWh respectively. $1 million worth of shale well produces enough natural gas to generate 300 million kWh over 30 years.

·      It costs less than $0.50 to store a barrel of oil, or its equivalent in natural gas, but it costs $200 to store the equivalent energy of a barrel of oil in batteries.

·      Over 90% of America’s electricity, and 99% of the power used in transportation, comes from sources that can easily supply energy to the economy any time the market demands it.

·      Politicians and pundits like to invoke “moonshot” language. But transforming the energy economy is not like putting a few people on the moon a few times. It is like putting all of humanity on the moon—permanently.

·      The common cliché: an energy tech disruption will echo the digital tech disruption. But information-producing machines and energy-producing machines involve profoundly different physics; the cliché is sillier than comparing apples to bowling balls.

·      If solar power scaled like computer-tech, a single postage-stamp-size solar array would power the Empire State Building. That only happens in comic books.

·      If batteries scaled like digital tech, a battery the size of a book, costing three cents, could power a jetliner to Asia. That only happens in comic books.

·      If combustion engines scaled like computers, a car engine would shrink to the size of an ant and produce a thousand-fold more horsepower; actual ant-sized engines produce 100,000 times less power.

·      About 60 pounds of batteries are needed to store the energy equivalent of one pound of hydrocarbons. At least 100 pounds of materials are mined, moved and processed for every pound of battery fabricated.

·      Storing the energy equivalent of one barrel of oil, which weighs 300 pounds, requires 20,000 pounds of Tesla batteries ($200,000 worth).

·      Carrying the energy equivalent of the aviation fuel used by an aircraft flying to Asia would require $60 million worth of Tesla-type batteries weighing five times more than that aircraft.

·      It takes the energy-equivalent of 100 barrels of oil to fabricate a quantity of batteries that can store the energy equivalent of a single barrel of oil.

·      A battery-centric grid and car world means mining gigatons more of the earth to access lithium, copper, nickel, graphite, rare earths, cobalt, etc.—and using millions of tons of oil and coal both in mining and to fabricate metals and concrete. And in case you’re wondering, China dominates global battery production with its grid 70% coal-fueled. EVs using Chinese batteries will create more carbon-dioxide than saved by replacing oil-burning engines.

Sobering realities indeed. 

I am all for a visionary future (hell, I love thinking about flying cars as much as the next person). And I love the chances being taken and the ongoing explorations that are pushing the envelope of our transportation future. It’s part of the American fabric to dream big and imagine what could be, and I am all for it. And I am quite certain that discoveries and great leaps forward will be made to make batteries much more efficient and cheaper too. But I am also quite certain that the predominant form of vehicle power for oh, at least the next 25 years or so, will come from Internal Combustion Engines. (I can sometimes see myself with a fully-electric car as my principal vehicle for around town, but I would have to have an ICE-powered vehicle, too, preferably with rear-wheel-drive and a V8. That’s just…reality.)

What does this mean for these manufacturers going all-in on electrification (yeah, that means you, VW Group)? Let’s just call it for what it is: The biggest bet in automotive history. It’s also the biggest marketing challenge in automotive history as well, because creating demand on a massive scale for vehicles that people don’t even know that they want will be a monumental task.

And let’s remember one big thing - this isn’t Hollywood. And just because a company builds them doesn’t mean that people will come and buy them.  

And that’s the High-Octane Truth for this week.