OneWedge

ITA

Every transformation needs a driving force supplying the impetus required to overcome obstacles. Change aversion, need for investment, realignment of competencies, amortization of existing assets are but some of these: the bigger the hurdles, the stronger the impetus must be, lest change… simply stops!

I was surprised to learn that not everybody agrees on what is the force that’s driving change in the Automotive sector, prompting me to spell out what I think is the most obvious candidate.

My candidate: efficiency

If among the readers there is anyone who chatted with me for more than 10 minutes, s/he won’t be surprised as I talk about this all the time: in my opinion, the driving force behind this transformation is the huge operating cost reduction unleashed by electrification thanks to the much better efficiency of the electric drivetrain.

I have attempted many graphical portrayals of this efficiency, and so far this is the most effective way I found:

In other words, with an electric drivetrain I can drive almost FOUR TIMES the distance I travel on gasoline for the same energy expenditure.

True, “energy” and “emissions” are two different things, but when you look closely at data, you discover they are good proxies of each other:

This justifies the statement that using 3/4 less energy saves 3/4 of emissions but, perhaps more importantly, saves 3/4 of the cost. When we look at the Automotive value chain we see that the reduction in fuel expense (red bar) is the most evident feature of the electrified value chain:

From big picture to detail: two practical examples.

Let’s take as our first example Susan, who uses her citycar to commute between home and work, with a yearly mileage of around 8,000 km: if she decided to switch to electric, she would have to swallow a extra purchase cost of around €15,000 (without incentives) plus the cost of a wallbox.

Our other example is Mark, whose last-mile delivery business uses 20 vans which he provisioned through Long-Term Rental: his purchase price differential is practically nil, but he will need to foot the bill of a professional-grade charging infrastructure in his parking lot to make sure his vans are fully charged every morning.

Now we can run the numbers on both cases using both current and pre-war fuel prices, obtaining this comparison table:

All in all, over 5 years, Susan would have to spend €15,000 more, while Mark could save up to €450,000!!

Who could blame Susan for being hesitant? It would take over 50 years to pay back her investment, i.e. way longer than the car could ever last. To make the proposition attractive the extra purchase price must plunge very close to zero.

If a few Susans will jump ship anyway, their motives will be ideological and not rational.

Mark however is in a very different scenario and, as soon as he realizes it, he will happily switch without a second thought.

An open secret

To conclude, I think that this is the dirty little secret the oil lobby would never want for you to know: framing the discussion as an ideological choice serves well their interests, as they can easily slap on Electric Mobility the derogatory label of “craving of the privileged”, easily pigeonholing it in an undesirable corner, at least in the eyes of the most conservative citizens.

Instead, a scenario where doing good for the environment is merely a desirable corollary of doing (a lot of) good to people’s wallets would resonate with everybody, whatever their ideological leaning!