Quora: Electric Cars Are a Fad That Will Fade

Tesla Model S charges at a Tesla Supercharger station in Cabazon, California on May 18. Reuters

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Answer from Richard Muller, professor of Physics, UC Berkeley:

I don't think there is room in the market for either Tesla or Apple. I predict that electric cars are a fad that will fade.

Let me warn you—whenever I write about electric cars I draw furious and angry responses from many people. It is remarkable how deep is the love of the electric car concept, and how many people consider my view to be blasphemy! Many people will argue that I am wrong, or don't have any vision. I respond by saying that the proponents of electric cars show "optimism bias." That is, they believe that the serious problems inherent in electric cars will be solved, yet they choose to be pessimistic about similar improvements in gasoline cars (e.g. 100 mpg gas mileage, which are well within the technology).

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The batteries are too expensive and not decreasing rapidly in price. The expense of running such a car comes from the battery replacement cost, which happens after 500 to 1000 full recharges. (Tesla builds a one-time replacement cost into their initial high price to cover this issue. That keeps the initial cost high.) There is little to no environmental benefit, since in most of the world the electricity is derived from coal. An electric car in China produces more CO2 than does a gasoline car.

It is amazing how the public continues to venerate the "success" of Tesla, even though they have continually shown no profit. (The old joke is that they lose money on every car, but will make up for that in volume.) Tesla continues to produce overly-expensive cars purchased largely by two categories of customers: the most wealthy people in the U.S, (who get admiration for going electric!) and to techie nerds who love the technology and are willing to devote a large fraction of their income to their love. They also appeal to people who mistakenly think that such cars are a big benefit to the environment.

I think we are observing a Ponzi scheme in which companies like Tesla continue to grow because the early investors made money—but only because later investors came in. That will stop, and then the fad will collapse. The subsidies are soon to end. When that happens, and the fad goes away, the electric car enthusiasts have their answer ready: they were driven out of the market by the unexpected and environmentally harmful drop in the price of oil and gas. They will blame the demise of the electric car, once again, on the oil and gas industry.

Why is Apple interested? They are a huge company with loads of capital, and it is worthwhile putting a modest investment into something that appears to be failing, just in case that prognosis turns out to be wrong. I am not an enthusiast about autonomous vehicles; I expect the technology will be implemented incrementally to help us drive (just as "cruise control" was introduced but never widely used). Yet the autonomous aspect is, in my judgement, far more likely to have a long-term benefit than the all-electric aspect.

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I am a real enthusiast for hybrid automobiles, cars that use electricity only for those short moments when it provides a true benefit. I think the hybrid car will be widespread.

My detailed arguments against the all-electric car appear in my book Energy for Future Presidents. It is a little out-of-date now, but basically still accurate. Prices of batteries have come down, but not nearly enough to negate the high cost of owning such a car. Of all the controversial things I say in that book, the only topic that draws hate mail is my discussion of the electric car. Love of the electric car is passionate and almost religious.

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Quora: Electric Cars Are a Fad That Will Fade | Business