“Electrifying the Freeway- The Transition to Electric Vehicles”

The podcast discusses the global electric vehicle (EV) transition and its implications. The EV market is currently valued at $193.55 billion and is projected to reach over $690 billion by 2030. EV sales have tripled in the last three years, with 10 million sold in 2022. Tesla is a major player in the EV industry, offering innovative and customizable vehicles. American companies dominate the top-selling EVs in the US market. However, challenges include the lack of widespread charging infrastructure, compatibility issues, and rising energy costs. The industry also faces supply chain and competitive challenges. Despite these obstacles, the transition to EVs offers significant environmental benefits and potential cost savings for consumers. Government agencies and major car brands are prioritizing the transition. It is important to research and stay informed about this important issue. Hello, everyone. My name is Matthew Galler, and I am an environmental economics and data science student at the University of California, Berkeley. In this podcast, I'm going to talk about the global electric vehicle transition and what it means for us in years to come. Today, this market is valued at $193.55 billion US dollars, and is projected to reach a value in excess of $690 billion by the year 2030. Today, I explore progress we've already made in the electric vehicle transition, the potential costs and challenges associated with the transition as we move forward, and the potential benefits for us in the context of climate change and in the fighting at the effect of global warming. In 2023, the electric vehicle market, often known as the EV market, is an impressive inflection point. EV sales have tripled in the last three years, from 3 million in 2020 to 10 million last year in 2022. For every 20 cars sold in the United States in 2022, three were electric. This growth and development is beyond impressive for a market that was faced with so much global skepticism at the time of its conception and into its early years of development. Toyota Prius is hailed as the first mass-produced hybrid electric vehicle. A hybrid electric vehicle is defined as a vehicle that can run on only combustion engine, only an electric motor, or a combination of both at the same time. In its first year of sale in 2000, total US hybrid electric vehicle sales that year were just over 9,000. Nowadays, the hybrid electric and electric vehicle industries combined sell over 1.3 million vehicles domestically in the United States. The success and growth of the industry can be attributed largely to a growing sense of urgency surrounding the climate crisis in the United States. However, it's also important to highlight how the industry has adapted to the market. EVs have transitioned from being perceived as unattractive and inefficient to modern and stylish. It's hard to argue that the leading driver of this change towards a new and refurbished image for the EV industry is anyone other than Elon Musk's Tesla. Musk is a South African-born business magnate and investor. In 2023, he is widely known as the richest man in the world with a reported net worth of $225 billion. This large net worth is largely attributed to his ownership stakes in many major global companies. He's listed as founder and CEO of SpaceX, a private space exploration company, owner and chairman of the widely known social media Twitter, and is listed as co-founder of two major pioneering companies in other industries, Neuralink and OpenAI. He's without a doubt one of the most famous and widely discussed people in the world. And many would say they're aware of Musk and know of him from his work at Tesla, where he's the CEO and lead product architect. Tesla is a US-based company, where their headquarters is located in Austin, Texas, a city often associated with innovation and modern growth. They have a market cap of over $800 billion, and over 70,000 employees are attributed to Tesla and their subsidiaries. The Tesla Model Y is the EV market leader in the US, having sold nearly 250,000 units in 2022. The company is without a doubt successful, with four Tesla cars occupying spots in the top six selling EVs in the United States. But you ask, why are Tesla so successful? I think many would agree with my opinion when I say that I believe the reason Tesla is so successful is because when you buy a Tesla product, you're not only buying a car, you're buying a piece of innovative and modern technology. Tesla is almost fully customizable and have many features within the cars that are rarely available in other models in the market, if at all, such as self-parking and self-driving at a basic level. With the sophistication of these cars taken into account, Tesla is also relatively affordable. Their cheapest model, the Model 3, starts from $40,000, which may sound like a lot, but with the many tax exemptions, subsidies and discounts available to those looking to purchase electric vehicles in 2023, a Tesla is definitely an option worth considering for someone who's looking to help the environment with their next purchase of a car without compromising on the excitement of driving vehicles at the top of their class and they're pioneering new features in the market. Joining the four Tesla models in the top six selling EVs in the US market last year was the Mustang Mach-E and the Chevrolet Bolt. What this means is the top six selling EVs in the US market are all made by American companies, with the Mustang Mach-E made by Ford and the Chevy Bolt made by Chevrolet. This American dominance in the domestic market could be largely because of tax cuts and subsidies made available by the government to US-made EVs and batteries. But in recent months, the US government have made attempts to expand the subsidies to cars with parts made abroad in other countries with high levels of innovation in the EV industry, such as Japan and the European Union. In years to come, competition from European and Japanese producers will either lower the cost of EVs across the market in the US or drive the innovation of US companies even further. So, plenty of investment, a good rate of growth, strong innovation and optimism in the consumer market make it sound like there's a good path ahead for the EV transition. But of course, the transition will be far from seamless. There are many challenges usually faced by those who are trying to pioneer this new industry. Any project of such a large scale would present many logistical challenges. The first challenge we face is the lack of widespread charging points across the country. Currently, 108,000 charging stations exist in the US, versus an estimated 110,000 to 150,000 gas stations. At first glance, it doesn't seem like the charging stations are lagging far behind the gas stations. However, we must consider that EVs take much longer to charge than a gas car takes to fill. A bill from the Biden administration in 2021 announced a planned $7.5 billion to be allocated towards creating 500,000 more charging points across the country. Despite this, another challenge is that not all charging points are universal, or what is described as level 3 by those in the EV industry. This basically means that not all charging points are compatible with all electric cars. This means your Tesla may not take the same type of charger as a Chevrolet Bolt, which presents another issue. To further add to the charging complexity, charging is also becoming more expensive in the current energy crisis. Household electric costs are up 65% in the last year, so we can only imagine that the costs are similar for the charging of electric cars and that they have experienced a similar rise in price. Among consumers, another problem exists. There is a belief that electric cars will not be able to meet the long distance needs of many modern drivers, as their battery range will not be far enough. This is referred to as range anxiety. The data does back this up. The average range of an electric car is 291 miles on a full charge, versus that of a combustion engine car on a full tank, which is 403 miles. This further compounds the already alluded to charging point problem. There are also many other problems that affect the industry that affect other industries as well, such as supply chain distributions and competitive foreign markets in China and the EU for the supply of electric cars. One important component that's being affected by supply chain issues is lithium. Lithium is pivotal in producing the large batteries that are required to power these electric cars. When asked at the Tesla shareholder meeting in 2023, Elon Musk had this to say about the issue. As we look ahead to tackle what we see as the choke points in the supply chain, one of them is lithium refining. There have been a few times on Tesla earnings calls where I've said, can someone please just do lithium refining? Because there's a shortage of it. We really see very little activity outside of China for lithium refining. So it's not that we wish to take on extra problems, but since nobody else was doing it, we felt we had to do this. And so we've just broken ground on a lithium refinery in Corpus Christi, which will do more lithium refining than I think probably everything outside of China. At least we can say with confidence at this point that the major players in the industry are aware of the issues and are doing their best to combat them. Despite the potential challenges and obstacles we face, the potential benefits are so great that we have no option but to continue and push on with the transition. Using the nationwide average of different energy sources, the average gasoline vehicle emits 11,435 pounds of CO2 equivalent per year. When we compare this value to the 3,900 pounds coming from an electric vehicle, the 5,700 pounds coming from a plug-in hybrid, and the 6,200 pounds of CO2 equivalent coming from typical hybrids, it is incomparable, with even the highest hybrid almost halving the emissions of one gasoline vehicle. There are benefits for the consumer as well. One individual can save $14,500 on energy alone by owning an EV, and that's before we apply subsidies and other benefits. Government agencies and authorities also consider the transition to be of utmost importance. The Environmental Protection Agency, the agency in charge of the fight against the climate crisis in the United States, announced auto pollution limits in April 2023 that aim to ensure all electric vehicles make up 54 to 60% of new vehicles sold in the US in 2030, and a rise to 64 to 67% by 2032. As well as this, major global car brands have announced strategies to be fully electric by 2030. Examples of these car brands include Aston Martin, Volvo and Mercedes-Benz, with Audi announcing plans to be fully electric by 2033. It is worth noting when we look at these automakers that they are largely European-based companies, but we can only hope that large American automakers such as GM and Ford will continue their work already done and announce similar goals in the coming years. I hope you've enjoyed this podcast and that you've learned something new. I would suggest and highly encourage you to do your own research on this issue, as it is an important one and one that will become increasingly important in the years to come. Thank you.