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The revolution is coming. Better be prepared

Hardly a day passes without adding to the exciting prospects for electric vehicles. In recent weeks, both France and the UK have committed to phasing out petrol cars fully for new car purchases by 2040; Tesla has started selling its “mass market” model to intense interest; there is now even electric car racing under the brand of (what else) Formula E.

In the little time left before the future arrives, it is wise to contemplate the possible downsides. Reservations about electric vehicles come in two versions. One casts doubt on whether the heralded electric vehicle revolution will in fact overthrow the internal combustion engine as it promises to do. The second accepts that it will, but points out the negative consequences of the shift to electrically powered transport.

BP issued estimates in January this year that were distinctly cool on the electric revolution as it applies to transport energy. Its analysts foresaw electric cars to number 100m globally by 2040 — a huge leap from now but still only about 5 per cent of a projected total global fleet of 1.8bn cars. That total is about 50 per cent higher than today’s, with almost all the net growth accounted for by emerging economies. On this estimate, electric cars would make a negligible contribution to the control of carbon emissions.

As with most things renewable, events are making that forecast more pessimistic by the day. (BP itself acknowledges the deep uncertainty, pointing out that an extra 100m electric vehicles would reduce oil demand by 1.4m barrels a day.) On the technology side, even if electric vehicles cost more to purchase than conventional ones, the all-in usage cost now seems to be on a par. It surely will not take long for financing schemes to develop that will allow consumers to shift lifetime savings on electric car ownership into the present so that sticker prices also look the same. And there is no reason to think the progress in electrically powered transportation technology is about to slow down.

Policy, too, is smiling at electric vehicle adoption. Other analysts are much more bullish than BP, with, for example, Opec expecting 266m electric cars on the road and Bloomberg New Energy Finance projecting that electric vehicles will constitute 54 per cent of new global sales by 2040. If the French and British commitments stick, that number will be 100 per cent for those countries and any other that pursues the same policy. That’s shares of sales rather than the stock of existing cars — but unless electric vehicles disappoint massively, the stock will adjust to a steady state at those rates reasonably fast. (The average age of the car fleet is about 10-12 years in the EU and the US.) If so, we will be counting electric cars in the billions, not the tens of millions.

Turn to the other type of scepticism: reasons why a high rate of electric car take-up may not be something to cheer. My colleague Pilita Clark writes about a challenge that does not receive anywhere near enough attention. Because the electric motors are mechanically simpler and require less maintenance than combustion engines, electric vehicles require much less labour in their manufacturing and throughout their life cycle.

But this is always the flip side of greater labour productivity: technology allowing manufacturers to produce a larger number of products with fewer hands. A productivity boost from a shift to electric is not, in its effects, all that different from productivity advances in conventional car manufacturing. The US, for example, produces more cars and parts today than at the employment peak in 2000, with only two-thirds as many workers. One consequence of higher productivity is a better, cleaner and more efficient car for a given amount spent.

The FT’s Africa editor David Pilling draws attention to another dark side of electric vehicle manufacturing. The batteries they use rely on cobalt, which is overwhelmingly found in the Democratic Republic of Congo. In ill-governed environments such as Congo’s, mining tends to despoil the environment, fuel corruption and finance conflict. As demand for cobalt grows, this is likely to get worse.

The answer, at a minimum, must be efforts in the main markets for electric cars to set up transparency and regulations to force accountability throughout the supply chain. A possible model is conflict diamonds, and “publish-what-you-pay” rules for oil and mining, although even the former are not perfect and the latter are being rolled back in the US. Notwithstanding this, Pilling is right that a decent policy to minimise harm “should not be beyond the wit of the same clever people who invented the electric car”.

To the best of our knowledge, then, there is a distinct possibility that a massive electric car revolution is indeed under way, with side effects that must be seen in order to be managed. Better be prepared.