Elon Musk Bets Half Of All Cars Built In 2032 Will Be Electric
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Tesla Motors CEO Elon Musk has an enthusiastic base of fans who consider him a visionary.
And with Paypal in the past, and SpaceX as well as Tesla today, Musk has an impressive track record.
So ears perked up when he recently predicted that in 20 years, half of all new cars sold would be plug-in electric cars.
The problem is that knowledgeable industry analysts suggest that such a goal requires a highly unlikely growth rate in plug-in sales and production.
Let's recap. There are now 1 billion vehicles on the planet, with 2 to 2.5 billion likely by 2050. The auto industry now builds 60 to 80 million vehicles a year, which is likely to rise to 100 million or more by 2020.
Globally, in 2012, fewer than 100,000 of those will be plug-ins.
Musk's half-plug-ins-by-2032 guess is a worthy goal. It leaves Obama's pledge to put 1 million plug-ins on U.S. roads by 2015 in the dust. (Though it's looking like Obama's goal will be met in 2018, not 2015.)
“In 20 years, more than half of new cars manufactured will be fully electric,” Musk said during the June 22 launch of the production 2012 Tesla Model S electric sport sedan at the Fremont, California, plant of Tesla Motors [NSDQ:TSLA].
“I feel actually quite safe in that bet.; that’s a bet I will put money on. … It’s probably going to be in the 12- to 15-year time frame."
Last time he made a wager, Musk won the bet with journalist Dan Neil, who had suggested he wouldn't launch the Model S on time.
But this time, Pike Research analyst Dave Hurst is willing to take Musk's wager. He backs it up in a recent post by running the numbers.
Hurst's analysis addresses the U.S. market, not the global total--which would require going from south of 100,000 plug-in cars a year today to 50-million-plus in 12 to 20 years.
Instead, assuming a U.S. market of about 15 million vehicles for the foreseeable future (since the U.S. vehicle population is pretty much maxed out and has actually fallen slightly over the last few years), Hurst asks what would be necessary to get to 7.5 million plug-in sales by 2032.
Pike Research is in the business of projecting the future, and it sells some very expensive reports that contain the resulting predictions.
It expects the U.S. plug-in market to grow at a 32-percent average rate from now through 2020. That takes sales to roughly 200,000 units in 2020.
Even if that rate continued for another 12 years, which Hurst considers unlikely, that would only take plug-in cars to roughly one-third of the market in 2032, or about 5 million sales.
But Hurst thinks 8 or 10 percent annual growth in plug-in sales is more reasonable, taking the total to 480,000 or 574,000 plug-ins sold in 2032 in the U.S.
Hurst's analysis assumes a continuation of current trends, and does not incorporate what plug-in promoters--most notably Nissan CEO Carlos Ghosn--call the "hockey stick effect."
That refers to a sharp increase in sales in some future year--perhaps between 2016 and 2022--when mass production has driven down battery costs sufficiently that electric cars become much more price-competitive with gasoline cars, which will get steadily more expensive in real dollars to meet stringent new fuel-economy rules.
Hurst suggests that for plug-in vehicles to grow at the rate Musk predicts, three things will have to happen.
First, plug-ins must spread from small cars into full-size sport-utility vehicles and pickup trucks, which remain a huge portion of the U.S. market. Second, an oil price shock would have to drive gasoline prices to $8 or $10 a gallon.
And, he suggests, drivers will have to get comfortable with overnight recharging and limited vehicle range--and the public charging infrastructure must grow to support those volumes of plug-ins on the streets, including both wireless charging and more widespread DC quick charging.
What do you think? Will Musk win his bet? Will half of all cars sold in the U.S. in 12 to 20 years be plug-ins?
Leave us your thoughts in the Comments below.
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Have an opinion?
For instance:
Pike research: batteries will be at $523 per kilowatt hour by 2017
evworld.com/news.cfm?newsid=27555
Roland Berger Strategy Consultants: battery prices at $250 by 2015
green.autoblog.com/2012/06/21/battery-costs-will-fall-to-250-kilowatt-hour-by-2015/
Clearly that's a huge difference in assumptions.
Generally these "expert" predictions are interesting but at the end of the day hardly worth the paper they are written on even if they come in "some very expensive reports" in a world where every expert has an agenda and truth is a rare commodity.
So maybe we should give the visionaries the benefit of the doubt.
hey chris,
i am glad i wasnt eating anything when i read that - LOL !!!
Guess the lesson here is: beware of free expert opinions, always ask yourself what's in it for them. Remember: every expert has an agenda.
or less. All we need is a cost effective, fast charging battery, and I firmly believe that they are just around the corner. Actually, this might not be something that would be to Tesla's benefit - oodles of competition where now there is none.
I like your hope but three years is just not physically or fiscally possible....perhaps 13 years at the soonest. I hope for sooner the better.
Here is a (the) question -
Once batteries reach the tipping point on efficiency and cost,
why would any auto maker produce vehicles with ICE engines?
Yes -
This is based on my premise that Tesla has now proven that the electric car is superior in theory, concept, and design.
I believe now every car maker will jump, once the battery issue is no longer "the" issue.
The primary difference between Musk/Goshen and Hurst is that the former make things happen, while Hurst just looks at trends.
In this case, we see now that auto manufacturers are resisting the plug-in hybrid n EV production wave. Meaning they are only producing, generally, as many of these better vehicles as the law or regulation require of them. For example Honda's new best in the world mpge Fit EV is only being leased to a few thousand Americans in the next few years...no matter what the consumer demand is. The real money for auto manufacturers and auto dealerships are the service departments and used car sales.
The biggest loser would of course be the big oil companies as their addictive, black goo would be required far less. Sure most new power plants west of the Mississippi are natural gas and there will be many gas/diesel vehicles on the roads for decades but fuel for EVs will not be dependent on the big oilies. Don't you think they are going to continue to fight higher CAFE standards, pollution regulations, and EVs in general? They have billions to spend in that effort...unfortunately.
"Tesla Motors, blessed with federal retooling loans, trails General Motors on mass electric vehicles"
Retooling Loans = A Bailout(elucidated) :-)
The only way Tesla Motors will survive beyond two more years is to partner up with a European or Japaneses deep pocket investor. Given that the Global Economy is walking on thin ice I don't see anybody dumping big bucks into Tesla Motors.
http://www.greencarreports.com/news/1021697_advanced-auto-tech-loans-go-to-tesla-ford-and-nissan
http://www.greencarreports.com/news/1060551_elon-musk-says-tesla-wont-be-sold-but-elon-musk-is-wrong
Hurst suggests that for plug-in vehicles to grow at the rate Musk predicts, three things will have to happen.
First, plug-ins must spread from small cars into full-size sport-utility vehicles and pickup trucks, which remain a huge portion of the U.S. market. Second, an oil price shock would have to drive gasoline prices to $8 or $10 a gallon.
And, he suggests, drivers will have to get comfortable with overnight recharging and limited vehicle range — and the public charging infrastructure must grow to support those volumes of plug-ins on the streets.
With the range issue sliding away, there is becoming no choice, its EV all the way.
U.S. electric grid needs major overhaul-utility
I don't see this happening for many years to come given the level of debt the US is carrying on the books.
Until the US starts investing in modernizing our national electrical grid system then I see EV's/Hybrids as a niche market.
The Federal Govt. and the DoE do not share the same vision as the GP(general public)in making the US energy independent or we would be investing monies at home rather than putting it in waging wars be they real or fabricated.
1) The use of Pike's research is rendered moot because Musk's statement was not confined to the US and there is no evidence telling us that he was only speaking about the US.
“In 20 years, more than half of new cars manufactured will be fully electric,” Musk said during the June 22 launch of the production 2012 Tesla Model S electric sport sedan at the Fremont, California, plant of Tesla Motors
2) So, lets think of the world and how the world is changing in the next 20 years when breaking down this bet:
A. Most of the world and growth of the world, population wise, is located in areas with little fossil fuel production. China, India, and Brazil to name a few.
C. It is in these non-oil producing countries, especially China, where small EVs will likely dominate sales early next decade as China will very likely to decide, as a command n control nation can, switch to electricity as fuel for most vehicles instead of always searching for new oil all over the world.
4) Pike's assumptions on the charging and range of EVs for next decade let alone later this decade are just laughable. Range for every new EV next decade will likely be at least 200 miles(400+ for some) and charging times down to less then hour...not that u care as your car charges overnight or at work...if needed. Think of where mobile phones were just 4 years ago...progress
Elon is entirely correct.
(written as a Leaf owner)
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