Electric Autos – Long life

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Long life may not bring prosperity.

• Data being gathered on Tesla’s battery performance is pointing to a range of 500,000 miles before 20% of the battery capacity depleted.
• This echoes RFM’s automotive ecosystem research (see here) which uses a 20% battery capacity depletion as the point at which the vehicle needs to be replaced.
• RFM’s research also assumes that 20% battery depletion will occur at 500,000 miles travelled which is then used as the basis for the useful life of an EV.
• This was originally derived from simulation data from Tesla, but as Tesla vehicles age and travel further this can be tested against real data.
• The Dutch and Belgian Tesla owners club (see here) has gathered data from 350 Tesla owners (small sample) and found the following:
  • First, approximately 5% of the charge was lost after 50,000 miles.
  • Second: However, the next 5% loss occurred after another 110,000 miles implying that degradation decelerates with distance.
  • Third: Extrapolation of this data would imply 20% battery degradation after 500,000 miles, almost exactly in line with Tesla’s own original simulations.
• I have long believed that if EVs are able to travel 500,000 before they must be replaced, then there are substantial and negative implications for the automotive industry as a whole.
• This is because most internal combustion (IC) vehicles will run for around 200,000 miles before they need to be replaced.
• In most markets vehicles are driven to destruction (albeit with numerous owners and often in different countries) implying that useful life is a significant factor in determining demand.
• Consequently, if useful life increases by 2.5x, then demand is likely to be significantly impacted.
• This assumes that total miles driven remains roughly the same and that other parts and the technology is capable of being upgraded.
• I think that this increase in useful life is also likely to impact the adoption of EVs because it help them to be a much cheaper option for the consumer.
• If this is added this to the much lower cost of maintenance (many fewer moving parts), it is not difficult to see how EVs could quickly become very attractive to vehicle buyers.
• This assumes that the very real problems of range anxiety and places and time to charge a vehicle will have all largely been solved.
• This is why I continue to believe that it is not autonomous driving that could really impact automobile demand but electrification.
• This is a much bigger problem for the car makers because while autonomy could be decades away, electrification is already beginning in earnest.
• This gives car makers much less time to react and find other ways to fill the hole that is likely to appear in their financial performance.
• One option is to look at digital services and I think that is the combination of Digital Life on the smartphone and the Digital Sensor pie that provides the most upside potential.
• I continue to believe that the car companies need to get on top of the digital services opportunity as they are currently leaving the door open for third parties to come in and cut them out.
• Car makers still have a lock on the crucial sensor data but the longer they sit and do little, the more they encourage after-sales sensor offerings to steal the opportunity out from underneath them.
• Hence, I still think that the car makers have the opportunity today, but they need to deliver results soon in order to offset market weakness and to keep out those that would turn them into handsets on wheels.