The latest Tesla Motors decision to build a mass-production car battery plant in Nevada not only means a step further in mass-production of electric cars but also raises broader questions as to the future of cars and electricity. Does this ambitious US$5 billion project pose a milestone in the future of the electric car?
Remember, there are multiple indicators that the hybrids are winning the battle against all-electric personal vehicles. From the bankruptcy of Israeli car battery replacement network business Better Place to the introduction of hybrid engines in Formula One car racing, one can see evidence of the petrol engine lock-in, which makes it extremely difficult to get the car industry, its associated networks, and ultimately the consumers off the current evolution trajectory. By the end of August, although up 35%, still only about 40,000 all-electric cars were sold in 2014, according to the car website Edmunds.com. Electricity generated using petrol power driving inefficiency currently seems an easier, more logical and cheaper solution.
To make the debate more interesting, ethical, climate change-related concerns are no longer the obvious argument for the critics of the oil lock-in and the proponents of bolder policy moves towards all-electric road traffic. With unambitious renewable power targets and even clean energy superpower Germany switching from nuclear to coal power plants, one can easily argue that all-electric cars are in fact coal-powered cars, which makes them even dirtier and less environmentally friendly than petrol cars.
In either case, the cars are not as much about the fuel as they are about moving people from place to place. Consumer backing may therefore primarily depend on the easy-to-use factor. Whereas Tesla has all the potential to make all-electric cars sexy, network effects that actually make the lives of electric car owners difficult compared to others (i.e. the hassle with battery charging or replacement) may be more difficult to overcome. Regardless of consumers potentially willing to pay a sustainability premium, mass market will need much stronger incentives than questionable environmental claims.