The Main Challenges Faced By The Upcoming EV Era

Even though sales of electric cars are still modest compared to traditional combustion engine cars when looking at numbers, EVs are getting more and more popular, and their popularity will only grow in the decades to come. The German giant alone, the legendary Volkswagen VWAGY, is targeting to produce 26 million electric vehicles within nine years, while being ready to spend 35 billion euros to increase its electric vehicle fleet.

The EV leader, Tesla Inc TSLA achieved its best results last year, including the number of sold new vehicles, delivering more EVs than in the previous two years combined.

Is There Enough Electricity For Many More EVs?

The number of electric vehicles is expected to grow dramatically in the decades to come. This means we must secure enough electricity to recharge all those new vehicles. To do this, serious expansion of the electricity generating system is required, and that can be only done with serious investments measured probably in trillions of dollars.

Where Will The Electricity For EVs Come From?

It's not as simple as if we could just use any source of electricity. This electricity should come from zero-carbon emission sources or renewable sources, preferably solar energy.  Somehow, both the auto industry and electric utility businesses are facing the same problem – how to integrate expensive battery technology without making a serious impact on the environment.

For example, a Nissan Motor Co., Ltd. NSANY battery, which costs $12,000 degrades faster than the internal combustion engine it replaces. So, both auto and electro industries are devoting significant amounts of their future capital investments to this segment. Franchise Holdings International FNHI is trying to solve this problem for the electric pickup market through their brand Worksport by developing a solar cover for onboard power and to extend the driving range. Aldo this could bring solutions to the pickup market it doesn't provide renewable energy for the whole EV market.

Where Can We Charge Our Electric Car?

Once we ensure enough green energy to charge all EVs, we have to secure enough recharging stations around the world. This also won't be an easy task. According to the Department of Energy, there are over 30,000 charging stations in the U.S. However, as in traffic, there are peak hours which are the most convenient periods for many drivers to charge their EVs.

To do that, the electric grid should have its own relatively high-cost storage system of green electricity. Even with many owners recharging their electric cars at home during the night, the home electrical systems should have their storage, since renewable energy, like solar and wind, also has its "working hours".

Cash Flow Issues

It is possible to resolve all the above issues. But to do that, we need many more investments. And to be able to invest, companies need funds. There is more than $1tn in corporate savings sitting in offshore accounts, held mostly by big tech firms.

And 10% of those tech companies, the largest and the richest ones like Apple Inc AAPL, Microsoft Corporation MSFT, Cisco CSCO, Oracle Corporation ORCL and Alphabet Inc GOOG, control 80% of these off-shore funds. So, they surely have "some" free cash flow laying around. With the exception of Toyota Motor Corporation TM, neither car makers nor the electric industry have an even similar free cash flow range.

Conclusion

Today, we are consuming more than 100 million barrels of oil per day (mbd). Even if the predicted number of EVs is reached by 2040 (50 million EVs), that will decrease our oil consumption for 1.45 mbd (or 1.79% of global oil demand).

Also, internal combustion engines are evolving its motor technology, becoming more and more environmentally-friendly, and still offering better performance in range, price, reliability, and efficiency than the EVs. Maybe it's just because they have been around much longer.

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