What’s happening with electric cars?

Right now, politics is all about Brexit, and only Brexit. So that means lots of other important news is slipping through the cracks.

Case in point, the “Road to Zero”.

This was the plan set out by the government last year to ensure all UK vehicles are electric by 2040.

Well, that plan has finally been formulated into a 46-point strategy, which was released last week.

The headline-grabber is that the government wants at least 50% of new car sales to be electric by 2030, preferably 70%. And 40% of new vans.

Well, it says “ultra-low emission”, but that basically means electric. As most of the points in the proposal are directly aimed at electric vehicles.

You can read the full 147-page report here.

Of the 46 points, here are the 11 I thought were most interesting:

  • Leading the way by ensuring 25% of the central Government car fleet is ultra low emission by 2022 and that all new car purchases are ultra low emission by default. Committing to 100% of the central Government car fleet being ultra low emission by 2030.1
  • Making the biggest increase in public investment in R&D in our history (towards a target for total R&D investment of 2.4% of GDP by 2027) and increasing the rate of R&D tax credit to 12%.
  • Fulfilling our commitment to provide £246 million to research next generation battery technology through the Faraday Battery Challenge.
  • Launching a £400 million Charging Infrastructure Investment Fund to help accelerate charging infrastructure deployment.
  • Taking powers through the Automated and Electric Vehicles Bill to ensure:
    • that chargepoints are available at motorway service areas and large fuel retailers;
    • that chargepoints are easily accessed and used across the UK. This includes powers to provide a uniform method of accessing public chargepoints and refuelling points; make certain information publicly available in an open and transparent format and set reliability standards.
  • Ensuring the houses we build in the coming years are electric vehicle ready. It is our intention that all new homes, where appropriate, should have a chargepoint available.
  • Future-proofing our streets. We want all new street lighting columns to include charging points, where appropriately located, in areas with current on-street parking provision.
  • Investing £4.5 million in the On-street Residential Chargepoint Scheme until 2020.
  • Launching the process for a R&D programme of up to £40 million by summer 2018 to develop and trial innovative, low cost wireless charging and public on-street charging solutions.
  • Fulfilling a £48m ultra low emission bus scheme funding round to accelerate uptake and deployment of supporting infrastructure.
  • Launching a second round of funding for local authorities to roll out dedicated taxi charging infrastructure. We will make available a minimum of £6 million to support more local areas to make the switch.

So, basically, we can expect to see chargepoints everywhere. The lack of chargepoints seems to be one of the biggest hurdles to electric vehicle ownership.

As I’ve written before, once you own an electric car, it is incredibly cheap to run, compared to a fossil-fuel alternative. At current prices, you’ll pay about 3.3p per mile in electricity.

But perhaps the biggest push towards electric vehicles won’t come from individuals, but from taxi companies.

The biggest carmaker you’ve never heard of is coming for Uber

Every heard of Geely?

I hadn’t until I read this Wired article. It turns out Geely, a Chinese carmaker, bought Volvo in 2010 for £1.4 billion.

In 2013 it bought London Taxi International – the company that makes the iconic black cabs – for £11.4 million.

Then in 2017, it bought Lotus and acquired a 9.7% stake in Daimler, the company that makes Mercedes-Benz.

Geely, it turns out, is a major player in the car industry. And it’s set its sights on electric taxis.

After buying London Taxi International, it rebranded it the London Electric Vehicle Company (LEVC) and poured £325 million into it.

It created a new factory in Warwickshire, and a new electric black cab – the TX. This factory will soon be able to produce a new TX every 14 minutes.

The reason why this is big news is because of the government’s plan to have all cars electric by 2040. In January, new regulations came in stating that all new black cabs must be able to drive for 30 miles without releasing any exhaust emissions.

Right now, the TX is the only taxi on the market that complies with those regulations. Although, it’s not really fully electric.

From Wired’s article:

Running on battery-only, [the TX] has an on-paper range of just over 80 miles, although around the streets of London it tends to achieve closer to 65. A petrol engine unconnected to the wheels can charge up the battery while the taxi is on the go, giving it a total range of 377 miles.

Right now, there are around 100 TXs picking up passengers around London. And with many other European cities enforcing similar emission laws, Geely thinks its TX will become the go-to car for taxi companies around the world. Amsterdam already has an order on for 255.

Will the TX succeed? It’s hard to say. LEVC’s CEO Chris Gubbey thinks passengers will be happy to pay more to ride in his cabs than in an Uber.

“The fundamentals of our business are based around a professional driver and a superb product that contributes towards the clean air in the cities,” he says.

“If you look at the companies that are running the major competition, they are losing billions. On a level playing field, if they were a company that was in a normal competitive mode, I don’t think the price difference would be that different.”

His second statement is pretty telling. The fact is, it’s not a level playing field. And if he can’t compete, his days are surely numbered.

In my experience, black cabs can be around three times the price of an Uber. It seems to mostly be businesspeople on expense accounts and tourists that mainly use traditional taxis. Everyone I know or speak to prefers to pay 1/3 of the price and get an Uber.

So, I don’t know how Gubbey’s strategy will play out.

Then what happens when Uber drivers start switching to electric cars and saving all that money on petrol? They’ll be able to undercut the black cabs by even more.

And eventually, Uber’s plan is to go driverless. These TX’s will always need a driver. That’s great for taxi drivers, but in the end, they will surely lose out to driverless cabs, which will undercut them by a phenomenal amount.

Still, in countries which block companies like Uber operating, perhaps the TX will always have a market.

And Geely seems like a smart company. It probably has its own driverless electric cars in development anyway.

It will be interesting to see how it all plays out.

Until next time,

Harry Hamburg
Editor, Exponential Investor

PS Even ride-sharing companies are now getting in on the electric car market. Last week Zipcar emailed to tell me it has a new fleet of electric VW golfs for hire. Electric vehicles are slowly but surely taking over London.

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