A Better US Strategy for EV Production and Sale

There is desire by the USA to drop fossil fuel use in vehicles by 50% by 2030. Unless we focus on market needs and focus our efforts, the 50% reduction milestone won’t happen until after 2040. But there is a path or strategy that will work. In short, nudge the production capacity to the market segments most likely to buy what we can deliver and for the vehicles using the most gas and diesel. What is at stake is US security, $trillions saved in transportation costs, reduction in CO2 and local pollution, and establishing US production capacity for a share of the global market.

By what “we” can deliver I mean the types of batteries that can be produced, the electrical grid infrastructure that must be available or installed, and the vehicle produced matches the customers need and wants (luxury features or bare bones, truck hauling configurations, SUV, sedan, life cycle costs, race car performance or basic…)

Battery production matches demand. The high-end Lithium Nickle Cobalt battery cannot be produced in high enough volume to meet the 50% reduction goal. The materials are too hard to obtain, expanding production would mean building new mines, a 10 year project in some cases. However, Lithium Iron Phosphate (LFP) can be produced in high volume today and is used for 250 mile range EV’s in middle range price points. Also, a new type of battery introduced this year by CATL use sodium and materials that are easier to obtain. The expected range is also limited to 250 miles initially but is expected to improve over time, with cost dropping to about 25% of today’s high performance battery. For this discussion, assume that LNC battery production rate for EV is X, LFP production is 10 X and CATL sodium battery production rate is 20 X (within 5 years). In short, pay attention to what can be produced in volume and fit the use case/market segment needs.

Electrical grid investment. There is an investment to increase the number of high-speed chargers in the US and this will take some time. However, there are many market segments that do not need high speed chargers. Level two (L2) or common 40 to 50 amp circuits is good enough for 100% of their needs. Some of these use cases will be describe below. However, bottom line, initially provide incentives and promote the EV to the market segment that use the easiest to produce battery, use the existing infrastructure and burn the most fossil fuel. Over time expand the match to market segments based on priority of fastest path to fossil fuel reduction.

Vehicle type. The vehicle needs to match the customers desired size, configuration and so on.

Easy to use. If a product is not easy to use, it won’t be used. This rule applies to all products. For EV it means charging at home (or the business) overnight, so only seconds per day effort is best. The next best case is using high speed charging so 30 minutes from 10% to 80% charge. Note this is not really easy as travel to a high speed charger is needed and while 30 minutes is ok for the occasion trip but not every day.

Why should we reduce fuel consumption by 50% sooner than later? What are the benefits for the USA? It is not just climate change and CO2 reduction. CO2 reduction is important but so are the benefits listed here:

1. Lower transportation cost for US business and industry and lower health costs from reduced pollution reduces inflation. Today’s electric light vehicles have a lower lifetime cost for fuel and maintenance. The electric drive train offers up to 1,000,000 mile expected life, the same as diesel truck engines, so up to 30 year life. LFP batteries can achieve up to 1,000,000 mile life. For trucks, the reduction in fuel cost is a major incentive to go EV, however the required high energy density battery production is limited. Consumers will also see a lower transportation cost, especially as the price of EV’s decline. The savings are on the order of $Trillions per decade.
2. As the fossil fuel consumption in the US is reduced, the balance of trade will be enhanced through US exports of more fossil fuel, at least until the world converts to EV. And as US EV production capacity grows, the US can export EVs.
3. With lower demand for gas and diesel, the US fossil fuel supply risk is lower. US supply shortages or price fluctuations of gas and diesel due to war or other issues with international suppliers will be lower. The Russian Ukraine war is a recent example. Supply issues from Iran or other less stable Middle East governments are an ongoing risk. As the fossil fuel demand falls to zero, the remaining fossil fuel use cases will benefit from stable prices until EV conversion is completed.

By the way, Saudi Aramco “agrees” with my suggestion that USA should prioritize reducing fossil fuel use. 😊 ‘The world should be worried’: Saudi Aramco — the world’s largest oil producer — issued a dire warning over ‘extremely low’ capacity. Here are 3 oil stocks for protection (msn.com)

4. Oil profits pay for Russian investments in new nuclear weapons delivery platforms designed to defeat US defenses. Oil profits also enable Middle East terrorists. In both cases, US security is enhanced by lowering oil profits of Russian and Middle East terrorists. And no more wars over Middle East oil supplies is a clear improvement of US security.

5. Lower electrical grid storage costs with vehicle to grid use of EV batteries. This is already in use for large vehicles in trials. The feature could become a common option on EV’s in a few years with a net cost to the consumer of zero from grid savings shared with the EV owner.

6. As the US improves the EV fit to markets and increases production, the US becomes a major source for world EV demand and offers a model for how countries dependent on oil imports can convert to a lower cost solution with the fastest path to 50% reduction in fossil fuel use.

7. An enhanced program to achieve a 50% reduction goal offers a faster reduction of pollution from light vehicles and truck emissions. The faster the CO2 reduction, the lower the risk of extreme climate weather and sea level rise.

What do we need to do? For market segments that use the most fossil fuel, provide what the market needs and match the supply to the demand. In the short term, that means education and incentives of market segments that can be supplied today and longer term working with industry to increase the coverage of the market segment needs.

Note there is a clear match between increased market growth/profits and continuous investments for improvements in battery cost and performance. Battery manufacturers and auto industry vendors make the same profit on vehicles that use only a small amount of fossil fuel as those that use the most. It also pays for investments in new factories to increase the production capacity. US policy must be win-win for both the auto industry and battery manufacturers.

What are the use cases for vehicles that use the most gas and diesel? Coltura provided an excellent report on consumer vehicles, showing that 20% of the “consumer” vehicles account for 50% of the gas used. However, we also need to solve the use by large trucks, which is not in Coltura’s white paper. And keep industry profits healthy and growing. Large trucks are 1.4% of the total vehicles but they account for 25% of the total US fossil fuel use. The Coltura report also suggests incentives based on the amount of fuel used. As you may have guessed this is not a complete answer but could be part of the solution. Their report is at the links below and also explains the slow progress to a 50% reduction in fossil fuel if we do nothing new. The Bloomberg chart embedded in the report shows the goal will be met in 2047, not 2030, if there is no change in the current plan.

https://www.coltura.org/policy-change

https://www.coltura.org/gasoline-superusers

A few use cases follow that illustrate the EV industry fit to current market needs. Following those use cases are recommendations for optimizing the reduction of fossil fuel.

Police cars. This segment typically drives 8 to 10 hours per day of stop and go traffic with 125 to 175 miles driving per day. When stopped, the engine is left running to power electronics and lights, so about 25 miles are added to the typical miles driven per day to account of this. The police cars typically are scrapped or sold after 100,000 miles. Several communities are switching to EV’s today because the life cycle costs are much cheaper. An LFP battery with 250 mile range can be charged overnight using L2 chargers and has expected life approaching 1,000,000 miles. Today’s EV drive train has an expected life of 1,000,000 miles, the same as a diesel truck that often has a 30 year life. The EV capital cost over 10 years is easily 1/3 of gas vehicles plus gas and maintenance savings makes Police high fuel use segment is great fit. What is missing? Essentially more configuration options. Federal, state and local governments need to determine the vehicle types needed and confer with vehicle manufactures perhaps organize large contracts designed to increase manufacturing volume enough so vehicle types to win 100% market share are profitable. Note, the superior low temperature characteristics of sodium batteries might be needed in some regions of the country. So options for this type of battery should be provided. No additional incentives are needed and minimal additions to the grid. This last point needs to be verified with utilities, that is, what locations can support additional EV L2 charging at night or off peak times.

Uber and cabs. This market segment drives about 100 miles a day with many small trips. So perfect match to LFP batteries. In terms of life cycle cost EVs are already a winner, like the Police use case. However, while L2 charging provides all that is needed, uber drivers that live in apartments might not have access to L2 charging overnight. To cover 100% of this segment, I would suggest a goal of adding 200 amp panels to 10% of apartment complexes within 3 years. Also, the Uber driver or cab driver would likely love the lower life cycle cost but financing is likely an issue. Hertz is renting Tesla EVs to this segment but perhaps low-cost loans might be needed as well to convert 100% to EVs.

Delivery vans typically drive 60 miles per day. Again, another match to LFP or Sodium batteries and can be 100% charged with L2 at the place of business for the delivery van fleet. Ramping up production is a missing step. The end user economics for delivery vans needs no additional economic incentives. Perhaps government loans to vehicle manufacturers would encourage a faster production ramp. Delivery vans have a modest need for range, but the weight can be an issue for some use cases that might not fit LFP or Sodium batteries. In the discussion below on trucks, I review the options to increase the transition pace from heavy fossil fuel use vehicles that require very high energy density batteries that are currently production limited.

Post office delivery trucks is an obvious market with high fuel use. In February 2022, the Post Office planned to purchase a new generation of postal delivery trucks with 8.6 MPG. Congress stepped in. Now the plan is 66,000 EVs by 2028. This high fossil fuel use case will take off the same fossil fuel demand as 4 million light vehicles with average fuel use!. It also matches what we can produce now. EV’s with LFP batteries and L2 chargers covers 100% of their needs. The Local, State and US government needs to prioritize the shift to EV’s in similar high use cases that can be met with LFP or Sodium batteries. By the way, the vehicle configuration is unique but the life cycle cost savings and reduction in fossil fuel saves more than 2X the February 2022 proposal to use gas. Note the life of EV’s is 30 years compared to the expected life of 20 years for the proposed new generation gas postal delivery truck.

Heavy trucks and Semi-trucks. 4 million vehicles out of 280 million that consume 24.5% of fossil fuel.

From US government data: Cars, vans, and buses are commonly used to transport people. Trucks, airplanes, and trains are used to move people and freight. Barges and pipelines move freight or bulk quantities of materials.

EIA estimates that cars, light trucks, and motorcycles account for the largest shares of total U.S. transportation sector energy consumption.

Estimates for the percentage shares of total U.S. transportation energy use by types or modes of transportation in 2021 are:1

· light-duty vehicles (cars, small trucks, vans, sport utility vehicles, and motorcycles) 54.2%

· commercial and freight trucks 24.5%

· jets, planes, and other aircraft 8.7%

· boat, ships, and other watercraft 4.6%

· trains and buses 2.6%

· the military, all modes 2.0%

· pipelines 2.8%

· lubricants 0.5%

The heavy trucks often use diesel engines that have an expected life of 1,000,000 miles. Often, these are used for 30 years. Here are the gaps in fast conversion to save 25% of fossil fuel use. First, the battery density requirement is quite high, it requires very large and production limited LNC batteries. It is not more than billions of batteries combined in battery packs that are needed but several hundred billion are needed.

Vendors are already producing EV Semi trucks. Check out the battery requirements for Tesla’s 500 miles range trucks. Note that many semi-trucks use cases are just large local delivery vans like those delivering goods to grocery stores like soda pop, beer and food. A predictable 100 to 200 miles driven in a day. But they still need really large LNC batteries. And many have a useful life of 30 years. How do we match the production needs and accelerate the transition to EV when the useful life of the fleet is so long?

Light Trucks such as the Ford F150 in rural areas. As the coltura reports notes, this is a high fossil fuel use case. Production is ramping up for vehicle configurations that match this use case. However, the battery energy density for some uses requires larger LNC batteries that are production limited and, in the cases where large trailers are being towed, the range is quite limited and might require super chargers to meet day to day needs. For on farm use, the range requirement is quite limited and can be met with L2, but for some uses like hauling hay over long distances, the infrastructure needs an upgrade.

What do people need, compared to what people want. Ok medium to high priced cars are sold with battery range from 250 miles to 500 miles. Of course, the price keeps the higher LCN battery demand (500 mile range) lower. However, only 0.5% of trips in the US are longer than 150 miles. And many of the high end vehicles are purchased by people who only drive 8000 miles. To drive up industry production capacity and profits, a $25,000 EV with tax credits of $7500 would encourage conversion to EV and increase the improvements in battery technology to lower cost and therefore increase the share of market. For the Uber or cab high fossil fuel use case this is a perfect match. However, charging infrastructure is a gap, especially for access to L2 charging in apartments. How do we encourage the use LNC hard to produce batteries for heavy trucks and the use of easier to produce LFP and Sodium batteries for SUV and sedans that are low users of fossil fuel?

My recommendations:

1. Local, State and Federal governments should educate the public on the total benefits of converting to EV in the shortest possible time. A plan should consider investments that match the total needs of high fossil fuel use cases first. The governments need to scrub their vehicle high fossil fuel use cases for gaps such as vehicle configuration and consolidate their purchase needs with other locations to encourage industry fast ramps up to fill in the gap. Police cars and postal delivery trucks are two examples.

2. The US government should build a model for EV industry evolution and fossil fuel reduction that optimizes the EV conversion pace and share the model with industry, local and state governments.

3. We also need a “moon-shot” program for an enhanced battery that by 2030 nails all the needs for cost, fast charging, weight, range and common materials for fast production ramp of EV heavy trucks and EV light trucks used in demanding towing applications. We need this to make the ramp from 50% reduction to 0% use of fossil fuels in a shorter time then it took to achieve the 50% goal. This is especially true for large trucks. The current batteries in production and incremental enhancements offer a continuous improvement but that is at a slow pace of about 5 year cycle. Can we jump two generations of battery development progress?

a. Two programs now in R and D or prototype development should be considered for all in expansion of development for high energy density, easy to produce in high volume and low cost solutions for trucks. Increase the number of Industry partners and University Labs by ten fold for both of these technologies:

i. InFluit Energy is prototyping a battery solution that uses common materials and potential fast charging of a military tank (and other high energy density applications) in 5 minutes. So high energy density and fast charging to meet the needs of heavy and light trucks with minimum investment in grid up grade.

ii. Researchers at Illinois-Chicago and Argonne National Labs produced a demonstration of a Lithium Air Battery with 685 Wh/kg energy density at room temperature that will be inexpensive to produce and has the potential of storing 4 times the energy density of current lithium ion battery technology. It would represent a transformation for electric transportation, especially for heavy duty trucks. Easy to produce and high energy density, let’s accelerate the development.

An all-in investment of a $1 Billion dollars over 7 years for each program to fund multiple Design of Experiments in industry, university and Federal Labs and the production ramp and industry certification of a new high energy battery technology could be a bet that accelerates fossil fuel use to zero by 10 years or more and sets the stage for the fast conversion to EV in the rest of the world.

4. There should be a plan to lower the cost of installing fast charging, especially for use cases where this is a bottle neck in converting the EV. There are large batteries that could use the existing grid to charge slowly during the night and day and provide fast discharge during the evening. In some cases, expanding the existing grid to support fast charging of trucks or providing the same service in rural areas might take years. How do we cover the infrastructure needs to keep pace with improving battery technology and match that to use cases and locations with the highest fossil fuel consumption?

5. Once the EV industry can meet the needs of heavy trucks, consider programs that will increase the pace of retiring trucks with an expected life of 30 years. For example, explore with industry the possibility of converting existing Trucks to EV. Once the cost of EV purchase or Truck conversion is cheaper than owning a fossil fuel truck, make the conversion mandatory.

Summary. The USA should encourage and prioritize EV use cases that use the most fossil fuel and where industry production and infrastructure match the use case needs. Where there are gaps, prioritize investments that close those gaps by encouraging investments by industry and government labs, product developments and infrastructure improvements.