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Past blogs from 2018

Sunday January 13, 2019 – The Petroleum Paradox

Sunday January 6, 2019 – 2018 Q4 Sales Overview

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Sunday January 13, 2019 – The Petroleum Paradox – Back when the EV1 was still on the road there was a lot of discussion about the end of petroleum; the time when petroleum would run out.  EV activist Doug Korthof, who sadly is no longer with  us, always used to say that we would never run out of petroleum.

 

What he meant by that is that as crude oil became scarce the price would have to rise and this would cause demand to reduce.  At some point crude would become so expensive that nobody would use it anymore.  This is the normal supply and demand that you will learn about in Economics 101 and is normally valid for raw materials. 

 

Supply and demand works for crude oil too but there is a couple of factors that have been impacting this.  In a normal situation, as price of the raw material falls the cost of making an item falls, and if this is passed along to the consumer it means that people buy more of the article.  In the case of gas it means that it becomes cheaper to travel so people can travel further for the same cost.  However, what tends to happen is that people spend the extra money on buying a bigger vehicle that uses fuel less efficiently so they travel the same distance for the same price.  This has the tendency to push up gas consumption, which increases the amount of crude needed, which tends to send prices back up.

 

There is another factor at work in the current market.  People are starting to move away from gas engines towards electric cars.  This causes the demand for gas to fall and that pushes the cost down.  This causes people to buy larger ICE vehicles which once again increases consumption.  Even though we have seen a large number of electric cars being sold, at the same time we have also seen an increase in gas consumption.

 

There is another factor that also impacts crude supply and demand.  The cost to extract crude oil is not constant.  Some oil is close to the service and is very easy and cheap to extract but as this runs out oil companies have had to drill deeper wells, wells must be sighted offshore, and have also had to extract oil from tar sands.  The more oil that is extracted from an oil field the harder it becomes to keep the oil  flowing.  To keep up pressure water, or gases like methane has to be injected into the field to force oil out.  This increases the cost of extracting the crude.

 

The creates a problem and as the easy fields become worked out the cost of extraction increases.  This means there is a limit to the price that the oil can be sold at.  We have already seen situations where tar sand oil extraction has been stopped because crude oil prices have dropped so low that extraction is no longer economical.

 

So we have this paradox, alternatives to gas cause prices to fall, which in turn causes less efficient usage, which causes prices to increase, which causes people to start using alternatives to gas.

 

There is a second paradox here too.  People know that burning fossil fuels in bad for them yet they not only continue to burn fossil fuels but also make the move to less efficient vehicles when the cost of gas falls.

 

In the end we have to recognize that burning petroleum as a fuel is having a very negative impact on both our health and the health of this planet.  The good news is that as more people make the move to electric vehicles they tend to stay with them rather than move back to gas when prices are low.  Eventually we will hit a trigger point where people will begin to see electric as the desirable option.


Sunday January 6, 2019 – 2018 Q4 Sales Overview - 2018 is now in the history books and it turned out to be the best year for EV sales ever, by quite a lot.  The final quarter of 2018 saw Plug-in sales climb to 126,562 led by a huge push from Tesla.  This lead to total sales for the year estimated at 361,307 cars.

Sales for the the final quarter of 2018 were higher than the the full year sales for all proceeding years except 2016 and 2017 and total year sales for 2018 represented an increase of 81% over 2017.

Tesla model 3 continued to dominate sales with a total estimated sales for the quarter of 61,650 cars and 139,782 cars for the year.  Sales of the model 3 in 2018 exceeded all sales of plug-in cars for year 2015 and earlier years.  Tesla also racked up second and third best sellers with  the Model X selling 8,525 cars for the quarter and the Model S selling 7,350 cars for the quater.

The Toyota Prius Prime was the best selling PHEV for the quarter and the 4th best seller overall with 7.072 cars sold.  Snapping at the heals of the Prius Prime was the Honda Clarity PHEV which sold 6,692 cars over the quarter and 5th place overall.

The Chevy Bolt placed 6th with sales of 6.212 cars followed by the soon to be discontinued Volt with a rather disappointing 5,063 cars.  Now that the Chevy Spark EV and Cadillac ELR have been discontinued the only other plug-in that GM has on sale is the Cadillac CT6 PHEV which managed to sell only 34 copies in the fourth quarter.

This quarter there is a new kid on the block, the Jaguar i-Pace.  The i-Pace went on sale at the start of the forth quarter of 2018 and have grown month over month since then for a total of 393 cars for the year with the bulk of the sales happening in December.  The press made a big deal of the i-Pace outselling all Teslas combined in the Netherlands in December so I thought that I should point out that the Tesla Model 3 outsold all Jaguars combined here in the US in October, November, and December.

While Tesla sales move ahead Ford appears to be winding down plug-in sales.  The C-Max Energi is now gone and the Focus EV sold only 2 copies in the fourth quarter.  That leaves only the Fusion Energi which sold Just 2,374 cars during the quarter.  It appears that the Fusion may also be on the way out so unless Ford has some new plug-in ready to make its debut at CES or the Detroit Auto Show they may well be out of the EV business by the end of 2019.

Most of the other cars on sale are being sold in small volume.  It appears that the low range cars like the Ford Focus EV and the Honda Clarity EV are being shut out by longer range models like the Tesla Model 3 and the Chevy Bolt.  With more of these coming into dealerships in early 2019 it appears that the shorter range models will begin to disappear from showrooms.  The same appears to be happening in the plug-in hybrid market too.  Short range plug-ins like the offerings from BMW are slowly loosing ground to the longer range vehicles like the Prius Prime and Honda Clarity PHEV.  Toyota could sell many more Prius Prime if the wished, it is still only available in states that follow the CARB emission rules.  The Honda Clarity is likely to pick up  sales that would have gone to the Chevy Volt once that goes out of production..

December also saw the sale of Hyundai's next generation fuel cell vehicle the Nexo.  Hyundai does not normally release sales numbers for its Fuel Cell vehicles but we do not that at least one was delivered to a customer in December.  Honda also doesn't break out sales of fuel cell vehicles but the numbers are expected to be quite low.  During the quarter Toyota delivered 545 Mirai.

Audi showed off their e-tron GT concept. The car is driven by a 90 KWh battery that will give the car a range of 248 miles. 0-6 time is a fast 3.5 seconds and the car can hit a top speed of 149 mph. While this car has nothing like the range of the Tesla Model S 100D it is the first car I have seen so far that looks like it could offer a challenge to the Tesla Sedan. There was no indication if this car would actually be put into production although it did look close to being production ready.

While looking around the Audi stand, I did notice on omission, I couldn’t find an A3 e-Tron Sportsback. What I did find was an all-electric SUV, the e-Tron 55 Quatro. The e-Tron 55 Quatro comes with a 95 KWh battery pack. The EPA range is not yet available for this SUV but it is expected to come in at around 250 miles. It will also include the 800-volt charging option that allows it to charge up to 80% in as little as 20 minutes. The car can go 0-60 mph in 5.5 seconds are speed tops out at 124 mph.

The car has a base price of $74,800 and can be ordered through the Audi USA web site with deliveries expected to start in the second quarter

BMW staged the world premier of the BMW Vision i-Next concept vehicle. The i-Next was a crossover type vehicle but apart from it being electric there was very little information about the specifications other than that they were in the process of developing the 5th generation electric drive train. They did mention that it would be fully autonomous.

VW were looking to fill a niche in local deliveries with the new I.D. Buzz Cargo. This is a panel van based on the I.D. Buzz platform. This concept is said to have an all-electric range of up to 340 miles depending on the battery option chosen. It also came with a solar roof and a digital cargo system to manage deliveries.

VW gave no indication of when this vehicle might be placed into production or if it would be offered in the USA.

I was disappointed to find out that Subaru was not having a press conference as they had announced the Crosstrek plug-in hybrid was going to be at the show. I took a walk around there stand and they did have a couple on display.

Outwardly the PHEV is the same as the standard Crosstrek but under the covers the 2.0 liter engine is mated to what is essentially the hybrid power train from the Prius Prime. The car has the same 8.8 KWh lithium Ion battery as the prime and this will offer up about 17 miles of all electric range which I found disappointing. Also like the Prius Prime the battery pack intrudes into the cargo area reducing cargo space.

The CrossTrek PHEV starts at a base price of $35,950 but will be eligible for a $4,500 federal tax credit. There was no indication of when the car would be available in the US but I expect to see it towards the end of the first quarter.

I was also somewhat disappointed with the Mitsubishi press conference. They did have the world premier of their new e-Evolution concept. This is a fully electric car that actually looked a little similar to the BMW Vision i-Next.

Being a concept car there were few details available about the e-Evolution drive train other than to note that it used a 3-motor system to give full four-wheel drive. There is a single motor driving the front wheels with two additional motors to drive the rear wheels.

The concept looked quite interesting but it was just a concept and looked nowhere near being production ready. I was expecting something more from them, perhaps a replacement for the now defunct i-MiEV.

 

I don't expect January to be a huge month for Plug-in car sales.  Traditionally people have rushed to get cars before the end of the year in order to get the tax credit.  This was particularly true for people buying Teslas as the $7,500 tax credit gets cut in half for sales starting in January 2019.  Tesla appeared to be selling anything that wasn't nailed down.  I walked by their Century City Showroom last week and even their display Model X was gone.  It has been reported that inventory of the Model 3 had dropped to just 3,000 cars by the end of the month.  In January expect sales to switch focus to international sales as they begin model 3 deliveries in Europe in ernest.

 

We do have some interesting things to look forward to.  First there are some new 200+ mile range EVs doing on sale soon including the 200+ mile range Kia Soul and Kia Niro EV; the 258 mile range Hyundai Kona; and the 200+mile range Audi e-tron Quatro.   We should also see the base model Tesla Model 3 begin production and perhaps the long range versions of the Nissan Leaf and BMW i3.  2019 will be an exciting year for plug-in cars.