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Electric vehicles and Elon Musk have serious problems

This is an edited transcript of a video talk given by geopolitical strategist, Peter Zeihan, on electric vehicles.

I thought it's time to talk about electric vehicles (EVs) and why they are not going to be an appreciable part of our transport future for at least the next decade, probably closer to three.

They aren't environmentally friendly

First and foremost, from a carbon point of view, EVs really don't stack up very well. They are among the most energy consumptive projects that humans have engaged in at this point. Even if you use Tesla data, which is biased and incomplete, they only deal with the battery assembly, and they assume 100% clean power for recharging your vehicle and 100% clean power for making the vehicle. They still say that on a standard grid that is 100% green, it's still going to take you over a year to break into some sort of neutrality compared to the carbon footprint of the conventional vehicle.

Now, if you include the fact that almost all of the processing for all of the materials and all the mid assembly is done in China on coal power, and if you include the fact that things like the frame - which doesn't go into their [Tesla's] data - are made out of a silicon aluminum alloy, which is incredibly energy intensive, you're really talking upwards of five and maybe as many as 10 years. And if you're talking about a more conventional grid like in the United States, you have to increase it from there. The numbers, at least for now, just aren't there from a green point of view.

Cost is a problem

There's also the cost issue. You can't get a lot of power, at least over sustained periods, from an electric vehicle that you can get from a more conventional system. Right now, we technically do have the innovations and the technologies necessary to go EV for our light vehicles and our light trucks, passenger cars, small pickups, that sort of thing. But we don't have anything for the more powerful vehicles such as semis or airplanes or ships that actually make up over half of tonne miles in the world. And even in those lighter categories, it's a bit of a question mark. 

But what the really big issue comes down to is whether we can do it at all from a physical point of view. Forget the cost, forget that these things are, for the most part, carbon bombs. Look at what it takes to make these things. If you want to make a conventional vehicle, obviously the energy that is required comes from the fuel.

But if you want to make an electric vehicle, you have to put in a much more sophisticated system that has a lot more material inputs and order of magnitude more material inputs, the aluminum, the silicon, the graphite and so on, And we need so much more of that if we're going to make this happen. We need at least double the amount of copper and zinc. We need at least four times the amount of chromium and molybdenum. And we need at least 10 times the graphite and the lithium. The world has never been able to increase the volume of something that it needs, whether it's vegetable or animal or mineral by a factor of 2 in a 10-year period at any time in world history and any technological age.

But we're going to increase the amount of lithium that we kick out by a factor of 10 in eight years? I don't think so. And it's worse than it sounds because we're losing a lot of the material production, a lot of the processing capacity.

Russia is a top three producer of things on this list, like zinc and copper and nickel. And then, China is in a top three position for the processing for all of them, and typically number one for all of them. Well, we're going to lose the Russian stuff because of sanctions in the Ukraine war. Even if sanctions do no damage to this industry, the Russians have proven time and time again that they can't maintain their own infrastructure without foreign investment and workers, and they're gone.

And the Chinese system is dependent upon an economic model that is in its dying days because globalization is over. They don't have the demographic structure to make it happen in the first place. And the capital that would be necessary to make all of this work even theoretically is also gone because that's wrapped up in the retirement of the boomers. As they liquidate all of their holdings and move into retirement, they're not going to be able to afford the sort of risk that it takes to invest in cobalt production in Congo. They're going to be going into municipal bonds. That doesn't generate a lot of chromium.

And if we start having to make economic and environmental decisions based on material constraints, then it's just a lot more cost effective and carbon effective to pour money into wind turbines outside of Oklahoma City or solar panels outside of Phoenix than it does to build carbon bombs for our cities.

We need to talk about Tesla

Most Teslas that are on the road right now are not a first car or a second car. They're a third or a fourth car. They're status symbols. They're conspicuous consumption at the highest level, which means that we really do need to talk about Tesla.

Three problems there. First, we call 'the Elon factor'. He has decided to showcase some of his personal politics, which are a little erratic. And they tend towards the Trumpian and the conspiratorial right. But most of the people who have been buying Teslas to this point are armchair environmentalists who think that they're better than everyone, and they're not interested in something that supports that general point of view. So, he's basically alienated his primary consumer base.

The second problem is that Tesla is priced as an information technology company like Google or Facebook. And that's a very different model. When you develop something in the information technology space, you can then sell it over and over, because the marginal cost of producing next unit is nearly zero. But when you're doing automotive manufacturing, you have to produce each and every vehicle independently and sell them independently.

Source: Morningstar

The first one is nearly infinitely scalable. The second one is linear. In an infinitely scalable environment, of course, the capital that flows in to develop the model and develop the workforce and develop the skill sets and the patents, it comes from everywhere, and that's why you see massive valuations in that space. But when you're only selling one vehicle at a time, you can only maintain those valuations so long as you are the only producer, and that is not the case for Tesla anymore.

Yes, Tesla was the world's largest producer for a while, but now, every major automotive company in the world has an EV line. And in many cases, these are vehicles with more towing capacity, more weight capacity and better range than Tesla has.

Tesla still has this panache as a luxury brand, but he's offended the people who bought it for luxury reasons, which brings us to the third problem. We're facing a massive capital crunch, and that's not something that's simply going to affect the financing for vehicles or the mining of materials, but the capital that is available to keep Tesla stock above board at all. We have seen Tesla drop by about 70% in calendar year 2022 as some of these factors have kind of come out indirectly.

For Tesla to be ranked, to be priced like a normal automotive company - normal automotive companies that in many cases now have superior EV models and a better income stream and more experience making vehicles - Tesla needs to drop by 90% from where it began this calendar year. That would bring it even with Ford and Chevy and the rest. And that's before you consider that Elon has systematically offended most of his existing customers. 

 

Peter Zeihan, founder of Zeihan on Geopolitics, is a geopolitical strategist, speaker and author. This article is general information and does not consider the circumstances of any investor. This article is an edited transcript of Peter's video, EV's Not-so-little Dirty Secret(s), posted on 4 January 2023.

 

34 Comments
Anthony Wasiukiewicz
January 25, 2023

As I'm reading through it, there are a few inaccuracies. The 'third/fouth' car for Tesla is one. It may have been that way, but isn't the case much anymore. I live in a low socioeconomic area. And there are numerous Tesla Model 3's around. And they are not the 'third or fourth' car.

What we do know is that any new technology in vehicles takes over 30 years to reach market saturation.
Airbags - over 30 years. Invented in 1951. Introduced in 1970s. Become mainstream by early 2000's.
Fuel injection - Invented in 1885. Introduced in 1950s. And my 1992 Ford Laser still had a carburetor..
Steel belted radial tyers - First patented in 1914.. Became common in the 1970s. Mainstream by the 1980s.
Hybrid introduced by Toyota in 1997. More common in 2023. Still not mainstream, but on it's way.
etc.

Electric cars will increasingly become common. As did all of the above. But history suggests we won't all be driving them in 10 years.

George Varghese
January 21, 2023

The best compromise is to drive a small hybrid car which does not require large battery capacity, has no range limitation, is affordable and does not require any charging facilities. Being small, such a car would reduce the impact on the climate and use less resources for manufacturing.

Daryl
February 07, 2023

100% agree. I'm on my fourth hybrid and the first three achieved magnificent mileage up to 200,000 kms when disposed of with the usual Toyota reliability. The latest is a PHV, Plug In Hybrid Vehicle. Been achieving 1.5l/100kms over the six months of ownership. Lucky to put 10 litres into the tank on any given month. Over the six months spent A$366.39 with fuel in Aust typically A$ 1.75/litre. There is one 2,000 km long trip in there with only the first 64km electricity. Most, but not all electricity comes from our solar panels and batteries. Simply unbelievable Economy. I know of several Tesla owners who can't get out of them soon enough with issues operating in snow country (dead battery) among the issues. I very much get why Toyota is slow to commit to full EVs, and they have (and have had for some time), the stop gap answer which others are slowly catching onto.

harry
January 19, 2023

Pure Electric vehicles will remain very small part of transport system unless some miracle material gets invented that provides energy density similar to gasoline. That is too far fetched in future. In next 50 years, batteries will mainly act as a supporting element at best in the mass transport chain. For example battery help improve mileage in hybrid cars. Ideal vehicle of future may be hydrogen combustion engine coupled with high density battery in hybrid mode. Owning a battery operated car may satisfy a person's ego, or gain some tax benefits from the governments, however it does nothing to solve the main problem of reducing carbon in the atmosphere. Elon Musk's personality, temperament and character is questionable at best. 

Jack Jones
January 19, 2023

Amid all this talk about Zeihan's expertise, I found this fascinating thread from someone who seems to know his facts, John Lee Pettimore. A solid argument, happy to hear rebukes.


@JohnLeePettim13

As a miner for 40 years I have worked in various mines around the world. Gold, platinum, copper, coal, lead, zinc, oil and salt. I'm going to tell you something, and here it is. We will destroy the earth in the name of "Green Energy" Follow along and I will explain. ?? MiningWatch Canada is estimating that “[Three] billion tons of mined metals and minerals will be needed to power the energy transition” – a “massive” increase especially for six critical minerals: lithium, graphite, copper, cobalt, nickel and rare earth minerals Over the next 30 years 7.5 billion of us, we will consume more minerals than the last 70,000 years or the past 500 generations, which is more than all of the 108 billion humans who have ever walked the Earth. Mining requires the extraction of solid ores, often after removing vast amounts of overlying rock. Then the ore must be processed, creating an enormous quantity of waste – about 100 billion tonnes a year, more than any other human-made waste stream. Purifying a single tonne of rare earths requires using at least 200 cubic meters of water, which then becomes polluted with acids and heavy metals. On top of that, imagine the destruction and energy required to obtain these essential metals: 18,740 pounds of purified rock to produce 2.2 pounds of vanadium 35,275 pounds of ore for 2.2 pounds of cerium 110,230 pounds of rock for 2.2 pounds of gallium 2,645,550 pounds of ore to get 2.2 pounds of lutecium Also staggering amounts of ore are needed for other metals. By 2035, demand is expected to double for germanium; quadruple for tantalum; and quintuple for palladium. The scandium market could increase nine-fold, and the cobalt market by a factor of 24. (Marscheider-Wiedemann 2016 ‘raw materials for emerging technologies’. The potential demand for rare metals is exponential. We are already consuming over two billion tonnes of metals every year — the equivalent of more than 500 Eiffel Towers a day. There is nothing refined about mining. It involves crushing rock, and then using a concoction of chemical reagents such as sulphuric and nitric acid, a long and highly repetitive process using many different procedures to obtain a rare-earth concentrate close to 100% purity. As rare metals have become ubiquitous in green and digital technologies, the exceedingly toxic sludge they produce has been contaminating water, soil, the atmosphere, and the flames of blast furnaces. Do you think solar panels are "Green" Think again. There is nothing green about solar panels. Did you know we clear cut forests, not for panel placement but for the wood needed to produce the panels. Don't believe me, have a read. hiddenhistorycenter.org I have seen the destruction of mountains, lakes and pristine waterways all in the name of #GreenEnergy. A recent report by the Blacksmith Institute identifies the mining industry as the second-most-polluting industry in the world. Soon to be Number # 1 Why? Green energy. Green’ technologies require the use of rare minerals whose mining is anything but clean. Heavy metal discharges, acid rain, and contaminated water sources — it borders on being an environmental disaster. Put simply, clean energy is a dirty affair. Wind turbines guzzle more raw materials than previous technologies: ‘For an equivalent installed capacity, solar and wind facilities require up to 15 times more concrete, 90 times more aluminum, and 50 times more iron, copper, and glass than fossil fuels or nuclear energy. Think of China. One-fifth of China’s arable land is polluted from mining and industry. Mining the materials needed for renewable energy potentially affects 50 million square kilometers, 37% of Earth’s land (minus Antarctica). Now imagine that number 10 fold. If you’ve gotten this far still believing that renewables are clean and green, well, I have a bridge to sell you. We thought we could free ourselves from the shortages, tensions, and crises created by our appetite for oil and coal. Instead, we are replacing these with an era of new and unprecedented shortages, tensions, and crises.

Jhm Mke
January 19, 2023

https://energycapitalpower.com/researchers-develop-sea-salt-battery-4-times-the-capacity-of-lithium/ "Researchers from the University of Sydney in Australia has developed a sodium-sulphur battery with four times the energy storage capacity of batteries that are powered by rare earth metals such as lithium, graphite and cobalt.." "With the research having been led by Dr. Shenlong Zhao from the University of Sydney, and serving as a breakthrough for renewable energy, the sodium-sulphur battery, which is developed through the use of molten salt that can be processed from sea water, is cheaper and more energy efficient than existing options."

S
January 16, 2023

I was concerned when I read this article because it went against many of the things I have been reading about EVs from other sources such as climate activism organisations. I asked a friend of mine, who reads comprehensively about EVs and similar technology, to look at the article. He has sent me a criticism of numerous points in the article and said they’re either not correct or are misleading because this field is receiving a huge amount of research focus and things are changing all the time. Zeihan has talked as though the way things are now is how they will continue to be, and many of those things have already changed or are in the process of changing.
Zeihan’s expertise is in geopolitics including conflicts in Russia, Ukraine and China. I haven’t been able to find any evidence that he has expertise in EVs and he certainly didn’t write this article as though he has any expertise in this area.
I thought I would let you know that I don’t think this article should be used as a source of reliable information about EVs and it could do a lot of damage, as it seems to conclude that EVs shouldn’t be used, when I think that their use it very important.

Ryan
January 17, 2023

Agreed.

from an electrical engineer

Jhm Mke
January 19, 2023

My background is electrical engineering too and I for one would prefer to spend my money (for transportation energy) on electricity which is made and sold locally so my money helps out my local economy. Not to mention that a 60Kwh battery (~250 miles) costs ~$10 rather than ~$25 with fossil fuels. The more EVs we drive, the more it takes away the value of fossil fuel assets that Putin uses to fund his illegal invasion of Ukraine. I also like the fact that there are far fewer moving parts to fail in an EV, no muffler to change, no catalytic converter to steal, no radiator to leak, no oil changes.

Dudley
January 19, 2023

"Not to mention that a 60Kwh battery (~250 miles) costs ~$10 rather than ~$25 with fossil fuels.": At present, depreciation on EVs is greater than ICEs largely due to the difference in price. The result is that the cost per kilometre of EVs is greater on typical car usage. Exceptionally higher than typical use is required to reduce EV cost per kilometre to less than equivalent ICE. For low use (less than 10 kilometres per year) ICEs are more cost effective. That might change with battery technology.

Peter
January 15, 2023

Readers may consider watching some of Australia’s most experienced electrical and nuclear engineers, lawyers and economists present their opinions about the AEMO Integrated Systems Plan in the Main Committee Room in Parliament House Canberra 24th November 2022.

@youtube query type “Canberra Small Modular Reactor Forum “

Dean Tipping
January 14, 2023

Here's Giles Coren's EV experience...https://www.thetimes.co.uk/article/why-ive-pulled-the-plug-on-my-electric-car-dwgs9l9hl and it's worth the subscription to read it. What someone asked me is that in cyclone/hurricane regions of the planet, Florida for instance...if the majority of vehicles are EV's and an evacuation order is made, what will be the consequences, especially if the electricity and recharging infrastructure gets knocked out?


Here's another worth reading ...https://www.heraldsun.com.au/motoring/motoring-news/car-makers-reluctant-to-reveal-price-of-ev-replacement-batteries/news-story/e44afa723ed16f1b8d1e022d07c9a7e5


from which I quote: "Car makers are baulking at revealing the cost of replacement batteries for electric vehicles, with good reason. Lexus has revealed that a replacement for the battery in its UX electric SUV is $43,476 plus GST. That’s more than half the price of the car, which retails for about $82,500. An engine replacement costs about $12,000 for the popular Ford Ranger ute or roughly $6000 for a small hatchback such as a Hyundai i30. News Corp asked ten manufacturers to reveal the cost of their replacement batteries and Lexus and Nissan were the only two to reveal any prices. Tesla, Mazda, BMW, Mercedes-Benz, Hyundai, Kia, MG and Mitsubishi did not provide any numbers."


The cost of replacing the battery will want to come down significantly otherwise you either stump up for a new battery or a new vehicle. How will these expired batteries be treated, to be environmentally friendly? How will the used vehicle market look if at the termination of the battery, the jalopy has little re-sale or trade-in value? Your children and grand-children could be paying more for the first or second car than we did. And then there's the quantity of mining required to have the raw materials required to build the damn thing. 

Jhm Mke
January 13, 2023

Another thing to take into consideration regarding our "Grid" is the fact that the EV manufacturers are working with Power companies to provide Vehicle to Grid (V2G) integration so that instead of Power companies purchasing tons of batteries, the electricity stored in an EV's battery can be used as "Peakers" with the owner's consent, so rather than build a peaker power plant, the EV's will replace the peaker power plant during high usage.

Also, I read that GM will be offering an option which allows a mat placed on the garage floor for "Wireless Charging" which means you never have to plug in your vehicle, you just need to park it over the mat when parking in the garage.

Duane
January 14, 2023

Wireless charging... 70% maximum efficiency which means 30%waste of something we don't have enough of or is still being produced by fossil fuels. Add that 30% to the already poor cost and emissions models, and it pretty much kills the EV charged in that way.

Jhm Mke
January 15, 2023

"Wireless charging operates within a narrow band of efficiency (88-93%) that is equivalent to Level 2 plug-in charging,"

https://witricity.com/newsroom/blog/what-is-efficiency-how-do-you-measure-it-and-why-should-you-care/

Neil
January 13, 2023

Can someone who knows what they are talking about please address these simple questions (knowing it may not have a simple answer):
If we go all out to replace ICEV cars with EVs, how much extra electricity needs to be generated in order to run these vehicles - measured as a percentage of our current electricity generation? 10% extra, 50% extra, 100% ?
And , how does this quantum of extra electricity required compare to current levels of RENEWABLE energy generated? e.g. will it need a doubling, trebling etc?
However if renewable generated electricity is NOT used to recharge the battery of an EV (for whatever reason and hence coal fired power stations are providing the grid electricity), what is the difference in CO2 between a coal powered EV and an ICEV? In other words , are there savings of CO2 with coal vs oil right now for similar sized vehicles?

Just trying to understand the scale of the problem ...

Glamourboi
January 13, 2023

You nailed that. Great questions and we all can assume the answer. It doesn’t stack up.

Dudley
January 13, 2023

Picking a petroleum category, petrol:
= 15,501.20 * 1,000,000
= 15,500,000,000 L / y
https://www.budgetdirect.com.au/car-insurance/research/average-fuel-consumption-australia.html#20-government-sourced-fuel-consumption-statistics

Petrol energy:
= 15,500,000,000 L * 34 [MJ / L]
= 527,000,000,000 [MJ]
= 527,000,000,000 [MJ] / 3.6 [MJ / kWh]
= 146,000,000,000 [kWh]
= 146,000,000,000,000 [Wh] / 1,000,000,000,000 [Wh / TWh]
= 146 TWh

Electricity production:
= 266 TWh
https://www.energy.gov.au/data/electricity-generation

Petrol usage is ~20% energy efficient, electricity ~80%.

Harv
January 13, 2023

Don't forget to subtract all the electricity it takes to refine oil into fuel. Imagine if that went straight into an EV.

Dudley
January 13, 2023

Tesla asserted electricity consumption: 4kWh / 3.7854 L = 1.06 kWh / L petrol
Actual use: 0.2 kWh / 3.7854 L = 0.053 kWh / L petrol
https://www.cfr.org/blog/do-gasoline-based-cars-really-use-more-electricity-electric-vehicles-do

Petrol energy content: 34 MJ / L = 9.4 kWh / L

Ryan
January 13, 2023

Hi Neil,

The AEMO has developed an integrated system plan, planning out to 2050 which covers most of your questions.

The step change scenario expects energy use from the grid to nearly double from 180TWh to 320TWh. The modelling includes switch to a high level of EVs.

Check out the infographic here
https://aemo.com.au/en/energy-systems/major-publications/integrated-system-plan-isp/2022-integrated-system-plan-isp

Adam
January 12, 2023

Everyone here has a valid point. Also , fossil fuels are on the way out. That's a given. How fast? Hopefully fast enough. Everyone loves our only planet. China is cheeky. Coal fired power is still on the agenda there. Not good. But eventually it will have to fade out that thing and go green like us all. Construction of any vehicle will come down in CO2 cost then. Lithium or Hydrogen Fuel cell ? Perhaps both? Yes we need more copper and other precious metals. Eventually we can recycle old EV's. Dont forget about Passenger Drones.Yes safety issues now but......? I read recently VW are moving into that space now. Other car makers too. These craft dont need roads , tyres. Four men could lift one. Lower production costs. No traffic jams. Fast. Poor range perhaps. Why own one? Dial one up. What Car manufacturer wants to be left out in the cold on this one. Perhaps governments may not need to spend so much on roads and infrastructure in the future. Less CO2. I bet Elon would love to fly with this one. And he will. But not just yet .

RalphA
January 13, 2023

Can't see China going green anytime soon. They will continue to increase CO2 production for at least a decade. Why? Because they are not stupid enough to sabotage their economy and manufacturing industries to keep "armchair environmentalists" happy. How many people actively boycott Chinese made products now when they are the largest polluter and have committed to producing more? Close to no-one. So why will China change when it doesn't need to?

michael
January 14, 2023

What do you mean? China produce renewable energy more than the rest of world combined.

Goronwy Price
January 15, 2023

China has a lower percentage of fossil fuels in its electricity production than Australia. This is in spite of it being the centre of World manufacturing. It is vastly expanding hydro, wind, solar and nuclear power and is doing this faster than Australia. Again apart from being the centre of World manufacturing it’s per capita emissions are lower than Australia’s by a wide margin. It has a long way to go but is travelling faster than us.

https://www.forbes.com/sites/thebakersinstitute/2022/04/26/coal-to-power-chinas-energy-transition/?sh=46ae374d1b9e

Dudley
January 16, 2023

CO2 emissions per km^2:
China 1,133
Australia 52

If all the world were like Australia there would be no CO2 emission problem for hundreds of years.

Wes
January 29, 2023

Fossil fuels aren't on the way out. That's fact. There is no known technology that can replace fossil fuels for air transport, sea transport or long haul road transport. Coal is essential for steelmaking. Do I need to go on about other applications? Any push to net zero must necessarily include the continued use of fossil fuels. End of argument. Renewable energy zealots can argue all they like, but it won't change the facts mentioned above.

Ryan
January 12, 2023

Are EV's environmentally friendly?
Further reading for those sceptical of the claims in the first paragraph. See the Life-Cycle analysis from The International Council on Clean Transportation.

theicct.org
A GLOBAL COMPARISON OF THE LIFE-CYCLE GREENHOUSE GAS EMISSIONS OF COMBUSTION ENGINE AND ELECTRIC PASSENGER CARS

Greig
January 12, 2023

It is fairly pointless trying to address the list of factual inaccuracies in this article which are prolific in nearly every paragraph. While agreeing with Elon off the rails comments, Tesla remains the largest electric vehicle manufacturer by an order of magnitude and will most likely sell more than 2 million electric vehicles this year. Tesla vehicles remain the fastest, with the longest range. Peter needs to actually drive an electric car and then he will understand that a great many drivers will switch simply for the superior experience, and this is in very early stage vehicles - the technology is improving rapidly and time will address many of his nominated concerns.

George
January 12, 2023

Google search on largest EV sales: "BYD beats Tesla in 2022 EV sales, as the world’s No 1 electric car seller vindicated Warren Buffett’s bet.
Sales of BYD’s wholly electric cars rose 4 per cent from November to 235,197 units last month, the Shenzhen-based carmaker said in a statement
BYD’s 2022 deliveries rose to 1.86 million units, most of them to customers in mainland China."

Tim
January 15, 2023

Greig, maybe. Though Tesla announcing cuts of 20% to car prices this weekend certainly doesn't assuage demand and competition concerns.

Bill
January 12, 2023

Maybe EVs should come with a sign on the back window saying "EV, Substantially powered by COAL"

John
January 12, 2023

Anyone with access to novated leasing is now able to buy an EV for tens of thousands of dollars less than they could a few months ago, following the removal of FBT for EVs by our foolish government. Collectively, that's millions of workers and Aussies love a bargain, so that will keep demand going for Tesla.

Trevor G
January 13, 2023

Yes and EV users don’t pay any fuel excise (which is supposed to fund roads) so that’s another subsidy in addition to the FBT break. So mums and dads are subsidising EV drivers. If EVs are any good they shouldn’t need subsidies

 

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