EV Quick Hits – Mid June Edition

People are Not EV Buying, Ford’s EV Profit is Dying, and How We are Going to Find Enough Copper to Go All-EV by 2050 is Mystifying

The Low-Hanging EV Fruit has been Already Picked

Image: Shutterstock

As time marches on, consumers are becoming much wiser as to the real-world experience of owning and operating an EV. The early adopters were, as we say in business, “low-hanging fruit.” These consumers were going to buy an EV regardless of the drawbacks and hurdles, partly because they fancy themselves as being “down with the climate cause,” and partly because they can afford to own a gas-powered vehicle alongside of their EV when a long-distance road trip is planned or the weather becomes too cold.

The remaining group of consumers that have yet to consider an EV are looking at practicality, convenience, costs, and total ownership experience. Most or all of these factors are enough to keep some of these consumers from taking the EV plunge.

And the trend is not in EV’s favor. The 2023 AAA annual consumer survey on EVs shows declining consumer interest compared to 2022.

Only 18 percent of surveyed adults in the U.S. would be “very likely” or “likely” to purchase a new or used EV, which is down from 23 percent from the previous year. In addition, 63 percent said they are “unlikely” or “very unlikely” to consider an EV for their next car purchase.

The overall potential market for EVs is becoming somewhat solidified, with only a small percentage of consumers willing to buy an EV and the rest of the market not showing much interest. This should come as no surprise to anyone paying attention – the limited utility, higher total cost of ownership, and inconvenient charging experience that is inherent to all electric vehicles is something that people just can’t accept. Not when these problems are not an issue with what these people are driving today.

In the minds of most consumers, EVs are not viewed as being more innovative than gas-powered vehicles just because they are battery-operated. Until there are major breakthroughs in battery technology (which we are always told are “just around the corner”), today’s EVs are a “no sale.”

Ford Would be 50 Percent More Profitable Without EVs

Image: Ford Motor Company

Good news at Ford! The automaker has an upbeat outlook for 2024, announcing an adjusted operating profit of $11 billion, which is an increase from the previously expected profit of $9.6 billion.

Ford stock was up 6 percent immediately after the announcement. Robust overall U.S. sales, the absence of last year’s UAW strike costs, and a full-year of profit from Ford’s new (gas-powered) Super Duty F-Series truck contributed to updated profit outlook.

Meanwhile, Ford’s EV division is expected to lose around $5.5 billion, an increase from the $4.7 billion the division lost in 2023. So, in essence, the gas-powered car and truck divisions of Ford are offsetting the losses of the EV division, which continues to consume almost half of the company’s capital expenditures.

To put this another way, if Ford was not producing EVs at a loss and investing in a new generation of battery-operated models to replace them, Ford’s adjusted operating profit would be 50 percent higher.

In business, we tend to view chronic money-losing ventures as something that either gets fixed or gets eliminated. Doubling down on ventures that have no path to profit is a poor strategy that cannot be sustained. Sober-minded executives will need to stop delaying the inevitable, forget about “sunk costs,” and make the hard choices that will probably be embarrassing but will at least keep the company from unnecessarily bleeding so much cash.

Will it happen at Ford? Eventually, the company must scale back its EV ambitions to that which can turn a profit by aligning with market demand. You know, like it was supposed to.

The EV “Transition” by 2050 Will Require All the Copper in the World – and Then Some

Image: Some company that sells a lot of copper, I suppose.

We rarely hear much about the amount of copper needed to reach a hypothetical “transition” to all-electric cars by the 2050 “Net Zero” targets set by 21 states in the U.S. and various governments around the world. That’s 26 years from now.

During this 26-year period, according to polymath and energy density expert Vaclav Smil, the following must happen in order to fully attain this EV “transition” (emphasis mine):

Replacing today’s 1.35 billion light-duty gasoline and diesel vehicles with EVs and supplying the expanded market (estimated at 2.2 billion cars by 2050) would thus require nearly 150 million tons of additional copper during the next (26) years. That is an equivalent of more than seven years of today’s annual copper extraction for all of the metal’s many industrial and commercial uses…Copper offers a stunning example of these environmental externalities. The metal content of exploited copper ores from Chile, the world’s leading source of the metal, has declined from 1.41 percent in 1999 to 0.6 percent in 2023, and further quality deterioration is inevitable. Using the mean richness of 0.6 percent means that the extraction of additional 600 million tons of metal would require the removal, processing, and deposition of nearly 100 billion tons of waste rock (mining and processing spoils), which is about twice as much as the current annual total of global material extracted including harvested biomass, all fossil fuels, ores and industrial minerals, and all bulk construction materials. Extracting and dumping such enormous masses of waste material exacts a very high energy and environmental price.

Smil postulates that if we used all of our current and future abilities to mine copper to achieve the goal of “transitioning” all vehicles to battery power by 2050, we would need to stop using copper for everything else. Think of electrical wiring, piping, plumbing, roofing, appliances, public health, heat exchange, and a host of other applications. EVs would need all of it, and the all-EV “transition” still wouldn’t happen by 2050 without extraordinary advances in mineral extraction and battery development technologies that do not exist today and are not likely to be discovered in the next 26 years.

Alongside of EVs, think also of electrically converting around 50 million tractors, 25 million medium-and long-haul trucks, 25,000 active jetliners…anything requiring power that is currently using some form of hydrocarbon-based energy including commercial, industrial, and residential heating and cooling, plus manufacturing and agriculture – and one must conclude that we lack the materials as well as the know-how to do this by the 2050 goal.

All of the attempts to achieve this “transition” to EVs in order to decarbonize our personal mobility are a waste of time and resources. Believing that we must reduce emissions to save the planet is irrelevant. Our access to materials and our knowledge on how to use them even if we had enough of them assures us that achieving a full “transition” to EVs as part of the “Net Zero” goals by 2050 is impossible and most likely will never happen.

Certainly not in our lifetimes.