How green is your electric vehicle, really?

Your columnist has just had the bittersweet pleasure of driving along America’s Pacific coast, wind blowing through what is left of his hair, in a new Fisker Ocean electric SUV. Sweet, because he was in “California mode”—a neat feature that with the touch of a button lowers all windows, including the back windscreen, pulls back the solar-panelled roof, and turns the car into the next best thing to an all-electric convertible. Bitter, because once he had returned the trial vehicle, he had to drive home in his Kia Niro EV, which is smaller, shorter range and has no open roof—call it “rainy Britain mode”. The consolation was that it is about a tonne lighter, and if you drive an EV, as Schumpeter does, to virtue-signal your low-carbon street cred, being featherweight rather than heavyweight should count.

Except it doesn’t. Just look at the future line-up that Fisker, an EV startup, unveiled on August 3rd. It included: a souped-up, off-road version of the Ocean, which Henrik Fisker, the carmaker’s Danish co-founder, said would be suitable for a monster-truck rally; a “supercar” with a 1,000km (600-mile) range, and a pickup truck straight out of “Yellowstone”—complete with cowboy-hat holder. Granted, there was also an affordable six-seater called Pear. But though Fisker says sustainability is one of its founding principles, it is indulging in a trait almost universal among car firms: building bigger, burlier cars, even when they are electric.

There are two reasons for this. The first is profit. As with conventional cars, bigger EVs generate higher margins. The second is consumer preference. For decades, drivers have been opting for SUVs and pickup trucks rather than smaller cars, and this now applies to battery-charged ones. EV drivers, who fret about the availability of charging infrastructure, want more range, hence bigger batteries. BNEF, a consultancy, says the result is that average battery sizes increased by 10% a year globally from 2018 to 2022. That may help make for a more reassuring ride. But eventually the supersizing trend will prove to be unsustainable and unsafe.

Already it is verging on the ludicrous. General Motors’ Hummer EV weighs in at over 4,000kg, nearly a Kia Niro more than its non-electric counterpart. Its battery alone is as heavy as a Honda Civic. General Motors also recently unveiled a 3,800kg Chevrolet Silverado electric pickup, which can tow a tractor and has a range of up to 720km. This year Tesla plans to start production of its electric “Cybertruck”, described by Elon Musk, its boss, as a “badass, futuristic armoured personnel carrier”. Such muscle trucks may be the price to pay to convince hidebound pickup drivers to go electric. Yet size matters to suburbanites, too. The International Energy Agency, an official forecaster, calculates that last year more than half the electric cars sold around the world were SUVs.

For now, carmakers can argue that however big the electric rigs, they have a positive impact on the planet. Though manufacturing EVs—including sourcing the metals and minerals that go into them—generates more greenhouse gases than a conventional car, they quickly compensate for that through the absence of tailpipe emissions. Lucien Mathieu of Transport and Environment, a European NGO, says that even the biggest EVs have lower lifetime carbon emissions than the average conventional car. That is true even in places with plenty of coal-fired electricity, such as China.

But in the long run the trend for bigger batteries may backfire, for economic and environmental reasons. First, the bigger the battery, the more pressure there will be on the supply chain. If battery sizes increase there are likely to be looming scarcities of lithium and nickel. That will push up the cost of lithium-ion batteries, undermining carmakers’ profitability.

Second, to charge bigger batteries in a carbon-neutral way requires more low-carbon electricity. That may create bottlenecks on the grid. Third, the more pressure on scarce resources vital for EV production, the harder it will be to make affordable electric cars critical for electrifying the mass market. That will slow the overall decarbonisation of transport. Finally, there is safety. Not only is a battle tank that does zero to 100 kilometres per hour in the blink of an eye a liability for anyone that happens to be in its way. Tyres, brakes and wear and tear on the road also produce dangerous pollutants, which get worse the heavier vehicles are.

Governments have ways to encourage EVs to shrink. The most important is to support the expansion of charging infrastructure, which would reduce range anxiety and promote smaller cars. Taxes could penalise heavier vehicles and subsidies could promote lighter ones. At the local level, congestion and parking charges could have similar effects. At a minimum, carmakers could be required to label the energy and material efficiency of their vehicles, as makers of appliances do in the European Union.

Derange anxiety

Ultimately, the industry is almost sure to realise the folly of pursuing size for its own sake. The penny is starting to drop. Ford’s CEO, Jim Farley, recently said carmakers could not make money with the longest-range batteries. His opposite number at General Motors, Mary Barra, has taken the unexpected step of reversing a plan to retire the affordable Chevy Bolt EV. In Europe, carmakers like Volkswagen are building smaller, cheaper EVs. Tesla is said to be planning a compact model made in Mexico.

The pressure is partly coming from competition. Felipe Munoz of Jato Dynamics, a car consultancy, says China prizes battery efficiency above bigness and is hoping to muscle in on overseas markets with lighter, cheaper brands, such as BYD. Innovation in batteries based on solid-state or sodium-ion chemistry may also make EVs more efficient. For the time being, drivers with money to splurge will no doubt relish flaunting their low-carbon credentials from the vantage point of a large SUV or monster truck. And so they should—until they realise that they may be making electrification less accessible to the rest of humanity. ■

Read more from Schumpeter, our columnist on global business:
Meet America’s most profitable law firm (Aug 2nd)
Why Walmart is trouncing Amazon in the grocery wars (Jul 24th)
Hollywood’s blockbuster strike may become a flop (Jul 19th)

Also: If you want to write directly to Schumpeter, email him at [email protected]. And here is an explanation of how the Schumpeter column got its name.