An automobile engineer recently described the new BMW 225xe Plug in Hybrid as the most complex automobile BMW has ever built. And if you look at it (take a look at the picture) you can understand why. It has an internal combustion engine (ICE) above the front axis of the car and a battery and electric motor on the back axis. The electric engine is designed for use in town, for improving the efficiency of the ICE and short distance driving with the ICE kicking in when there is not enough power in the electric engine or when the automobile goes over 100km/hr. And the results are impressive. The car has 224 bhp, does 0-100/kmh in 6.7 seconds and its fuel consumption is a measly 2.0 litres per 100 km (134.5mpg). But let’s be clear do we really need two engines, two gearboxes and a complex array of power electronics and software to make sure that these two engines function perfectly together to ensure an effortless drive? Would it not be easier and cheaper for BMW to go fully electric especially given that Tesla is showing us that an electric car is faster accelerating and more fun to drive than a combustion engined car?
The main reason they are not doing it is that BMW and all the other major automobile manufacturers have invested over 100 years of engineering prowess into building ICEs. It is one of their core competences of BMW and they have factories and value chains in place to produce some of the best ICEs in the world, and changing quickly from ICEs to EVs would not only cause job losses but also would destroy shareholder value. But let’s be clear, BMW will go fully electric. Hybrid is only a bridge between the ICE and fully electric.
Electric vehicles have major advantages over ICEs starting with the fact that they are better for the environment. An electric vehicle (EV) is up to 3x more efficient than an ICE which means less fuel is needed to power the car but in addition there is no exhaust fumes from an EV which means that there are no harmful fine particles emissions when driving, which is one of the major reasons why China is pushing EVs particularly in cities like Beijing and Shanghai.
But what is really interesting is that an electric drive develops maximum torque from standstill which allows an electric vehicle to accelerate considerably faster than an internal combustion engined car, noting that the Tesla S P100D is the fastest accelerating roadcar in the world. In addition, electric drives are very robust meaning that they require less maintenance than a mechanically driven ICE. But perhaps the biggest reason why EVs will win over is because they will not only be cheaper to run but they WILL be cheaper to buy than ICEs.
For a start, electric engines are at a much earlier stage of mass production than ICEs meaning that they have greater cost reduction possibilities. To add to that EVs have less components. They do not need gearboxes, clutches, mufflers, pistons, exhaust systems or fuel tanks. And we are seeing not only technology improvements at the battery level but also massive cost reductions, and these trends will only continue.
By 2025 we will full cost parity between the EV and ICE. In the meantime we will see significant increases in the ranges of EVs noting that the new BMW i3 has a battery in it which is not only cheaper than when the car was released two years a go but also gives 57% increase in range from to 190km from 300km.
But let’s be clear we do not need the ICE to have cost parity with the EV for us to see exponential growth in EVs. All we need is to see the total cost of ownership (including servicing and fuels) to be equal that of the EVs at which point the automobile manufacturers will wrap fuel or rather electricity and servicing and costs of buying the car into one service package for their customers. That is 2020 at latest.
The other necessary requirement for EVs to really take off is improvements in range and charging time. This is happening and with 500 km in clear sight and fast charging technologies improving it could well be that by 2025 there is no need for plugin hybrids let alone range extenders for EVs…