The Car Business is Doomed

Let the Chinese Go Broke

I wrote last month about the EV Revolution and there’s a further point I need to make.

The car business, as we’ve known it, is doomed.

Because an electric car is just a battery on wheels, 40% of the cost right now is in the battery. That percentage is going up, as self-driving software becomes a commodity, and as the mechanics of EVs are better understood.

BYD can already produce an EV for $25,000 because it controls its battery supply chain. It mines the lithium, it produces the battery packs, it started as a battery maker. There will be hiccups along the way because the material and technology of batteries is changing fast. Suppliers will soon be able to arbitrage among several super-cheap materials, to create solid state batteries that last a long time and store more power per weight than today’s lithium ion. Graphene is just carbon, folks.

Solar Shows the Way

The analogy is to solar panels. Panels that seemed efficient a decade ago are already obsolete. The pace of change is dizzying. We will soon have see-through panels and perovskite panels with 30% efficiency. Storage can be as simple as Ivanpah (left), which uses simple mirrors and no panels at all. Melt salt and generate power as it cools. That’s how you get solar power at night. That’s also how you can store wind power for when the wind stops.

Oil producers are already having a tough time maintaining $70/barrel oil in the face of EVs and e-bikes. The only complaint their advocates can make against renewables is storage, and that complaint is bunk.

As materials change, as software scales, that $25,000 price will become a ceiling, not a floor. That ceiling will drift down a little every year. The industry can’t survive it.

Let the Chinese have the business. Let them go broke.