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Electric mobility: What to expect

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Earlier this year, I had an opportunity to try-out a modern electric car. It is difficult to ignore the sensory delight that such cars offer. Other than the generic look and purpose of the car, everything is radically different. The experience of driving an electric car and its impact on the environment are something we have read about in hundreds of articles, but what often gets missed out is the economics of it all. And this is the most challenging aspect of electric mobility.

According to a report[1], there are approximately 1.2 Billion cars in the world. CNBC reported[2] in 2014 that annual global sales that year hit a record 82.8 million. The automobile industry is a source of employment to millions of people and its impact in terms of sheer economic activity is testament to that. The economic relationship that the automobile industry shares with almost every other commodity in the world is staggering – steel, minerals, plastics, oil, aluminum, rubber, textile, electronics, to name just a few. And this is just scratching the surface. But it is this industry that is witnessing the disruption that is electric mobility.

With countries like China, USA, Norway, Germany, and many others driving the push towards electric car adoption, each country is setting some percentage target of total volume of cars to be electric. China is doing this most aggressively. The Financial Times reports[3] that China produced 45% of total electric cars sold globally in 2016 and is planning to produce up to 7 million electric and hybrid cars by 2025. The report goes further to state that China is evaluating a time-frame within which to ban conventional automobiles sometime between 2025 and 2040. Germany and Netherlands have similar ideas[4], even as their plans have been met with mixed responses from the general public, particularly in Germany[5] where the trinity of range, infrastructure, and price influence purchase greatly.

Slow as the adoption may seem, as is true of any new technology, one thing is clear – the adoption is happening and it presents economic challenges. At the resources level, the economics of electric cars is entirely different when compared to conventional automobiles. By far, the most significant component of such a car is its battery. With it comes the reliance on Lithium and Cobalt. The eight countries with the largest lithium reserves[6] are led by Chile, China, Argentina, and Australia; followed by Portugal, Brazil, USA, and Zimbabwe. The reserves total up to about 13 million metric tons according to the US Geological Survey[7]. What is to note is that with increased adoption of electric mobility, the battery production is expected to rise several folds versus current capacity. The impact of this will be felt by the glass, ceramics, metallurgy, and even medical industries where lithium has alternative uses. Drawing lithium away from battery production will lead to higher prices of these other products that are not growing in demand as quickly.

The other chief ingredient is Cobalt, and this has even more alternative uses than lithium. Since the push for electric mobility began, the price of cobalt has already tripled[8] in just 2 years, although this is in part attributed to the lack of ethically sourced cobalt i.e. without the use of child-labor[9] as is the case in the Republic of Congo, which has the largest reserves of the metal. The estimated reserves[10] globally are reported to be about 7 million metric tons. The use of cobalt in many industrial alloys, paints and pigments, and oxidation catalysts further drives prices upwards. Cobalt alloys are used in the medical industry for orthopedic implants and prosthetics. Therefore, it will be interesting to see how we, as people and as nations, come to terms with these trade-offs.

While we are still at commodities, one can speculate that oil will be affected too. The closer we get to a complete ban on conventional internal combustion engines, the harder it gets for oil; even though plastics are not going away any time soon. The increasing demand for oil generated by the growth in conventional automobiles (and the higher prices of oil) in the past also made it economically feasible to extract oil from reserves that were otherwise not deemed viable when the price of oil was low. The increased adoption of electric mobility is going to have the reverse effect. Even as there is demand for plastics, its growth may not justify current oil production. As a result, oil production will fall to more economically viable levels. The impact will be seen in oil-driven economies of the Middle-East, Russia, and others. Nations which collect revenues from taxation from the sale of oil such as India, will also, in all probability, face fiscal pressure.

Employment will also see a massive makeover. At this point, it is wise to note that we cannot determine exactly how many kinds of new employment opportunities may emerge from electric mobility. There is no predictive theory to support this besides speculation from what we already know. To dispel any panic, it may not be all doom and gloom[11] as some people may be speculating. We can acknowledge the potentially greater structural employment problem that we will witness. How nations address the skill-gaps remains to be seen but it should, and will, generate serious discussion. The certainty is that employment within the oil industry will take a hit and so also will businesses that are solely engaged in conventional automotive technology such as exhaust, gearbox transmission, head gaskets, pistons, cylinder linings, etc. almost all of which are not required in an electric car. What is in fact interesting to note is that many of these businesses have been pro-active and are already invested in the electric mobility business by expanding their businesses also to electric drivetrains, motors, research into lightweight materials, electronics, power management, battery management, software, and the like. Auto-makers themselves will need to add jobs to their new electric mobility departments but at the same time, might have to let go some jobs from the conventional assembly lines.

Electric mobility also means fresh infrastructure spending – power generation through wind, solar, tidal, geothermal, nuclear, as we move away from environmentally harmful methods of power generation, and then setting up of charging infrastructure. These are going to generate a great deal of new jobs. We might as well go a step forward in stating that electric mobility lays the foundations for autonomous vehicles. This translates to incredibly high use of electronics and computing. Today, if you are someone who is engaged in machine learning or data science, you are, in all probability seeing rapid advancement. Computing and data analytics is definitively going to see plenty of opportunities for employment. The growth in battery use is also going to drive battery disposal and recycling industries since batteries, through charging and discharging cycles, experience degradation over time. Considering the hazards associated with battery disposal and recycling, we can expect enforcement of tighter environmental regulations while at the same time, lucrative business opportunities leading to more employment.

At this point, it appears as though India is just not in the thick of things as far as electric mobility is concerned. Considering the size of its market, India cannot afford be too far behind. Now although India opened up its markets through the economic liberalization movement of 1991, the baggage of its socialistic past is still evident in politics. In the course of the last few years however, there has been a commitment from the top to ensure electric power generation and distribution across the country. Naturally, for India to become a market for electric mobility, it has to ensure availability of electricity and also prepare capacity for the enormous load that electric mobility will bring with it. Even though China is ahead in the adoption of electric mobility, a reported 72% of its power generation is from coal[12]. India has a similar situation where it relies 66% on fossil fuel based power generation[13] . This is often cited when discussing the clean credentials of electric mobility. Power generated from non-renewable sources generate significantly higher emissions and pollutants than automobiles[14]. The Government of India, in 2016, has signaled its intent in pushing aggressively for renewable energy in the Draft National Electricity Plan of 2016[15].

According to The Economist, 2018 shall be the tipping point for electric cars[16] which will see both greater adoption, and also switching from conventional automobiles to electric cars. This presents serious challenges also for carmakers. China and India are both huge markets but only one of them is prepared to absorb the effects of this increased electric mobility. India is still not done electrifying itself entirely and the realization cannot come sooner that going forward, the next couple of years are crucial for India’s power sector. Historically, government bureaucracy has always been terrible at managing such urgency, and in India, where power generation is still dominantly under government control, it is hard to be optimistic. There has never been a better case than now for the Government of India to consider greater privatization of the power sector which currently stands at 44%. Even as other problems like power-theft, cross-subsidization, crippling financial situation, and supply chain issues continue to plague the power sector.

While electric mobility, once a visionary idea, is fast becoming a reality, and there is optimism surrounding its adoption; its economics presents unique challenges. It will be interesting to see how nations, politicians, and regulatory agencies approach these challenges even as the debate about electric mobility’s clean credentials still goes on.


  1. Green Car Reports.
  2. CNBC.
  3. The Financial Times.
  4. Electrek.
  6. Statista.
  7. The United States Geological Survey.
  8. Mining.
  9. The Washington Post.
  10. The United States Geological Survey.
  11. Business Insider.
  12. U.S. Energy Information Administration.
  13. Central Electricity Authority.
  14. U.S. Environmental Protection Agency.
  15. Central Electricity Authority.
  16. The Economist.

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