Electrification Challenges: Navigating the Future of Sustainable Energy

By Kerry Dennis Clancy    9/21/2023

The pace of electrified innovation is up. This innovation takes a long time and is a lot of hard work.  As Thomas Edison said, “Genius is one inspiration and ninety-nine percent perspiration.” However, with so many inspired to sustain the planet, there are massive efforts to electrify.

Even with the huge advancements, there are challenges. The biggest challenge is adapting along with the changes. Indications are jobs will change and demand for electricity will change, to name a few.

The Dawn of Electrification: A Green Revolution

The transition from fossil fuels to electrification is happening faster than most realize. Governments have stepped up their incentives to reduce the use of fossil fuels.

New Skills: Transition from Fossil Fuel to Electric Skills

  • Mechanics go back to school to learn how to work on EVs.
  • Drivers learn how to operate computer screens instead of buttons and handles.
  • Utility companies transition to operating battery-balanced grids

Transportation Sector: China is leading the electrified transportation sector with a 25% market at 80M electric vehicles registered. Norway is at 80% saturation with 4.4M electric vehicles. The U.S. by comparison is at 6% at 11.2M electric vehicles.

According to the International Council on Clean Transportation, the U.S. in 2019 looked like this:

US map of BEV saturation as of 2019

EV adoption is much lower in middle states because the heartland is 1) spread out causing range anxiety, 2) trucks are practical there, and 3) the price. Tesla’s Cybertruck may change the adoption rate of electrification in middle America.

The price of EVs is coming down to what the majority can afford. Once the affordable compact car comes out in 2025, the EV market in America is expected to catch up and dominate the car market in America. The timing of when EVs will overtake ICE cars in America is anybody’s guess but analysts predict it to be sooner rather than later.

The chart from Jose Pontes below demonstrates the growing EV market.

Bar Chart of BEV growth by year

At the same time that EVs are on the rise, the big three gas car makers in America are slipping. They are on the slippery slope of attempting to transform into the EV sector and finding it much harder and more expensive than anticipated.

Governments worldwide are restricting the internal combustion engine sector and rewarding the electric vehicle sector. Legacy car makers may succumb to these disruptive forces. The economics of transitioning from petrol to electric is not in Detroit’s favor.

In China, BYD is the most successful at electrification of their vehicles. However, they are flatlining on profitability. The cause is due to reliance on labor instead of automation and industrial robots. However, they recognize the problem and are in the process of updating their facilities with industrial robots.

Because the Chinese government subsidizes automakers, profitability during ramp-up was not a major concern. The current deflation economy in China is creating downstream headwinds. Automakers must reduce prices as consumers there are holding off for a better deal as prices go down. At the expense of a debt crisis, buying from China is getting cheaper. A side-effect is that dependence on Chinese goods increases as a result of their deflation.

In Japan, Toyota and Honda are in catch-up mode. They coerced the government to support the hydrogen fuel cell ecosystem. An 80% dependency on China for lithium battery materials was seen as a risk. They went deep into hydrogen fuel cell infrastructure. This strategy failed.

Actually, in Japan, BEV startups seem to be in a better situation to pivot from ICE production. One possible outcome is the BEV startups are folded into the existing industrial complex but this is anyone’s guess.

Whether Japanese automakers can recover remains to be seen. Their deep-rooted culture in “Just On Time” manufacturing may take some time to evolve into Tesla-like agile manufacturing. We can’t count them out but they have a tough road ahead.

In Germany, VW’s bet on their EVs is not paying off as they planned. Competing against Tesla is turning out to be more difficult than they thought. The superb engineering in legacy car manufacturing does not guarantee electrification skills. VW’s software and hardware in their EV entrants fell short of consumer expectations. Volkswagen’s EV sales have suffered as a result of quality concerns.Offering popular women’s necklaces such as pendants, chokers and chain necklace. Shop for jewelry in a variety of metals and gemstones to suit any occasion

VW had ~14,000 programmers in their software development team. However, the software is buggy. It turns out that the size of the development team does not determine the quality of the software. VW is partnering with Chinese suppliers to fill the gap in their technology shortcomings. Whether this is a good move remains to be seen.

The European car market in general is different than the North American market. Big cars and trucks are welcome in the States. More narrow streets and roads in Europe require more narrow and more agile cars.  

In America, Ford has recognized the urgency of the transition to electrification. They know that their truck business is a lifeline for now. But facing a tough economy and dwindling market share, they are working hard to turn a corner. Ford is making an all-out effort to get the electric vehicle business right, no matter the pain.

The legacy ICE vehicle business is a drag on Ford’s efforts to transition into electrified vehicles. To clamp down on dependency on gasoline consumption, the federal government is leveraging unions and regulations against ICE vehicle makers. Facing these challenges is a distraction from Ford’s electrification efforts.

GM is not demonstrating this same agility of transmutation in the electrification arena. Their strategy is to focus on the luxury EV business. It is doubtful the strategy will sustain this behemoth for very long. Instead of investing in research and development, GM’s strategies have always been short-sighted to placate stockholders.

Energy Sector: Electric battery power stations are gaining momentum. Lithium Battery Megapacks are able to buffer electricity usage much cleaner than traditional methods. Using artificial intelligence algorithms, these big block housings maintain both the lithium batteries and the grid at the same time. Because the Megapack tech is so smart, they are low maintenance and provide substantial energy to the masses.

Power companies are budgeting and actively planning for the Megapacks. Since the battery tech is so compelling, the orders for them are increasing.

In the residential space, folks who are facing high electricity bills are finding Powerwall batteries worth buying. It fills up on juice at night when rates are cheap and then uses the power during peak hours when the rates are higher. As a bonus, solar panels can be configured to add energy to the battery pack during the day. Then if the battery is topped off, the excess can be sold back into the grid. The electric bill can be drastically reduced for some consumers.

Mike Ratcliffe’s chart:

The Infrastructure Requirement: Charging Ahead

A robust infrastructure is needed to support widespread electric vehicle (EV) adoption. The availability of charging stations remains inconsistent, especially in less urbanized areas.

As of September 2023, Tesla has over 50,000 Superchargers worldwide, making it the largest global fast-charging network in the world [1]. Tesla owners can use the Tesla app to view Supercharger stall availability, monitor their charge status, or get notified when they’re ready to go [2].

 

Tesla has awarded access to most OEMs who care to adopt the NACS. Tesla’s North American Charging Standard (NACS) is a proprietary charging connector that Tesla has developed for its electric vehicles. The NACS connector is different from the CCS (Combined Charging System) connector that is commonly used by other automakers.

Here is the status of Tesla’s NACS adoption as of August 2023:

  • Stellantis, Mercedes-Benz, and Hyundai have revealed that they are “considering NACS” [3].
  • Nissan has announced that it has reached an agreement with Tesla to adopt the NACS beginning in 2024 [4].
  • Volvo intends to adopt the NACS charging inlet for its North American battery electric vehicles (BEVs) in 2025 [5].
  • Ford was the first major automaker to announce that it will be switching to Tesla’s NACS ports in 2025 [6].
  • Other automakers that have announced plans to adopt the NACS connector include GM, Rivian, Lucid, and Fisker [7].
  • The NACS connector is also being adopted by charging networks such as Electrify America and EVgo [8].

Powering Industries: A Complex Transition

The challenge for many industries is the transition to electrified power takes time, effort, and money.

Industries heavily reliant on traditional energy sources face a unique set of challenges. Sectors like manufacturing, where processes demand high energy consumption, must adapt their operations to harness electric power effectively. This transition demands substantial investments in upgrading equipment, retraining staff, and optimizing workflows for maximum efficiency.

Transportation: The mass introduction of electric transportation infrastructure is another part of the energy transition [1]. Electric vehicles are gaining market share over gasoline and diesel vehicles. Automakers like BYD and Tesla are investing $Billions to build EV infrastructure globally. This investment is based on governments actively supporting the growth and on the data showing consumer trends.

Not all EV maker risks payoff. VW has not gained traction on its EV entrants. Ford and GM lose money on each EV sold. It will probably be at least 5 years before legacy automakers can ramp up their EV production to scale. Except for China-based BYD, most legacy automakers are at the most risk.

Sparse or deficient charging stations are a pervasive global issue. Without adequate en-route charging, the adoption of electric vehicles is constrained. In America, the adoption of the NACS North American Charging System standard is taking away some of the consumer skepticism.

Oil and Gas Industry: Some large oil and gas companies are set to make a switch to “energy” companies that supply a diverse range of fuels, electricity, and other energy services to consumers [2]. The increasing social and environmental pressures on many oil and gas companies raise complex questions about the role of these fuels in a changing energy economy and the position of these companies in the societies in which they operate [3].

Power Generation: Utilities have begun a rapid energy transition away from coal and towards renewable energy sources such as wind and solar power [4]. Shifting toward net-zero emissions requires replacing fossil-based electricity and heat with renewable energy and hydrogen [5].

Industrial Applications: Not all industrial applications can easily switch to electricity, but some can. For example, gas has been substituted for coal-fired industrial and residential boilers in many urban areas [6].

Renewable Energy Jobs: The transition to renewable energy sources can also create new job opportunities. Policies to retrain fossil fuel workers could help break the climate stalemate and uplift fossil fuel communities [7].

The Economic Equation: Balancing Costs and Benefits

Electrification, while promising environmental benefits, often comes with higher upfront costs. Electric vehicles, for instance, tend to have a higher price tag compared to their gasoline counterparts. The challenge lies in convincing consumers that these initial costs are outweighed by long-term savings in terms of fuel and maintenance expenses.

Policy and Regulation: Paving the Way for Change

Clear and consistent policies play a crucial role in driving electrification. Governments must establish incentives, subsidies, and regulations that encourage individuals and industries to transition to electric power. This alignment between policy and sustainable practices ensures a smoother journey toward a low-carbon future.

Overcoming Technological Barriers: Innovation is Key

Innovation remains at the heart of overcoming electrification headwinds. Research and development efforts are essential to enhance battery technologies, charging efficiency, and grid integration. Breakthroughs in these areas not only address existing challenges but also open doors to new possibilities in the world of sustainable energy.

Transitioning Mindsets: Education and Awareness

Embracing electrification requires a shift in mindset. Educating the masses about the benefits of electric power and dispelling myths is imperative. People need to understand that electrification isn’t just about change; it’s about progress, cleaner air, and a healthier planet for generations to come.

Navigating Electrification: A Collaborative Effort

The path to successful electrification is complex and multifaceted. It demands collaboration among governments, industries, researchers, and individuals alike. Together, we embrace innovation and prioritize sustainable practices to secure a better future.

Conclusion:

Electricity is replacing fossil fuels at an increasing rate. We are destined to be on a cleaner and more quiet planet.

To Top

 

Leave a Comment

Your email address will not be published.