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The future of transport looks more digital than electric

During last week’s Impact mobility rEVolution’18 congress, I took part in a debate about the role of public institutions in creating the electric car market. I felt the subject to be important enough to be addressed in a broader context.

The future of transport

Electric cars require a new ecosystem that takes people’s expectations about health and environmental matters into account. The role of the state is of critical importance here. However, if we look at the role of public institutions from a product market, i.e. the electric car market, perspective only, we lose sight of the more profound causative context, the megatrend of E-MOBILITY, and fail to tap its potential. While this megatrend includes electro mobility within itself, complete realization of the concept requires a much more comprehensive approach.

What is this megatrend about? It is not only a matter of traditional engines being replaced by electric motors, a practice already being integrated in public transport, or of reducing the state’s role solely to building demand for electric cars through a system of advantages, such as tax incentives, for electric car users, and the development of an electric car charging network. This is a real revolution that is taking us from the current model of mobility, where traditional, privately owned cars driven by individuals make up the majority (in 2016 those cars accounted for 98.5% of global sales), to a new model in which we will use autonomous vehicles shared with other people travelling in the same direction.

This revolution has already begun. The environmental footprint both private and public transport leave behind compels us to look for entirely new solutions. City dwellers already get stuck in huge traffic jams and suffer from smog. Greenhouse gas emissions may not be visible to the naked eye, but figures don’t lie. Increasingly stringent CO2 and PM emission standards are being imposed on internal combustion engines. Municipal authorities are introducing zero-emission zones in city centres. By 2050, the world population will increase by another three billion people. Taking ever-increasing urbanization rates into account makes it clear that, even if all new cars were electric, we would still have to bid the existing model of passenger transport farewell.

Replacing one vehicle powered by an internal combustion engine with one vehicle powered by an electric motor is not a solution for traffic congestion or traffic jams in big cities. What we need is reduced demand for passenger cars. Reducing the number of vehicles in relation to the number of car journeys is just as necessary as reducing their carbon footprint. Innovative technologies can help here, as they will allow us to handle a higher demand for travel using a significantly smaller number of vehicles than today.

Digital technologies are a crucial driver, as they facilitate the shift towards autonomous driving, i.e. digital robots providing passenger transport services. Unlike humans, robot drivers have no concept of fatigue, meaning they can stay focused on the road 24/7. It is no doubt an immense progress, but not a revolution yet, because corporate taxis also run 24 hours a day – only their drivers change. A revolution will take place when people begin using transport services, such taxis with drivers, car sharing or ride hailing, in lieu of their own vehicles to commute. Thanks to digital applications connecting customers with drivers (Uber, BlaBlaCar) and available cars (Traficar), this is already an available transport option today.

Increased use of passenger cars, achieved through digital technologies, lowers the prices of those services and the ease of hailing a vehicle encourages customers to use them. When compared to using a personal vehicle for commute, the benefits of buying travel services are undeniable. There is no need to cover the considerable fixed costs associated with owning a car (locked funds, depreciation of a car, insurance, garage costs). You don’t waste your time looking for a place to park and you don’t have to pay any parking fees. Autonomous electric vehicle availability will increase the attractiveness of passenger transport services.

There are at least four reasons to believe that autonomous electric vehicles will prevail in the new model of mobility. Firstly, such vehicles do not emit exhaust fumes, making them the preferred means of transport in urban traffic, irrespective of emission rates produced during manufacture and the electricity they consume.

Secondly, they are simple to build and will be cheaper to manufacture compared to their internal combustion engine counterparts. The electric motor is simpler to build and more efficient than an internal combustion engine. Electric vehicles do not have complex mechanisms such as a gearbox, nor do they have fast-wearing parts, like a clutch or a starter, and kinetic energy recovery systems prolong the life of their brakes. Autonomous vehicles will not require expensive floorpans to “hang” unitary constructions with appropriate crumple zones on. Safety will be ensured by digital robots instead.

Thirdly, it is about synergies between green electricity producers and owners of car batteries, which will become the main receiver and storage for electricity. At present, the cost of increasingly large batteries prevents price reductions, as it is the easiest way to increase range. Automotive batteries offer a simple and inexpensive solution to the problem of storing energy from intermittent sources, such as wind or solar power. They are already in the system, one only needs to share them. To this end, software must be developed to enable the flow of electricity in both directions between the network and the battery, and to appropriately control this flow. According to experts from ENEL, an Italian energy company, access to five percent of the capacity of 100,000 batteries installed in Tesla cars would be enough to satisfy Rome’s demand for electricity generated using intermittent sources. The benefits of such a back-up as opposed to the alternative of building and maintaining brick and mortar energy storage facilities would allow ENEL to pay USD 10,000 in incentives for each electric car purchase.

As a result of electric cars’ relative simplicity, many car makers and countries where the automotive industry is a leading industry losing their competitive advantages gained by long-term experience in constructing floorpans, internal combustion and compression-ignition engines, or automatic gearboxes. The concept of an electric vehicle and the example of Tesla prove that everyone starts virtually from scratch and that it is anybody’s game. This opportunity can and, more importantly, must be taken.

The path that we will follow on our way to the new mobility model largely depends on the state, as it is the state’s responsibility to shape and coordinate social and economic processes. I would argue that social benefits offered by a new mobility model, i.e. bettering the condition of natural environment (air), health and quality of life, can be achieved whether a given country manufactures electric cars or not. However, economic benefits are greater when such cars are designed and manufactured, even from scratch, building the prototype from what is available on the market. Many countries followed this scenario with respect to traditionally powered cars. In the case of electric vehicles, the entry barrier is much lower.

Adam Czyżewski

Adam B. Czyżewski, Ph.D., has been the Chief Economist at PKN ORLEN since 2007. He specialises in the changes of the global energy sector that are driven by economic policies and revolutionary innovations.