Hal Harvey’s Insights And Updates – The Future Of Cars And Trucks

The Volkswagen diesel scandal has sparked a revolution of sorts. Cities worldwide are planning to ban diesel engines.  Electric vehicle (EV) announcements from major automakers come at a daily pace – Volkswagen itself now says it will offer ten EV models in the next few years. The Economist’s recent cover issue proclaimed “the death of the internal combustion engine.”

Should we tick off this box? Is it time to consign internal combustion engines to the Iron Age, and be assured the new vehicles will be electrical, and thence powered by the sun and the wind? Unfortunately, this will be a complex transition, and it is worth thinking through both the means of decarbonizing vehicles and the obstacles.

First, the good news for electrics. Batteries, the Achilles’ heel of EVs, are getting cheaper and lighter. New EV models are already broaching gasoline equivalence in range, and by many other measures – acceleration, quietness, reduced maintenance, and zero local pollution – significantly surpassing petrol. If you’re in the Silicon Valley, say, or Oslo, Norway, you can begin to feel assured that momentum and technological innovation alone will get us there.

But some sobriety is in order. Batteries are still expensive, and they are lousy energy containers compared to gasoline.  They rely on metals in short global supply. Batteries can catch fire due to internal shorts. Recharging times are slow compared to filling a gas tank, and the weight of batteries is still very high. Certain applications are extremely hard to electrify – aviation, long-haul trucking, and ships, for example.

Then there’s the question of infrastructure. The world will need to deploy hundreds of millions of charging stations and ensure that the distribution grid is robust enough to handle the load. This will be an expense of hundreds of billions of dollars. And it’s not yet clear who should pay for this, and who should do the work. Many believe that vehicle electrification can be a core element of a new business model for electric utilities – and we certainly agree – but that in turn requires both a change in the regulations under which utilities operate, and usually a change in management approach. Some public utility commissions and some utilities are moving gently along this path, but collectively, they simply don’t have the speed or intensity required to transform the system, and if one looks at the history of the electric utility sector, one cannot be sanguine that this will rapidly improve.

So what does this all mean for our half-century dependence on foreign oil, carbon dioxide emissions, people suffering from air pollution from tail pipes, and livability? There are two parts to the strategy: Dramatically accelerate the EV transition, and at the same time, drastically improve the internal combustion engine. These ideas may seem in tension with each other, but the reality of our transportation system demands both, and smart public policy can deliver both. The remainder of this memo focuses on fixing internal combustion engines: We will focus on EV policy in a future note.

Why not just abandon the internal combustion engine? Math. It is hard to imagine that even under the best circumstances, the world will build fewer than one billion more internal combustion engines, and the figure could easily be two billion. No matter how ambitious one’s electrification plans are, the world needs a strategy to make these billion-plus internal combustion engines clean and efficient. The strategy is fairly straightforward. A 12‑year-old report, called the Bellagio Memorandum on the Future of the Automobile, written by the regulators of the top dozen auto producing nations, lays it out. The ingredients are simple: Set stringent performance standards, for both tail-pipe emissions and fuel efficiency. Make them tighten steadily, rather than plateau. Create a long-term horizon for these standards, so that manufacturers can invest in new technologies with confidence. Test cars and trucks with rigorous, real-world tests. And enforce them.

That all sounds pretty basic. It is. Unfortunately, there’s not a single regulatory system in the world that follows these precepts. The California Air Resources Board and U.S. Environmental Protection Agency are moving in this direction, although it took the VW scandal to prod the U.S. to start testing vehicle emissions under real world conditions.

The European Union uses a deeply flawed testing program, and its enforcement system would not deter a mouse. How bad is this? Auto companies in Europe can choose a lab in any of 28 countries to certify their models. They then radically adulterate the vehicle to be tested – stripping out seats, taping gaps in the bodywork to reduce wind resistance, filling the tires with liquid to reduce rolling resistance, and so forth. These “golden cars” are hardly representative of the real world autos they sell. As for enforcement? VW’s half-million cheating cars in the U.S. cost them some $24 billion in fines.  Their 8 million VW cheating diesel cars in the EU? Fines of approximately zero, so far.

American regulations had an almost 40-years long performance plateau for significant fuel efficiency improvements, from Presidents Ford to Obama, costing America some $1 trillion in wasted money, and enabling technological complacency to help bankrupt two of our three big auto manufacturers. This country failed the core design principle of continuous improvements. We also set looser standards for “trucks”, which now comprise over 60 percent of passenger vehicles sold in America.

The Japanese system has a famously soft test cycle paradigm. China sets auto taxes according to engine displacement instead of fuel efficiency—so turbochargers, which make little engines act big, become standard. And so forth. The world has built regulatory systems that are simply not up to the job.

That’s a shame, because with strong standards and realistic testing, it is completely feasible to build an internal combustion engine that has extremely low conventional emissions, at a cost of only $400 for a four-door gas or diesel sedan. It is also feasible to build gasoline or diesel cars that are very efficient, with consumer payback typically around three to four years depending on fuel prices. Ironically, the manufacturers’ attempt to evade these improvements is tanking their products in favor of EVs. Real-world performance is what the real-world needs, and manufacturers who evade that reality will pay a heavy price.

The point here, and it’s an important one, is that we will build a lot of internal combustion engines, so they had better be extremely clean and extremely efficient. It would be dangerous to simply write off the internal combustion engine, and focus on electrification. That will condemn us to at least four more decades of foul air and high carbon emissions.

Strategies to accelerate electrification will be the subject of one of our next memos.


Hal Harvey’s Insights and Updates offers monthly thoughts and analysis on current energy and climate topics. These newsletters are written by Energy Innovation’s CEO Hal Harvey. Sign up here to receive Insights and Updates straight to your inbox.