Gordon: I am all in favor of electric vehicles

Gordon: I am all in favor of electric vehicles, and I do believe that their market is going to grow exponentially, especially with China and India putting in new electric-vehicle mandates and incentives, and driving down the costs dramatically as a result.

However, replacing the current vehicle fleet with an electric-vehicle fleet—even if fewer people are driving, as Tony notes—is in large part a matter of individual owner economics. The majority of Americans drive the cars they can afford, and “affordability” is about upfront cost, not cost over the period of ownership.

Americans are actually holding on to their cars longer since the 2008 recession; in fact, the share of cars 11 to 20 years old in the U.S. vehicle fleet increased by 33% between 2008 and 2012. Those with older cars often just let them run down, and then buy from a neighbor or friend.

The secondhand market will increasingly include hybrids and more-efficient cars, thanks to fuel-economy standards, and we’ll see the fleet slowly become more efficient and more electric. But this won’t be a sea change—especially in low-income rural areas, where people are most dependent on their vehicles today.

Electric vehicles will still need to address

Electric vehicles will still need to address inherent problems with range, battery performance in cold/hot weather, charging time and charging infrastructure. Having said that, electric cars could and will gain 5% to 15% market share in the 2030s, mainly due to regulation, aspirational sales, innovation, and improvements in cost and performance.

Internal-combustion-car manufacturers are not ignoring the threat. Innovation in fuel efficiency and reduced pollution continue, enhancing internal combustion’s appeal and longevity, as well as extending the yardstick electric vehicles must beat. I don’t see electric vehicles replacing internal-combustion cars under any reasonable time frame. However, the future is infinite, and such switching may very well take place beyond the 2050 time horizon.

The biggest obstacle for electric vehicles

wide adoption is their failure to address an actual problem from the driver’s point of view. Electric vehicles have less range, lower residual value, higher cost—and this includes fuel cost—slow charging time, and are adversely impacted by cold or hot weather, among other issues. In 1917, electric vehicles represented 38% of the U.S. car fleet; there is a reason why they are at 1% today. Internal-combustion cars offer a more-viable transportation option.

The day autonomous vehicles 

are approved, the per-mile cost of autonomous electric vehicles will be one-tenth that of a new car, because electric vehicles last 500,000 miles and are being designed to last at least 1 million miles. The cost of operating autonomous electric vehicles will be as little as one-quarter that of even a paid-off gasoline car.Alsaadi: It is noteworthy that autonomous electric vehicles are required for electric vehicles to dominate. This speaks to the fact that the current generation of electric vehicles can’t compete with internal-combustion vehicles unless they are integrated with a new business model. The technology to offer such a transportation model remains experimental; the financial viability of such a business model, assuming the technology matures, has yet to be proved; and the cultural acceptance of such a transportation model remains questionable.

What’s next and when?

WSJ: Tony, how soon do you think electric vehicles will replace gas and diesel ones?

Seba: By 2030, 95% of U.S. automobile miles traveled will be in on-demand, autonomous electric-vehicle fleets, in a new business model called transport as a service.

This disruption isn’t going to be one where individuals simply trade in their gasoline or diesel vehicles for electric vehicles. Both gasoline/diesel vehicles and the individual ownership of automobiles will be disrupted. By 2030, 60% of light-duty vehicles are expected to be owned by fleets that provide transport-as-a-service—think electric, autonomous versions of Uber, Lyft or Didi—and only 40% to be individually owned. However, since fleet vehicles will drive 100,000 miles a year apiece, they will contribute 95% of the total miles driven in the U.S., while individuals will only contribute 5% of the miles. Also, the total number of vehicles in the U.S. will shrink by 80%, because individuals will stop buying cars for themselves and opt for these services instead.