EU stops promoting electric cars → Toyota and other Japanese companies win again... It's becoming clear that EVs are bad for the environment - 2023/9/28
A)
1)
Governments in Europe, the US and China have actively promoted electric vehicles (EVs) to replace petrol cars. On August 28, it was reported that the market capitalisation of VinFast, a new Vietnamese EV maker, briefly reached about 28 trillion yen in Japanese yen, making it the world's third largest automaker after Tesla and Toyota Motor Corporation.
However, Hiroshi Ohara, an international investment analyst and executive partner at the Institute of Human Economic Sciences, says this is just an EV bubble starting to burst. We spoke to him.
2)
--At the end of March, the EU announced that it would change its policy of altogether banning the sale of new petrol cars in 2035 and allow cars powered by environmentally friendly synthetic fuels. This is a significant shift in the EU's policy, which is one-sidedly focused on electric vehicles. Should we see this as the beginning of the bursting of the EV bubble?
3)
Hiroshi Ohara (from now on Ohara): It was an EV bubble or illusion. Everyone has come to understand that it was a lie that EVs were good for the environment.
Comparing the whole process from production to disposal, EVs are said to emit more carbon dioxide (CO2) than petrol cars. Kyoto University has also produced research. EVs use more carbon in manufacturing than petrol cars, and lithium-ion batteries are a hazardous waste when disposed of, so they are bad for the environment.
Many people change their cars every few years, but the price of EVs drops significantly when they become used cars. This is because batteries deteriorate quickly, as you can see with your smartphone. No one wants to drive a used EV with an unknown battery condition. However, replacing the battery is expensive and not possible.
4)
People who say EVs are good for the environment argue that they run on electricity, so they don't emit CO2. However, around 70% of the electricity used to charge them comes from fossil fuel-fired thermal and nuclear power stations worldwide. So-called clean energy accounts for only about 30% at most. So, even if it runs on electricity, it isn't very sensible because it emits CO2 when generating it.
B)
5)
EVs are much heavier than petrol cars, which is also bad for the environment. Heavy vehicles damage roads and create dust. It's often said that trucks damage roads, but it's the same thing.
According to the Ministry of Land, Infrastructure, Transport and Tourism, road damage on expressways is proportional to the 12th power of the maximum axle load. If the weight is doubled, the damage is 4096 times greater.
The US government and other sources have also reported that EVs are more likely to be involved in severe accidents.
6)
--Tokyo, for example, is promoting solar power generation with an ordinance requiring the installation of solar panels on newly built homes. If the electricity generated by the solar panels is charged directly into the EV, isn't that OK?
7)
Ohara: From the macro perspective of the power grid, solar power generation is useless because it only generates electricity on sunny days. On a macro level, most of the electricity generated from sunlight is wasted.
Realistically, if we increase the amount of electricity, the possibility of daily blackouts will increase. If this is possible, we need to popularise the ultra-small nuclear power plants that are being developed, small enough to fit on the back of a truck and use them to charge electric cars.
It is said that small nuclear reactors are easy to cool in an emergency. In short, this is possible if atomic power, which can generate electricity continuously like fossil fuels, becomes widespread, but it is not possible with renewables alone. It is OK to use solar panels to power cars or homes, but only fossil fuels or nuclear power are possible for global energy supply.
8)
The power of solid-state batteries
--Japan has pledged to promote 100% electrification of cars by 2035 and carbon neutrality by 2050. Both are still a long way off, and renewable energies such as hydrogen and ammonia are also being developed in terms of macro power generation methods.
9)
Ohara: Hydrogen power generation has potential, and Toyota is developing hydrogen-powered cars. I also think artificial photosynthesis is at a pretty good point.
Plants have a mechanism for photosynthesis, but artificial photosynthesis converts solar energy into organic matter. In the case of the Toyota-funded Toyota Central R&D Labs, the organic matter is "formic acid", which, in simple terms, is a liquid that can be used in the same way as petrol.
Moreover, hydrogen can be produced from formic acid, which is an important point. Toyota is focusing on hydrogen engines, probably because of the technology known as artificial photosynthesis. Hydrogen has a much higher potential than solar power.
10)
--Will the trend for EVs change when the solid-state battery that Toyota is developing is completed?
Ohara: Toyota says it will release a next-generation EV with a solid-state battery in 2027-2028. If Tesla said that, I wouldn't believe it, but Toyota rarely says such things, so they must be very confident. It's five years away, but that's when EVs could take off.
That's not to say that EVs are good. Because EVs have several drawbacks, it's unclear whether they will ever become mainstream. However, they are unlikely to disappear from the market. At the very least, they won't last with lithium-ion batteries of today's specifications. They're just too cumbersome.
C)
11)
--How far has the development of solid-state batteries progressed?
Ohara: Simply put, solid-state batteries are liquids turned into solids. However, according to data from various research institutes, they don't perform well. However, they are less flammable and, therefore, safer.
For example, small solid-state smartphone batteries are already in practical use, but there is a big difference between small and large batteries. Lithium-ion batteries are also acceptable as long as they are used in smartphones.
12)
However, there are several problems with EVs. So, solid-state batteries are there now, aren't they? Looking at the latest data, my honest impression is that they can't really do much. In principle, I don't think the specifications can be that high, but they're probably better than lithium-ion batteries.
13)
--Even with solid-state batteries, are there still doubts about EVs?
Ohara: Even Toyota's high-spec solid-state batteries can't beat HVs. HVs can efficiently recover the energy generated from petrol using batteries. So, in principle, they should be better for the environment than EVs. Even with regular electricity generation, there are losses in the transmission lines, making it inefficient.
However, HV engines can recover almost all of the energy. There are no hard statistics, but it makes sense.
14)
--Toyota began leasing fuel cell vehicles (FCVs) in December 2002, and then Prime Minister Junichiro Koizumi helped promote them, but FCVs never caught on.
15)
Ohara: FCVs and hydrogen engines are entirely different. FCVs run on hydrogen, so technically, they are the same as EVs but also have disadvantages. On the other hand, hydrogen engines are, simply put, petrol turned into hydrogen, and technically they are petrol cars.
So, with some modification, you can use your current petrol engines and the infrastructure for petrol vehicles. That's the critical difference.
16)
The EU's ambiguity in promoting electric vehicles
--National environmental policies will decide the decarbonisation of cars.
17)
Ohara: Speaking of policies, the promotion of EVs is the EU's confusion. Diesel cars were a colossal failure, so they promoted EVs to make up for it, and there is no policy to be seen there.
They want to crush the Japanese car manufacturers. But even though they tried to crush Japanese manufacturers, China overtook them, and now BYD is the world's largest EV manufacturer. Tesla is in second place.
Six Chinese manufacturers are in the top 10. The EU is taking Chinese-made EVs seriously in the EU market, so it will probably stop promoting them.
18)
China has turned its domestic market towards EVs and is selling them to the world. Both the EU and the US are sceptical about this. EVs are easy to make in China. The only important part is the battery, and it's just a matter of assembling the modules. On the other hand, China cannot win with hybrids or petrol cars.
So it would be better for the EU to compete in this area, so the promotion of electric cars will be put on hold. If that happens, Japan will win in the medium to long term, which is unattractive.
19)
EVs have sold well in the EU and China because of generous subsidies. However, as subsidies have been reduced or eliminated in the EU and China, EV sales have gradually declined. This, too, is an EV illusion.
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