⚖️ Su$tainable Mobility, Volume 22
This newsletter aims to separate the signal from the noise for making money in all things sustainable transportation: Electrification, mode shift, active and public transit, and mobility aggregation, across both people and goods movement.
This week’s Deep Dive is on vehicle tipping points in the zero-emissions transition.
I’ll be moderating a panel at Curbivore on Friday, March 4 in Los Angeles about the role that curb management plays in making mobility more sustainable. Join us!
QUICK HITS
🏭 California state Senator leading bill to require all large companies to disclose carbon emissions. This is inevitable, whether it ultimately gets required by the SEC, insurers, rating agencies, states, or some other entity.
⚠️ Bigger cars lead to bigger risk-taking by drivers. This is likely one of the key reasons why traffic deaths are rising in the US while falling in other markets. Electrified Hummers won’t fix everything.
💰New study shows that motorists underestimate the total costs of car ownership; policymakers underestimate social costs. A great quantification of how private car ownership results in significant public costs.
🦍 The backlash against instant delivery is growing in Berlin. Curb management, street congestion, workers’ rights, and microhubs are all on the list of grievances.
🇮🇳 Indian state of Maharashtra to offer incentives to fleets like Amazon, Uber, Flipkart, and others to get to 25% electric before the 2025 target. India is pushing to make sure it doesn’t get left behind as China and Europe rapidly pivot to zero emissions.
🇬🇧 London may move from a congestion fee to pay per kilometer. As technology costs fall and sustainable mobility ambitions rise, more cities will likely move from congestion fees to a price per vehicle miles traveled (VMT) that should logically include vehicle size, emissions, and passenger numbers, among others.
🇪🇺 Europe’s Car of the Year (COTY) nominees are all available with plugs. COTY is an extremely prestigious award in Europe. It’s hard to imagine more than a handful of ICE vehicles ever being nominated again.
🚙 Lucid Air Reviews are in, and they’re glowing. In a head-on comparison versus the Mercedes-Benz EQS, it’s clear that the New York Times favored the Lucid Air. Lucid is earning its place alongside Tesla and Rivian.
♻️ Ford and Volvo Cars join Redwood Materials’ battery recycling program. An interesting approach given that the US has no legal framework for extended producer responsibility in the same way that Europe does.
STARTUP WATCH
🤳🏽 Active Things (United Kingdom): Mobility app for active mobility use cases
🚙 Ferry (Texas, USA): Short-term EV car rental service
📦 Getcho (New York, USA): On-demand goods delivery service
🔌 Kerb-E (United Kingdom): Curbside charging hardware for EVs
🛒 KooKoo Grocery (Romania): Instant grocery delivery
🏠 Lectrium (New York, USA): Managed marketplace for home EV charger installation
🚲 Mixte (Georgia, USA): Next gen direct-to-consumer micromobility manufacturer
DEEP DIVE: VEHICLE TIPPING POINTS
In parallel with the mobility transition towards sustainability, the energy industry is going through its own transition, marked by the decarbonization of the energy grid. California law, for example, requires its grid to be zero carbon by 2045, up from a mix today of about 33% renewable and an additional 9% nuclear. A popular refrain from energy experts is that getting to an 80% decarbonized grid is relatively easy, but the last 20% is extremely difficult.
It’s notable because the opposite is basically true in automobiles. Absent supply chain shortages or some other exogenous factors, the final 20% of automotive decarbonization is actually the easiest, at least at a vehicle model level. We’re already beginning to see what you might call “platform tipping points”, where an OEM decides to shift entire vehicle lines towards all-electric rather than continue with a multi-energy strategy.
Most OEMs think about a particular vehicle line (e.g., Volkswagen Golf, Peugeot 3008, Chevrolet Equinox) as a “top hat” of sorts sitting on a particular vehicle platform. In simplified terms, the platform is a set of common design, engineering, and manufacturing resources that form the technology underpinning vehicle, literally and figuratively. Each platform has defined constraints, from weight and height to which powertrains it can support: multi-energy (i.e., battery-electric, plug-in hybrid, and internal combustion supported), battery-electric (BEV) only, internal-combustion engine (ICE) only, etc.
To manage this, OEMs have had to make a series of monumentally large bets on when to pursue BEV-only platforms, which can be optimized for space and range, and when to pursue multi-energy platforms, which can offer more business case flexibility but result in product attractiveness tradeoffs. Getting these decisions wrong can be fatal; a new platform is a multi-billion engineering decision, with consequent manufacturing tooling decisions in the billions as well.
So it was notable earlier this year when Stellantis announced that, in Europe, its multi-energy small passenger vans were going electric only. The platform is multi-energy, and the factories have been manufacturing passenger vans on one line that are both BEV and ICE. But the decision was made to shift production to BEV only. The culprit here is likely European CO2 norms, but production complexity and inventory costs could have played a role as well.
So at the production level, this was a case where the last 20% of decarbonization was easy. Stellantis simply decided that passenger vans heading down the production line in Europe were henceforth going to be BEV only. This same decision for multi-energy vehicles is playing out at the manufacturing level every day at OEMs, and each day it becomes easier to simplify the last bit by going BEV only.
That has a knock-on effect at the vehicle line level. When you’re kicking off product planning for a new top hat, which may take 2-4 years of engineering and be on the market for 5-7 years, it takes an awful lot of conviction to make the case that in a decade from now there will still be enough volume to justify an ICE variant.
And that, in turn, has knock-on effects at the platform level. Given that a platform may be in use in some form for multiple decades, it becomes easier and cheaper at a certain point to just forego a small amount of ICE optionality over the next two decades by committing a new platform to BEV-only.
As the 2020’s progress, look for many more of these tipping points, as OEMs throw in the towel on ICE production, first at the factory level, then at the vehicle line level, and, most importantly, at the platform level. As it gets harder and harder to decarbonize the last part of the grid, it will be great to see how much easier it will be to decarbonize the last 20% of passenger vehicles in markets like Europe and China.
