Wright’s Law Enables EV Niches To Leap Into The Future, Or Not
Water, Wind And Earth Niches Of Transportation Benefit From EV Cars
In the past couple of weeks I’ve had a few conversations which have led me to appreciate how much value the electrification of cars and light trucks will have, how the tentacles of goodness from it which will reach into nooks and crannies around the world. And, of course, there are firms which will ignore the strategic opportunity and run boldly into cul-de-sacs, sometimes without a reverse gear.
Let’s start with a less recent conversation, my chat with Professor Bent Flyvbjerg, Danish knight, Oxford and Copenhagen professor, and global leading expert on why billion-dollar-plus megaprojects succeed and fail. He and the co-author of his recent book, How Big Things Get Done, Dan Gardner, reached out to me a couple of years ago because I’d coincidentally been assessing every few years the natural experiment in China around renewables vs. nuclear generation. The ninth chapter of their book, What’s Your Lego?, dealt with modularity, a mechanism for accelerating and derisking any project if it exists — my material was highly aligned and they wanted to and did include it.
My 2014 thesis was that the modularity of wind and solar would enable them to scale much more rapidly than nuclear, and that China’s experience, where all of the purported barriers to nuclear were stripped away, would make that clear. That’s exactly what happened. China’s nuclear program hasn’t hit targets, and peaked in 2016 and 2018. Meanwhile, its wind and solar programs have exceeded targets massively. The country added 48 GW of new solar in the first months of 2023, and is expected to hit well over 100 GW of new solar this year. As Laurent Segalen and Gerard Reid of Redefining Energy like to point out, we’re approaching a gigawatt a day of new solar capacity this year globally.
But what does modularity have to do with EVs and transportation niches?
First up is my conversation with David Cebon, professor of mechanical engineering at Cambridge, director of the centre for sustainable road freight and founding member of the Hydrogen Science Coalition. I assessed the agenda of their annual conference a few months ago to see what insights sprang out, and noticed the almost entire lack of hydrogen on the agenda. The podcast will be dropping soon over on Redefining Energy — Tech, so keep an eye open.
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One of the things Cebon and I poked at was that road freight trucks were a numerical niche compared to passenger road vehicles, but were able to take advantage of the absurd numbers of motors and batteries that segment was manufacturing. Further, we explored Tesla’s major advantage over other OEMs in reusing their motors and battery pack experiences in the Tesla Semi. Cebon’s projects included getting quotes from major OEMs for electric freight tractors, forcing them to write down numbers, and he found that non-Tesla OEMs were expecting triple the capital cost as for their diesel trucks, £300,000 vs £100,000. Meanwhile, Tesla’s Semi was reported as coming in at £200,000, a substantial cost saving over legacy OEMs.
Next was my lunch with Marc-Henry de Jong, co-founder of ELECTRON Aviation, an electric aviation startup I’d had a minor role in assisting over the past couple of years. When I was in London recently, he graciously treated me to lunch in Soho at the Ivy Soho Brasserie. In addition to good food, one of the topics was the force leverage of working with ground EV batteries and chargers. The relatively tiny volumes in aviation would never trigger Wright’s Law manufacturing doublings that would drive down drivetrain costs by 20% to 27%, so leaning into ground EV batteries as much as possible took advantage of the millions of cars sold annually. ELECTRON, and other wise electric aviation startups, are trying to avoid doing stupid things like pretending origami aircraft make sense or that there’s a market for hundreds of thousands of them over cities. Instead, they are exploiting existing technologies to take over existing aviation markets.
Then I headed north from London to Glasgow, the reason I was in the UK in the first place. Stena Sphere, a major private Swedish shipping firm, had invited me to their technical summit, where technical executives from their multiple business lines — roll on roll off, passenger, ferry, drilling and bulk — were gathered to share insights and learnings, and to figure out strategies to deal with a changing world. Stena Teknik, the innovation, design and transformation arm of Stena Sphere, was organizing the event, and had decided to get representatives of various maritime decarbonization perspectives on stage for a debate.
A methanol industry representative was there to talk about the purported benefits of that pathway, and there are some, although I think it’s not the optimal choice. A nuclear-powered shipping firm’s CTO was there to talk about the niche of very long-haul, very big ships with their inordinate emissions where he and his colleagues thought molten salt small modular reactors were viable. An ammonia fuel representative had been invited but was unable to attend. I was there with my projection of maritime shipping tonnage and biofuels plus batteries scenario through 2100, which apparently was a bit of a change of pace and eye opener.
And Rakshith Sachitanand, CTO of Swedish firm Echandia, was there, talking about how the firm was electrifying maritime ships already and how the various forms of drive, hybridization and auxiliary power were fit for purpose today. Echandia’s solution was interesting, in that it had chosen lithium-titanium-oxide chemistries as its power storage solution. As I noted to the audience and in a recent piece here, that technology currently has a third of the energy density of Tesla’s lithium-ion cells, so just swapping cells would triple range from 40 nautical miles to 120, from 74 kilometers to 222.
Discussions at various points during the time I spent with Stena pointed out that while battery prices for increasing energy density had been plummeting in the automotive world, that hadn’t been true in the marine world. My observation, and something confirmed by Sachitanand, was that leaning into automotive batteries would benefit the maritime electrification process. If memory serves through the fog of jet lag and too many convivial meals with amazing people, Echandia is working on a solution that replaces its current lithium-titanium choice with lithium-ion or lithium-phosphate.
Wright’s Law makes it clear why lithium-ion batteries have plummeted in price per watt-hour per kilogram (Wh/kg), and are likely to achieve close to their chemical potential of 700 Wh/kg. We make millions of them every year and shove them into everything.
There are two form factors to consider with this, cell and pouch. We’re all familiar with the little cylinders with + at one end and – at the other. That’s the form factor that gets assembled into big packs in Teslas. The other form factor is flat pouches, and most of us don’t recognize them, as we don’t disassemble our electronic devices to poke at the innards with screwdrivers and the like. I’ve done that a few times, but it’s generally not recommended, as it can void warranties, not to mention destroying functionality.
Both are used in enormous numbers. Both have massive economies of scale. Both have significant amounts of automation of manufacturing and assembly regardless of the chemistries that go into them. Both enable any battery chemistry which fits into them to enjoy at least some of the Wright’s Law modularity advantages.
Finally, I was speaking this week with a sustainability leader for a multi-billion shipping port owner and operator, one with 5–10% of global freight running through their ports, circling back to the maritime industry. That’s an interesting space with 20–50 thousand tons of CO2e per year per port emissions from their operations, excluding of course the fuel for the ships, just as airport energy consumption is a fraction of airplane energy consumption.
Ports are a segment I’m poking at because I’m concerned that maritime decarbonization efforts aren’t thinking systemically about the implications of having to bunker not only variants of petroleum products, but also biofuels, ammonia, methanol and electrons, and my discussion confirmed that it would be a logistical and infrastructure cost nightmare. More on that later.
But electrification of the ports themselves was a key topic. Most of the major stationary cranes that haul cargo and containers in and out of ship are already electrified. Ports are already major electricity consumers as a result, as hauling a 60-metric-ton-loaded container dozens of meters vertically and horizontally is a non-trivial power and energy draw.
My contact was focused on mobile ground container movement trucks, both the ones that plucked them off trucks, train, and ground that I wrote about over a dozen years ago while working with CN Rail and the tractors that haul them around in the ports. Given the massive standardization and modularity that shipping containers have brought, one would have assumed that standardization of those container-handling ground vehicles would have occurred as well, and that electrification of them would have taken advantage of the standardization and modularity advantages of road vehicles.
Apparently not. The maritime industry, outside of containerization, seems to like the bespoke engineering solutions they demand of ships, so the ground vehicle segment is a mess of variations, one-off solutions, and expense. There are no economies of scale with one-sized is good enough vehicles filling the 800 ports around the world. And electric versions of them from European OEMs delivering vehicles to the segment are much more expensive. Unsurprisingly to me, Chinese OEM products that were electrified were already equivalent on a total cost of ownership comparison, something I’ve noted multiple times over the years, most recently with an exploration of Europe’s transit firms leaning into Chinese electric buses.
Niche ground transportation segments like ports, airports, and warehouses are going to be vastly better served by OEMs that jump on high-volume batteries and motors out of the ground light vehicle segment. OEMs that try to roll bespoke engineered solutions, niche chemistries, or custom designed battery assemblies are making the wrong strategic decisions. Standardize on high-volume components within vehicles wherever possible, or lose competitively.
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