Future blog | What does the future hold for electric cars?

Forum Virium’s Senior Specialist in Smart Mobility Raimo Tengvall explores the future of electric cars and the challenges hindering their proliferation both optimistically and from a practical perspective.

Why electricity?

In many other areas, we have already advanced from a modern to a post-modern world or even beyond. These include energy, which is nowadays produced by numerous other means besides fossil fuels. Why, then, are fossil fuels still so dominant in the transport sector, on land, sea and air alike?

When it comes to ships, aeroplanes and small boats, there are several good reasons to prefer fuels over electricity. Fuels are easy to fill up, they can be stored for fairly long periods and their energy content is fairly high relative to their weight.

A ship with its tanks full of heavy fuel oil can operate independently on the seas of the world for a long time. An aeroplane must be both light and full of energy to be able to blast through the skies to halfway across the world, and a small combustion engine boat at the shore of a summer cottage is easy to start after the winter due to its mechanical reliability, as long as you bring a canister of petrol with you. The amount of energy needed to drive a small boat throughout the summer is small enough to easily carry by hand when it’s in the form of fuel. Convenient, isn’t it? 

When it comes to cars, however, I can’t really come up with any reasons as to why they would absolutely need to be powered by internal combustion engines. I just can’t anymore, even though I grew up with a fascination for vehicles with internal combustion engines. 

From interest to occupation

I have always been immensely interested in cars, buses, roads, streets and anything having to do with motorised transport on wheels. After I learned to read, I read all the Tekniikan Maailma and Tuulilasi magazines (Finnish magazines that focus on general technology and cars, respectively) and even public transport timetable booklets that I could get my hands on until they were frayed around the edges. 

My career has followed the same path that I started on back then. Due to my interests, I ended up becoming a freelance journalist specialising in cars and transport. As a journalist, I spent over ten years following the development of the transport sector from a front-row seat, during which time I got to meet countless interesting people, learn about many fascinating phenomena and test-drive almost everything under the sun.

Following my university studies in social sciences, I started to become increasingly interested in many of the major changes related to transport. And there are a lot of them! I have been lucky enough to get to witness many of these changes while facilitating new pilots and innovations at Forum Virium Helsinki over the last five years.

The initial hype for automated driving and mobility as a service (MaaS) has already passed. Now they are progressing at realistic paces where progress is possible. There was also some hype for the electrification of transport back in 2022, but this hype has not died down to the same degree.

In my first test-drives ten years ago, I was slow to warm up to electric cars. Even the Tesla Model S failed to fully win me over based on my first test-drive. It was only after more test-drives, the entry of a broader range of cars into the market and several revelations that I talk about more below that my opinion finally changed.

The hype for electrification will not die down easily – there are simply too many separate reasons to keep pursuing it for that to happen. That is why I dare make the following claim, which I believe will still hold true ten years from now: in the future, we will be driving battery electric vehicles.

Low-emission mobility

Electric motors and batteries are used for countless applications around the world. As such, their widespread adoption in the automotive industry was only a matter of time. That being said, there are two main parties that we have to thank for this: Tesla and the European Union. Ten years ago, it was Tesla that showed us that it is actually possible to produce an attractive electric car.

The EU, on the other hand, has imposed strict emission performance standards for car manufacturers, which will gradually grow stricter until 2035, when new cars must have zero emissions. The first hard milestone was the fleet-wide CO2 emission target of 95 g/km for passenger cars in 2020. 

The EU’s emission performance standards have driven car manufacturers to sell cars with minimal emissions in the EU. Hybrid cars, especially plug-in hybrids, help bring down fleet-wide emissions, so they are favoured as an easy solution that does not yet necessitate dismantling the long subcontractor chains related to internal combustion engine technology. However, battery electric vehicles provide the greatest emissions reductions, so it is clear that the focus will be on them over the long term. The upcoming models and plans that car manufacturers are now showcasing are already almost fully electric. At least in Europe, there is little reason for manufacturers to focus on anything else.

The challenges of electric cars

When it comes to charging electric cars, the only major long-term challenge is on-street parking without assigned parking spaces. In this case, the city must issue permits to charging operators to provide on-street charging based on demand. This is an area that I have recently worked on myself at Forum Virium Helsinki, focusing on how the City of Helsinki can obtain viable data for forecasting the future charging needs of neighbourhoods. The demand for this type of operating model is particularly high in other parts of the world, where assigned parking spaces are rarer and on-street parking is more common.

Battery materials and their supply are a major issue. Extracting them from the earth is not pretty, which is a thing that they have in common with oil. The difference, however, is that battery materials are primarily only extracted once, after which they can be recycled, whereas oil must be drilled continuously. But the drilling cannot continue forever. The world’s oil reserves are dwindling, and the climate should not be warmed any further.

Is driving an electric car more expensive?

In Finland, charging an electric car is cheaper and easier than almost anywhere else in the world. Electricity is affordable, and many Finns live in detached houses, where an electric car is just one more electric appliance. People living in blocks of flats also often have parking spaces with car heating poles, the Suko outlets of which are easy to convert to support slow charging. The slightly faster Type2 charging requires at least new poles, but in many cases they are compatible with existing wiring, so no construction work is required. Of course there are also housing company policies to consider, but these are becoming less and less of an issue as more residents purchase electric cars.

Electric cars do have higher purchase prices because of the cost of battery materials, but you should not let that put you off buying one. After all, the actual costs of owning a car consist of a myriad of other things besides the initial price tag. This is something that I have been particularly interested in, which is why I have developed solutions for calculating the costs of car ownership based on data collected from various sources under my part-time company Auto-Inno Oy.

The purchase price of a car is something that almost no one ever pays in full. This is because cars nearly always have resale value. Therefore the thing that you should actually be looking at is depreciation. At present, electric cars depreciate slightly faster than internal combustion engine cars, but in the future the situation may end up being reversed.

The difference between internal combustion engine and electric cars becomes massive when you look at the difference in cost between fuel and electricity: the energy costs of electric cars are only one third or one quarter of the energy costs of an internal combustion engine car. This means that the more you drive, the more economically viable an electric car is likely to be for you. The economic viability of a plug-in hybrid, on the other hand, depends on whether you can frequently recharge it and whether the distances you drive are short enough to allow you to drive almost exclusively on electricity.

Based on comparisons that I have conducted between several car models using comprehensive datasets, a price difference of EUR 10,000 usually puts an electric and an internal combustion engine car on equal footing, provided that you drive as much as the average Finn. In other words, if the price tag of a used combustion engine car says EUR 15,000 and the price tag of a used electric car says EUR 25,000, the total costs of ownership will be the same.

In practice, the money saved on monthly fuel costs can be used to pay higher monthly loan instalments. As such, practically all creditworthy Finns who drive even slightly more than average can already afford an electric car. 

Predicting the future of the automotive industry

Predicting the future of the automotive industry is relatively easy. A new car model takes approximately five years to design. After entering the market, it is usually sold for seven years. In Finland, sold new cars remain in operation for an average of just over 20 years. The electric cars currently being designed and entering the market in the near future will therefore remain in active use until the 2040s and 2050s. 

People who are interested in cars and those working in the automotive industry are already driving electric cars. So far, car manufacturers have been focusing on making more expensive and larger electric cars for these early adopters. Now, however, manufacturers have started to increasingly design more affordable electric cars intended for wider audiences. As is the case in many other industries as well, it is the enthusiastic early adopters who have paved the way for eventual widespread adoption by the masses. 

Photos: Raimo Tengvall and Aapo Rista

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• Future blog | What will the urban nature of the future look like?

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