Will Gasoline Be Supplanted by Electricity as a Fuel?

By Alex Daley, Chief Technology Investment Strategist

Longtime readers of Casey Extraordinary Technology know that we are big fans of innovative transportation technology, especially electric cars and trucks.

Ground transportation, after all, is one of the world's largest and most established industries. It's one of only a handful of trillion-dollar-sized markets around the world. Yet at the consumer level, very little has changed in the last 80 or so years. The basic structure of an engine is the same, and the overwhelming fuel choice of the fleet is gasoline. More than 99% of the estimated 1.2 billion vehicles in operation today are powered by gasoline or diesel. And that technology is increasingly expensive because of a mix of declining resources, geopolitical entanglements, and government meddling (wars, taxes, tariffs, regulation, etc.).

To us, that clearly spells an industry ripe for disruption. Electric vehicles have some characteristics that make them ideal disruptors.

First, they can potentially circumvent many of those complex political situations by relying on an energy source that can be derived from many different inputs. Gas always comes from oil. Electricity can come from coal, nuclear, natural gas, hydro, oil, and yes, even from renewable sources (we doubt it, but that is a subject for a whole series of other articles, most likely penned by ).

Second, the technologies involved exhibit economies of scale near the level of their combustion brethren - electric motors and batteries existed long before the internal combustion engine and manufacturing for both is well established. Yet they are continuing to evolve. Modern innovations range from highly resilient "brushless" electric motors with computer controllers, to lithium polymer batteries with low toxicity and far less risk of fire and explosion.

As fans, that does not necessarily make us boosters. I was reminded during the pre-interview for a recent radio show of the derivation of the logic flaw with electric cars. I was asked, "What do you think of electric cars? Can they replace gasoline cars?"

Did the Internet replace television?

As the old saying goes, it is comparing apples and oranges. Gasoline and diesel fuel are highly unlikely to be replaced as fuels any time in the near future; that's because they are - despite some well-publicized and significant drawbacks - great ways to power a vehicle.

Energy Density

How good a fuel is gasoline, really? The ultimate measure of any mobile power source is its energy density, or how much potential energy resides in a particular volume and weight. Fans of the oddball primetime cartoon show Futurama can likely remember that spaceships in that world were powered by dark matter - a substance so dense that a fictitious spoonful could power the ship over billions of miles, but of course weighed thousands of pounds. Unfortunately, no such power source has been found yet, but consider a simple question to better understand the energy capacity of gasoline:

How long can you power an iPhone on one gallon of gasoline?

ExxonMobil recently

Consider, then, that it takes maybe five minutes to fill a ten-gallon gas tank. That equates to about 3,960 kilowatt hours per hour - or 2,640 times faster than a household electrical outlet for the same amount of energy. Edge to gasoline.

The advantage holds even if you could use all 1.5 kilowatts as fast as it can be delivered. You'd still be looking at about 80 hours of time to fill up a car with as many kilowatts of power as that ten-gallon tank of gasoline can hold. Of course, as discussed above, it takes many fewer kilowatts to move an electric car that same 330 miles. Still, even considering those efficiencies, you're looking at about 55 hours of charging at that trickling rate. This is another reason why most electric vehicles today are hybrids of some variation, targeting all-electric trips of 100 miles or fewer.

Fully electric vehicles with the range of a gasoline engine require specialized outlets, specialized charging circuitry in the car, and more - all of which come at significant cost, offsetting any fuel economy savings. We need to be able to deliver more energy, and faster than a traditional three-prong outlet can give you, to make all-electric cars a reality beyond that range.

While those numbers may make the task sound insurmountable, researchers are making significant progress in that area, and it increasingly looks like a very achievable goal. Recently, Samsung engineers showed off a system that could fully charge a vehicle battery in approximately 15 minutes. Of course, the system would require very high voltages to do so, and thus would likely not be suited for use at home without a lot of special equipment (the same way you can't add a gasoline pump to your garage without some serious thought and infrastructure).

But small advances beyond that giant leap would get you close to the idea of commercial electrical fueling stations, something that is simply not tenable today.

Yes, for those who will inevitably send an email to let me know, there are such things as commercial charging stations today, but leaving your car plugged in for eight hours between refills is just not practical. The family road trip to Disney World becomes a week's drive with $1,000 extra spent on hotel rooms. And you'd need a station the size of Manhattan to charge up the number of cars one Jersey Turnpike rest-stop station refuels per day with current technology.

Until that changes, gasoline again wins hands down when it comes to time to load.

Serving the Right Markets

As you can see, despite some benefits for electricity in terms of cost, gasoline still has key advantages that electricity can't match. But all markets for cars and trucks are not created equal. Instead of thinking of electric cars as a replacement for gasoline-powered cars, you have to think of them as in a separate category.

For instance, in countries where gasoline is incredibly expensive and electricity still relatively cheap - like France and Germany, where gas is ~120% more expensive and electricity only about 70% more expensive than in the US - electric cars and trucks may take off sooner than in the US. That's because the fuel savings in those markets may be enough to offset the needed charging infrastructure investment and higher vehicle cost.

Even there, though, mass consumer adoption is not likely. The charge times are still too long. Tesla has the right formula for that market, targeting the rich user who can afford multiple cars including a fun car for around town - electric cars accelerate at a rate that makes most other sports cars blush - or a conspicuous commuter. You don't take road trips in a Tesla, but if you have $125K or so to drop on a sports car, you can easily buy or rent a second car for those occasions.

Where electric may find a more friendly niche is in fleet scenarios. Delivery vehicles for UPS and FedEx, as just one example, have their full day's drive mapped out by computers and predictably sit idle overnight. The charge times are of little concern in that situation; an adequate infrastructure is easily built in one central location; the large chassis leaves plenty of room for batteries if more volume and range are needed; and the fuel savings may be enough to pay for other added costs, and then some, over the expected life of a vehicle.

Then there's the plug-in hybrid: all the range and fast fueling of a gasoline vehicle plus the ability to reduce fuel costs by mixing in electricity. While the first few attempts haven't really taken off, if someone gets the cost:benefit ratio right, the immediate market could grow considerably.

With 1.2 billion cars and trucks out there already dependent on gasoline and its many advantages over electricity, it is clear how it became - and why it remains - the dominant fuel on the planet today for transportation. But electric vehicles in certain applications are starting to make a lot of economic sense today for businesses; that is more likely to serve as a catalyst for the growth of the industry and eventual lowering of costs than the consumer market in the short term.

In fact, that growth is already ramping up. As a market unto themselves, plug-in hybrid and battery electric vehicles stand to grow to between 2-6 million units in sales per year by 2017, depending on which analyst's projections you agree with. Either way, given that that market last year was about 114,000 vehicles, that's one big growth curve.

Gasoline is here to stay. But so are electric vehicles.

[It will take many brilliant minds to overcome the world's dependence on fossil fuels, but such minds are in short supply. In fact, there's a battle raging for the services of the technological geniuses who can solve the energy crisis and other 21st century challenges