Micromobility is an Economically Viable Climate Solution
Ever wondered which e-thing was the most economically viable solution to climate change?
No? Well, it's the perfect time to learn something new :)
Below is a guest post from Eric Johnson, investor, pilot, author of What the Hell is an Economy? and all around super smart dude.
He breaks down how, although electric vehicles are incredible innovation - their relatively high price point limits their ability to the be the most impactful solution to addressing carbon emissions on a broad, international scale. He argues that ebikes, and especially micro ones like JackRabbit, have more potential to address climate change versus EVs given their mass appeal and accessibilty.
Dig in below.
And to get a bit smarter every month, be sure to check out WTHisAnEconomy.com for monthly posts about the economy, startups and investing.
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Tesla makes quality vehicles; I know this because I own one. They are convenient and fun to drive. I also own a JackRabbit, a small, light-weight, speed-limited electric motorcycle, for lack of a better description. Also convenient and fun to ride. The Jackrabbit is part of the new wave of innovative battery-powered transportation products collectively referred to as “micro-mobility.”
Most people are of the opinion that full-sized electric vehicles (EV’s) will play a significant role in reducing future carbon emissions. The politicians have responded, and thus buried in the “Inflation Reduction Act” is a tax credit of up to $7,500 per domestically produced EV’s. What this redistribution of wealth has to do with reducing inflation I cannot imagine, but what it will do is economically reward the manufacturers of EV’s, while punishing the manufacturers of all other competing transportation products.
This is known as a market distortion.
The logic behind such market distortions is that they will accelerate positive change in our society by influencing our buying decisions. Not completely abandoning the principles of a free market, but just a nudge to facilitate the growth of a new domestic industry focused on EV’s.
There is nothing new about government subsidies, but there is always an economic cost associated with market distortions, the economy is less efficient, more likely to waste wealth. The hope is that the benefit to society will outweigh this economic cost.
While this might be the right path for shifting the production of lithium-ion batteries and EV’s from China to the U.S., is this really the correct approach for reducing future global carbon emissions? Are EV’s really the highest priority “global climate solution?” Perhaps not, as the International Energy Agency (IEA) estimates that an EV using the global average mix of power sources over its lifetime will still emit about half the CO2 as a gas car.
We appear to be putting all of our “tax credit eggs” in this one ineffective basket.
“..the IEA estimates that even if the whole world achieves all of its ambitious stated electric vehicle targets by 2030, the additional saved CO2 emissions over this decade will be 235 million tons. The standard climate model used by the Intergovernmental Panel on Climate Change reveals that this will reduce global temperatures by only 0.0002°F by 2100.”
EV’s are innovative products of excellent engineering, and eventually will have an important role to play in meeting the needs of future transportation. The problem today is that the majority of people that require transportation cannot afford them, there is simply not enough economic wealth for all. Less expensive alternatives must be considered, and even encouraged.
“.. instead of getting people electric cars in rich countries, what we should be focusing on, is perhaps, getting electric motorcycles in third world developing cities, where they would do a lot more good.”
Bjorn Lomborg, Climate Change Debate, Lex Friedman Podcast #339
By “a lot more good,” Lomborg is referring to a cost-effective way of reducing future carbon emissions, one that will not require massive subsidies. The encouraging of consumers in developing countries to purchase electric motorcycles instead of low-cost fossil fuel powered cars may very well be the low hanging fruit of reducing global emissions.
If this is not done, it will not matter how many expensive EV’s are sold in California or the rest of the U.S., emissions will continue to rise.
It also needs to be understood that no government can subsidize globally and forever, there is not enough economic wealth to do so. What is needed is a safe, reliable, useful and affordable micro-mobility product that can be globally sold for a profit without the subsidy crutch.
The good news is that price of lithium-ion batteries dropped dramatically over the last decade. The bad news is that last year, as demand increased, the prices rose slightly. While the long-term forecast is that the price will drop to $100 per kWh by year 2026, today the manufacturers of high-volume EV’s pay about $150 per kWh for battery packs (the lithium-ion batteries plus the necessary surrounding packaging).
We are all familiar with the common, standardized 1.5V AA alkaline battery, and less familiar with the 3.7V “2170” lithium-ion battery. The Tesla Model 3 is powered by 2,976 of the 2170 batteries. The Jackrabbit is also powered by 2170 batteries, but just 10 of them.
Compared to the Jackrabbit, the Tesla Model 3 is about:
- 44X the purchase price
- 27X the range
- 300X the number of 2170 batteries
- 300X electricity required to fully charge
- 11X electrical power consumed per mile (cost to operate)
- 150X the weight
A micro-mobility product such as Jackrabbit is not the right product for everyone. True, but perhaps it is reasonable to assume that for every one person that can afford a $44,000 EV, there are at least 44 other people that can afford a $1,000 product.
This ratio is probably much higher given the unequal distribution of wealth in many developing countries.
Fair enough, but which consumers would be interested in a micro-mobility product such as the Jackrabbit?
- Those who cannot afford an EV. Unless provided with an inexpensive alternative, they may instead a purchase fossil-fuel powered car. Or be left without any convenient transportation option, stifling economic growth.
- Those who have a short commute, do not require a car, and are not comfortable riding a less-stable scooter.
- Those who do not need a car but are unwilling/unable to exert themselves on a manual-powered bike or prefer something lighter than a heavy pedal e-bike.
- Those who cannot afford or are not comfortable riding heavy high-powered full-sized electric motorcycles.
- Those that have a short commute and live in cities already congested with heavy car traffic.
- Those who do not have access to an electric grid (required to charge an electric car,) but do have a portable 100W solar panel charge system (about a $200 investment), which can charge a Jackrabbit battery pack in a single sunny day.
There are 8 billion people on the planet, and they all want to improve their standard of living. All want the energy security required for economic growth. Many require transportation, which explains why there are about 1.145 billion carbon-emitting cars. EV’s are great, but to date only 10 million have been shipped globally, representing just 0.87% of the world’s cars.
If the goal is to provide all with transportation that meets their needs, to reduce the emissions generated by transportation in a reasonable time frame, and to minimize the amount of lithium and other mineral mining, does it not make sense to encourage all forms of innovative, battery powered transportation products, especially ones that are a small fraction the cost of a typical EV?
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