EVs for the win. Unless reality happens.

I came across a very interesting survey by KMPG last week. Conducted among more than a thousand car industry executives, the survey reports findings such as that by 2030 51% of the cars sold in the United States would be electric as will 49% of cars sold in Western Europe. That would be up from a less than 10% share for EVs of global car sales at the moment.

Leaving aside the 3-percentage-point difference between the U.S. and Western Europe, which is counterintuitive (as are many other things that actually make sense), the survey paints the brightest yet picture of EV adoption. Look at the U.S. — EV sales in the U.S. in the first half of this year accounted for about 3% of total sales, per BloombergNEF. For the full year, some predict 5% in EV sales. And this is set to grow to 51% over nine years. Talk about spectacular growth.

But the sales growth projections are not the most interesting finding of the survey. The respondents are car executives whose companies are pouring billions into EVs. Of course they’d predict massive sales growth if they know what’s good for them and for the company’s share price. No, the most interesting piece of statistics to come out of the survey is the one about EV penetration and government support.

According to the survey, a surprising majority of 77% of car industry executives believe that EVs can achieve widespread adoption over the next 10 years without government intervention. That’s right, 77% and yes, that’s 10 years from now. In other words, car executives believe EVs can become cheap enough and reliable enough—and there would be sufficient charging infrastructure—to become real competition to internal combustion engine vehicles.

In perfect conditions, it would be fully possible. If battery metal prices were cents to the kilo because of oversupply; if basic metals were dirt cheap; if microchips were available in abundance; and if everyone got richer suddenly that would be possible. Conditions, however, are far from perfect, both for buyers, who are facing steep inflation in all major car markets from the United States to China, and for carmakers, who are struggling with the same inflation, only in commodities. There’s also the chip shortage problem.

Of course, the current rate of inflation will not last for ten years. Of course, the supply of battery and basic metals will not be tight forever. But it will take time to bring inflation down and during this time, the cost of EVs will be even higher than it already is comparative to ICE vehicles. Could EVs survive on their own at current sales levels if governments suddenly decide to remove their generous — and they are generous — subsidies? Anyone making such a bet would need to present a really strong argument for that bet.

What’s even more fascinating is the respondents’ take on direct government subsidies for EV buyers. A whopping 91% of them agree with that policy. This means that, on the one hand, we’ve got car executives confident that EVs can stand on their own four tyres without government “intervention” and on the other, we’ve got the same car executives even more confident that direct government intervention in the form of subsidies is a useful thing, which it is.

Subsidies for car buyers are not, however, the only form of intervention governments have used to stimulate greater EV adoption. They have also considerably tightened emission standards for carmakers, effectively forcing them to electrify their product lines. Not that any Big Auto executive would admit it, of course. Instead, VW’s Herbert Diess has been baiting Tesla’s Elon Musk on social media for years now, although without much success. VW has yet to come up with a car comparable with a Tesla in terms of performance but at half the price, which Diess had promised for 2020. In fact, VW has yet to come up with a successful way of emulating Tesla after $50 billion poured down the EV pipeline.

Did I say that no Big Auto executive would admit to having been forced to manufacture EVs? I was wrong.

"What has been decided is to impose on the automotive industry electrification that brings 50% additional costs against a conventional vehicle," said the chief executive of Stellantis, the Big Auto giant that resulted from the merger of Fiat Chrysler and PSA Group, in an interview with Reuters in early December.

Now, this company may have the silliest name in the industry ever but it has a brave man for a chief executive. Carlos Tavares said carmakers are being pushed into electrification by governments and investors but the costs of this accelerated transition are “beyond the limits” of what the industry can take.

"There is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay,” Tavares also told Reuters.

So, on the one hand, we have a survey among Tavares’ peers who are overwhelmingly upbeat about the future of their biggest bet ever. On the other, we have a Big Auto CEO who is saying plainly that things won’t happen the way governments want them to happen because it will be expensive and possibly unsafe for consumers as the quality of the vehicles might also suffer. This is what a lot of EV revolution critics have been saying for a long time only to be ignored as, I don’t know, oil industry shills, I guess.

Count me among the oil shills, then, because I’m one of the drivers who wouldn’t buy an EV unless several conditions are met: first, I need a guarantee that would be able to make a 250-km trip on a single charge and won’t need to plug the car in the moment I arrive. I also need a guarantee that the battery will not spontaneously burst into flames, which is what happened to enough Chevy Bolts to prompt a global recall that cost GM billions.

I would also like to be sure my car charger will not be hacked and I won’t be saddled with thousands in electricity bills, not to mention a hack attack of the car itself rendering it potentially dangerous in a way my 2012 Mazda 2 can never be. Finally, I would naturally want this car to be affordable, preferably without government subsidies as I am among those paying for these subsidies from my taxes. I’d much rather the government subsidised farmers.

EVs are a great idea for a world with cleaner air, especially in cities. Like all great ideas, however, this one too needs time to mature and become competitive with the currently dominant technology. But governments are rushing carmakers and rushing things is never a good idea. When you rush things you are often forced to cut corners. Cutting corners is invariably dangerous but especially so when it comes to vehicles.

And then there is the job loss problem. It has garnered some attention in recent years but not enough, it seems, most likely because it interferes with the emissions-as-top-priority discourse. Yet the switch to all-EV manufacturing will lead to the loss of thousands of jobs. According to the FT, in Europe alone, it could lead to the loss of half a million jobs, if the EU sticks to its plan to ban all ICE cars by 2035.

Citing a study by PwC among close to 100 companies from the industry, the FT reported the shift to EVs will also create 226,000 jobs, reducing the net job loss substantially. That’s of course much better than half a million but it is still a lot of jobs that would be lost, and they will be lost in the five years to 2035, according to the PwC poll. It’s worth noting that VW’s Diess downplayed the potential problem, which, to me, means the problem could be even bigger than the survey suggests, based on the VW CEO’s track record.

Meanwhile, copper has gained over a $1,000 per tonne since the start of the year. Fully electric cars contain about 183 pounds of copper, or roughly 90 kg. Lithium prices in China, the biggest EV market in the world, have surged by 276% since the start of the year to reach over $30,000 per tonne. The amount of lithium used in EV batteries is tiny but when we’re talking about millions upon millions of EVs, it stops looking so tiny at such prices.

The list goes on: cobalt, steel, aluminium, not to mention rare earths that are used in all sorts of electronics and EVs are more electronics-heavy than ICE cars, at least for now. There’s a supply crunch in metals and minerals. And the thing about supply crunches in an industry such as mining is that it is tough to ramp up production quickly.

There are investments to be made in new exploration.Then there are investments to be made in the construction of the mine — most of the world’s mineral supply is in developing economies and not all of these have well developed mining infrastructure. Then, with luck, production could begin, after a few years. Unless people erupt in protests, which is what happening right now in Serbia because of a proposed lithium mine.

Big carmakers are currently in a rush to build their own battery factories having woken up to the fact they are almost entirely reliant on imports from China and South Korea. That’s more billions invested in EV-related infrastructure. Commodity prices are likely to remain elevated for a few more years in light of the supply and demand discrepancy, which has little chance of changing given all the bullish forecasts for EVs that are driving EV startup valuations sky-high even if the startup has yet to manufacture an actual road-ready car. EVs are not getting any cheaper. Neither is EV charging infrastructure.

In a perfect world, EVs would be able to compete with ICE cars with no help from governments in the form of either ICE car sales bans or buyer subsidies (that the buyers still pays for but pretends they don’t.). This is not a perfect world, however. It is a real world, in which nothing ever goes as smoothly as forecasters with a vested interest in a certain outcome tend to predict. EVs will probably become the dominant mode of personal transportation with all the support being thrown behind them by governments and investors, and carmakers. Yet it might just take a little bit longer than all these stakeholders are hoping.