The internal combustion engine, utilising oil-derived fuels, invented in the late nineteenth century, was the basis for the mass motorisation of society, which was a dominant feature of the twentieth century, and for the way most of us now live and inter-connect. Within less than a hundred years this originally complicated and unstable piece of kit was developed to high standard of performance and reliability – a considerable achievement by the world’s auto manufacturers and fuel suppliers. But now, what was thought to be an enduring technology, is in flux, with uncertain outcomes for both manufacturers and users of road vehicles. Major decisions are having to be made about a switch to electric propulsion and the automation of vehicle controls, with global industrial, societal and environmental consequences; and business (and public policy) disrupting penalties for those making the wrong choices.
In this blog I look at the implications of this critical time of change for both the propulsion and control systems underlying our deeply entrenched relationship with motor vehicles – and what the governmental role should be.
Vehicle electrification
The switch of road vehicle propulsion from internal combustion to electric power is being driven by the need to decarbonise road transport, substantially and quickly cutting its contribution to climate change. In pursuit of this goal the UK’s Zero Emission Vehicle Mandate, put in place by the previous government, requires 22% of new cars sold this year to be zero emission, rising each year to reach 100% in 2035. Under international agreements begun with the Paris COP accord on Nationally Determined Carbon contributions in 2015, similar requirements are in place for most developed economies, although the mechanisms vary. The car manufacturers are responding by developing new models, although UK firms are finding it hard to meet the current government-mandated requirement in terms of annual electric vehicle (EV) sales. Even though approaching year-end, 22% of new car sales are battery EVs, nevertheless the industry has pressed for a relaxation in the year-by-year targets. In response to this plea, the government recently said it intends to launch a consultation on the scope for flexibility, while remaining committed to phasing out sales of new petrol and diesel cars by 2030.
The change to electric propulsion is causing a major shake-up to the global auto industry. Modern EV development emerged at the end of the 20th century in response to oil market crises and growing climate concerns. Starting with the Toyota Prius in 1997, the 2000s marked the development of hybrid vehicles (with batteries working alongside the internal combustion engine), the popularity of which has persisted to mitigate concerns about the driving range achievable with pure battery EVs. Tesla pioneered the development of commercially attractive battery EVs, starting with the Roadster sports car in 2008 (when Elon Musk became CEO), followed by successive models, designated X, Y and 3, achieving record sales such that the company became the world’s most valuable car company.
Tesla brought fresh thinking to bear on vehicle design, with a view to making best use of the limited driving range available from current batteries between recharging. The traditional car sales dealer network was cut out, as was conventional advertising and marketing, Musk relying instead on acquiring a large personal following of early adopters though social media and live presentations. This approach has proved very successful so far, but Chinese and Korean EV manufacturers are a growing challenge, while China has become by far the largest market for EV sales, where battery EVs currently comprise 29% of new car sales and plug-in hybrids a further 17%; corresponding figures for the UK are 22% and 40% respectively.
For legacy car manufacturers, design and manufacture of internal combustion engines has been a core competence, developed and executed in-house, with much else brought in from specialist equipment suppliers. Batteries are the most expensive component of an EV, whose performance is most crucial to the acceptability of the vehicle to purchasers. So the question for car manufacturers is whether to develop and make these in-house, or to partner with a specialised battery supplier, or to buy in batteries as a commodity, choosing the best available on the market. This strategic question is perhaps the most difficult, since the wrong decisions may have a major impact on sales. Another strategic question is whether to develop electric motors in-house, as does Tesla, or whether to buy in from specialist manufacturers.
One consideration is the desirability of locating battery production near to vehicle manufacture, given the weight batteries and the cost of moving them. Another is the possibility of advances in battery chemistry that offer better performance and/or lower cost. For instance, batteries based on lithium-iron-phosphate chemistry are lower cost but heavier than the hitherto standard lithium-nickel-manganese-cobalt formulation, whilst offering more limited range – less of a disadvantage in China where distances travelled are shorter than elsewhere. There is much effort underway to develop better batteries, yet only limited electrochemical theory to indicate likely directions for success, although much renown and commercial returns are to be gained if success is achieved. Also important is dependence on sourcing of key minerals, such as those mentioned above, although demand brings forth new supply, as ever.
Accordingly, difficult judgements are required as to where to locate battery development and manufacture in relation to car manufacture. Ten years ago, Tesla entered into a partnership with Japan’s Panasonic, a battery specialist, to build the first ‘gigafactory’ in Nevada, USA. In contrast, BYD, short for ‘Build Your Dreams’, founded in 1995 in China as a battery innovator, subsequently very successfully adding car and bus manufacture, has an integrated supply chain staring with lithium mining, and has now overtaken Tesla in global sales of EVs, focussing on lower price sub-premium markets – initially at least. There are a considerable number of Chinese start-ups that have entered a very competitive EV market, with downward pressure on prices – good for purchasers but challenging for the legacy manufactures such as VW that had been successful with petrol and diesel vehicles in the large Chinese market. Chinese manufacturers are now entering overseas markets, posing a threat to the European manufacturers, who have not developed integrated supply chains.
In response, as a trade protection measure, the EU recently imposed further tariffs of up to 45% on EVs imported from China, on top of existing 10% tariffs. This has been justified as a countermeasure against what the EU perceives as unfair competition, prompted by concerns that Chinese EV manufacturers have for years received substantial state subsidies, allowing them to produce vehicles at something like a 30-40% cost advantage as compared with European automakers. Chinese industrial policy support has enabled Chinese firms to build experience, reduce costs, scale up and push ahead on battery innovation. The EU tariffs are controversial since they may not be sufficient to exclude the lower cost Chinese vehicles from European markets, while possible retaliation may be counterproductive, particularly for European luxury car manufacturers selling profitably in China. There may also be increased likelihood that Chinese manufacturers would set up plants within EU countries to avoid the tariff. Indeed, BYD is already building a car plant in Hungary. For now, the UK has opted to stick to the existing 10% tariff, benefitting purchasers but possibly problematic for future trade negotiations with the EU.
The availability of low cost EVs from Chinese manufacturers puts pressure on competitors to extend their offering to include lower cost models. Tesla has just four cars in its model line-up, but none at low-cost entry level, which Elon Musk has justified by the expectation that it ‘is blindingly obvious at this point that [autonomy] is the future’, and announcing a two-seater autonomous Cybercab without steering wheel or pedals (pictured above), to be on sale before 2027. But this may be hoping for progress with vehicle automation that may not be fulfilled (see below), as well as a presumption that drivers would be prepared to forgo the satisfactions associated with personal car ownership.
Another possible role for governments is to support the construction of battery gigafactories, without which vehicle manufacturing may decline. The Biden administration has devoted substantial resources to boost US-based EV production. But the forthcoming Trump administration may cut such support, relying on tariffs to protect US manufacturers. The previous UK government published a battery strategy in November 2023, aiming (as usual) for Britain to be a ‘world leader’ and a ‘science superpower’. Two UK gigafactories have been announced so far, with government financial support, but a critical House of Commons committee report concluded that announced plans would satisfy little over half the capacity the nation needs by 2030. The failure of the Swedish Northvolt, Europe’s one-time battery champion, and before that of Britishvolt that planned to make batteries for EVs in Blyth, Northumberland, points up the risks involved in a major shift of technology.
The benefits of the switch to electric propulsion are environmental. The mobility to which we have become habituated in the built environment designed around it, that we have inherited, and which is very slow to change, means that the heavy lifting to decarbonise the transport system must depend on the expeditious switch of those vehicles deployed on it to electric propulsion. Incentives to achieve this can be contentious, however. A valuable recent report from the Resolution Foundation addresses equity aspects, arguing that, paradoxically, it has been justified for tax incentives to purchase EVs to target the richest fifth of households that are responsible for the majority of spending on new cars, who drive more, and whose new cars in due course feed the used car market for other buyers. But these incentives can be wound down now that capital costs are falling and the ZEV Mandate is in place to require manufacturers to ramp up EV sales.
However, a remaining impediment to EV purchase is that the cost of using a publicly-provided kerbside charger remains much higher than charging at home from the domestic electricity supply, an option not available to some 35% of British households. The public cost has increased by half since January 2023 despite wholesale electricity prices falling considerably, according to the Resolution Foundation, which estimates that the cost of driving an EV that is refuelled away from home is now double that of one charged at home (11.5 pence per mile compared with 5 pence per mile), amounting to a £425 difference each year based on average mileage. Regulation might now be needed to put a ceiling on the charges made by providers, analogous to the price cap imposed on domestic energy charges.
Vehicle automation
There has been much enthusiasm in recent years – at least in technological, and some investment and governmental circles – to develop self-driving vehicles, also known as autonomous vehicles (AVs). The impetus has come largely from technology entrepreneurs who see the possibilities to earn large returns. Some politicians perceive AVs as powering industrial and economic growth. Traditional manufacturers are trying to keep up, to avoid loss of markets should the technology gain wide acceptance. However, the technical task has proved more challenging than anticipated, and thus slower to realise than predicted, and the prospects for widespread deployment of self-driving vehicles are far from clear, as indicated in a recent review. A variety of technological advances in combination may allow the human driver ultimately to be dispensed with, at least under specified conditions. The human is replaced by a robot driver – a robotic replacement for the control, navigation and safety functions exercised by an experienced and safe human driver.
There are a number of technological components that typically go to make the robot driver. The robot must sense its surroundings using video cameras, usually plus radar and often plus lidar, which uses the reflection of laser light to detect objects. It must know where it is located in relation to the features of the road network, requiring satnav location and high-definition three-dimensional digital maps, which need frequent updating. Fast software programming is required to fuse all collected images, using inexpensive hardware with minimum power requirements. But unlike a factory robot performing-well specified tasks in a well-defined space, the robot driver cannot be pre-programmed to deal with all situations that might arise, so the robot must learn on the job by utilising artificial intelligence to learn to cope with a wide range of circumstances.
While such a multicomponent approach to autonomous vehicle control is most generally employed, Tesla is restricting itself to cameras, to replicate the information available to a human driver. This reduces costs and avoids the need for digital maps, which eases wide deployment, although it is yet to be seen whether acceptable safety can be demonstrated – a general problem for all technological approaches.
There is extensive and ongoing development of automated technology both by new entrants to the road vehicle sector and by established manufacturers. There are broadly two approaches. An evolutionary approach adds individual features to progressively reduce the driving task, such as cruise control, lane keeping, lane changing and valet parking. These can be seen as further advances in the sequence of developments that have delivered established technologies such as automatic gearchange and automatic emergency braking. The potential problem is that as the tasks required of the driver are reduced, yet some remain (such as emergency intervention) and the driver’s attention may wander or may become occupied by unrelated tasks, with the risk that the human may not be able to respond sufficiently quickly to take control in circumstances where the robot cannot cope – such as sudden reduced visibility or a difficult-to-identify obstruction.
This problem of achieving a safe handover to the human driver when required has prompted an alternative approach – a step-change to automation in which the vehicle is designed not to need a human driver at all. If purpose-built, it may omit the steering wheel and other controls; where a conventional vehicle is adapted, conventional controls are normally redundant. Waymo, a subsidiary of the parent company of Google, has been the most advanced in developing vehicle automation, operating a driverless taxi service – a ‘robotaxi’ – initially in Phoenix (Arizona), subsequently in San Francisco, with Los Angeles and Austin (Texas) planned, all places where the weather is generally fine and the roads straight and wide. Yet there are reports of rapid progress by Chinese manufacturers in developing AVs for deployment in congested city centres. On the other hand, General Motors has just pulled out of the development of the Cruise self-driving taxi, attributing this to ‘the considerable time and resources that would be needed to scale the business.’ And earlier, Ford and VW had shut down a joint self-driving car venture.
More generally, the vision is that of equipping and permitting an autonomous vehicle to function without a driver within a defined geographical area where highway and traffic conditions are suitable. It would be more demanding to go beyond that to replace the human driver under all conditions, although this is the ultimate objective of the proponents of the technology.
However, the practical benefits of vehicle automation remain unclear. Proponents argue for safety benefits, especially in the United States where 41,000 people were killed in motor vehicle crashes in 2023. Given that human error and risky behaviour are responsible for 90% or more of fatalities, it would seem a reasonable expectation that robots could do better than fallible drivers. On the other hand, robots suffer from their own shortcomings, tending to be less effective at perceptions involving high variability or alternative interpretations. In particular, robots would find it difficult to engage in the kind of visual and body-signalled negotiation that occurs between human drivers to settle which gives way when space is tight or priority needs to be ceded to pedestrians, for example. Moreover, the driving performance of a robot would need to be very similar to that of a human driver to ensure public acceptability in mixed traffic. A robotic driver that proceeded particularly cautiously to meet safety requirements would be unattractive to purchasers of AVs. So, the robot driver would need to learn how to drive like a human.
Fatalities involving AVs, although rare, naturally attract attention. It seems likely that the public will expect an AV to perform substantially better than a human-driven car, but by how much is an important question. In any event, it will be difficult to demonstrate the safety performance of AVs in practice. For instance, in Britain there is one fatality per 140 million miles driven, so if AVs are to do better than a human driver, fatalities will be exceedingly rare events. One possible solution is to devise simulations of AV performance so that very large numbers of potential incidents could be studied, but then the problem is how to valid the simulation model as an adequate representation of real-world driving conditions. Whatever the approach, the authorities responsible for safety regulation are likely to have particular concern for public reaction to collisions and casualties involving AVs, both in anticipation and after the event. And the motor insurance companies will be concerned with who is to blame.
Another claimed benefit is that automation might increase the capacity of existing roads by allowing vehicles to move with shorter headways, that is, with a smaller distance between them than the recommended two-second ‘braking distance’ gap on fast roads. The more precise control exercised by a robot might also smooth traffic flows and allow the use of narrower lanes. However, such increases in capacity seem likely to be possible only on roads dedicated to AVs since the presence of conventional vehicles, not to mention cyclists and pedestrians, would require standard spacing to be maintained. In any event, any increase in capacity would be expected to attract additional traffic, so that congestion relief would not be expected. Automation that allowed an increase in road capacity might be of interest to a road authority, but not to individual vehicle owners would bearing the cost of the necessary technology.
There are other potential (and possibly unforeseen) consequences of vehicle automation. Because AVs would be capable of operating empty, for example when returning to base after dropping off the occupant, they could add to traffic and hence to congestion. Conventional taxis operate without a passenger while seeking a fare, of course, but privately owned vehicles without occupants would be a new source of traffic and may require regulation if congestion is not to worsen. There is also the problem of AVs getting stuck in the traffic flow at critical points in the network or ‘trapped’ in odd places (as has already been happening) and not able to move to safe pausing places, as would a traditionally-driven car.
The prospects for widespread vehicle automation on existing roads with mixed traffic therefore seem very uncertain. Much will depend on whether users see the benefits outweighing the costs. The benefits for private owners of AVs are improved journey quality and the chance to carry out other tasks while in the move. This could allow greater distances to be travelled, but that would increase traffic, so no useful increase in speed or in access seem likely. For taxi operators, the benefits would be saving the labour cost of drivers. A more ‘visionary’ possibility is that of widespread shared use of individually owned AVs, taking advantage of the ability to summons such a vehicle when needed, and avoiding have a privately owned vehicle parked for 95% of the time – a concept advocated by Elon Musk. This could offer efficiency benefits, spreading capital costs over more miles travelled. Yet the experience of individual car ownership is deeply ingrained, both for the certainty of having this means of mobility available when needed and because of the good feelings associated with ownership of an attractive consumer product.
Whatever the type of ownership, the costs of automation comprise the equipment on the vehicle plus remote supervisory back-up in case of unexpected events. There are also the large research and development costs incurred to deliver safe, effective and attractive vehicles – likely to be of a magnitude such that acceptable returns could ultimately only be made through sales to the mass market of private purchasers. In the meantime, providers of robotic taxis and public service vehicles may benefit from the technology, but only if the additional costs of automation are less than the costs of employing a driver that may be dispensed with – by no means a forgone conclusion.
The UK has enacted legislation to regulate autonomous vehicles, implementing the recommendations of a very thorough analysis by the Law Commission. While creating a clear framework to govern responsibilities for vehicles when in driverless mode, such responsibilities will impose likely significant costs of oversight on manufacturers who sell AVs to private owners and on robotaxi operators. It would not be surprising if the human taxi driver were to be the lower cost option, as well as generating less public anxiety in the event of mishap.
What are the priorities – EVs or AVs?
Both EV and AV technologies contrast sharply with the transport innovations of the previous two centuries – the steam railway, the internal combustion engine for road vehicles, and modern aircraft – each of which took advantage of the energy of fossil fuels to effect a step change increase in the speed of travel, the benefits of which people took in the form of increased access to people and places, activities and services, with the greater opportunities for human interactions and choices that this made possible. Likewise for the modern bicycle, a later nineteenth century invention that harnessed human effort. But electric propulsion yields no step change increase in speed, and so not in access, nor does it seem likely that vehicle automation will yield such an outcome either. The case for deploying EVs is to reduce the transport sector’s carbon emissions, a key strategic objective. The case for AVs is to improve the quality of the journey, as perceived by individual purchasers, or to reduce operating cost of robotaxis if that proves feasible. Evidently, EVs are much more important than AVs as regards policy concerns about climate change.
Accordingly, competition amongst auto manufacturers to introduce new and better EVs is very desirable, regardless of their origin. Uptake by purchasers is constrained by anxieties about charging possibilities – the concern about ‘range anxiety’ – the least for those able to use home chargers in the driveway, but still a deterrent where long distance trips are contemplated. In the long run, provision of public charging points would be a commercial matter, as are roadside filling stations, but in the short run we have a chicken-and-egg problem that justifies government financial support for the provision of more retail charging outlets, as well as regulatory initiatives to speed the enlargement of the electricity transmission and distribution system.
The new Labour government has issued a consultation paper on industrial strategy. Eight growth sectors are identified, including advanced manufacturing, in which context it is claimed that up to 56 gigawatt hours of electric vehicle battery manufacturing capacity is planned for the UK so far, and that we are on our way to reaching the 2030 capacity requirements expected by the sector. The Chancellor of the Exchequer’s Budget Statement of 30 October allocated over £2 billion up to 2030, to support the zero-emissions vehicle manufacturing sector and supply chain.
The previous Conservative government was very supportive of driving forward vehicle automation, enacting legislation to support that aim, emphasising the benefits to the industrial economy rather than the transport system. However, there was no mention of support for AVs in the new Chancellor’s Budget Statement – a reasonable decision, in my view. There has been little development of the technology in Britain to the point of on-road deployment without a safety driver, in contrast to the position in the US and China. Moreover, the lack of UK-owned car manufacturers does not suggest that this technology is likely to be first rolled out here at scale, even though there are UK tech enterprises gaining investor support, notably Wayve, which is applying AI to self-driving in on-road trials and hopes to partner with vehicle manufacturers.
Vehicle automation is progressing incrementally, yet the goal of widespread driverless operations across the whole road network still seems elusive, while it remains to be seen whether the benefits to road users are sufficient to justify the higher capital and operating costs involved. The benefits of vehicle automation for both industrial and transport policy do not seem to be great. It is conceivable that public transport or freight vehicles could operate in driverless mode in some circumstances – at low speed on campuses, in dedicated lanes or roadways, or on set routes on which hazards are minimised. But the economic case, based on the costs savings of a human driver, may be difficult to justify.
The top technology priority for transport policy has to be the switch to electric propulsion of road transport, to which UK and European legacy manufacturers are giving high urgency. Yet establishing viable product ranges competitive with Chinese providers is proving difficult. Besides, the possible emergence of acceptable and attractive automation raises a strategic question of priorities for manufacturers beyond the switch to EVs, bearing in mind Tesla’s twin track development of an electric, automated robotaxi, as well as the progress being made by the Chinese auto industry in combining electric propulsion with automation. Who would bet against Elon Musk, given his record in pioneering EVs, reusable rockets and ubiquitous satellite communications? And who would bet against the Chinese in any technology that the state designated as strategic.
The current pace of digital and electrochemical technological change is fast in comparison with that of the auto manufacturing business whose timescales for new model development are long. In these circumstances, it is hard to have confidence that good decisions are being made by those with power to influence outcomes. Yet decisions cannot be avoided.
The above blog was the basis of commentary published in Local Transport Today on 18 December 2024.