Oil and car companies are suddenly investing in electric vehicles. Here’s why.

As gasoline prices soar, electric vehicles shift into high gear.

A Tesla charges at a rapid battery charging station in Mountain View, California, August 24, 2016. CREDIT:  Smith Collection/Gado/Getty Images
A Tesla charges at a rapid battery charging station in Mountain View, California, August 24, 2016. CREDIT: Smith Collection/Gado/Getty Images

Game-changing advances in batteries are happening so fast that, this week, oil giant BP announced it would invest $20 million in an Israeli company that could allow an electric car to be charged in five minutes.

On Wednesday, German battery maker Sonnen announced $71 million in new investments from Shell Ventures (the oil major’s venture capital fund) and others.

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Also this week, National Grid, which runs England’s electric grid, announced a partnership with startup Pivot Power, which will create a $2 billion 2-Gigawatt network of batteries connected to the UK grid that will power 100 fast electric vehicle (EV) chargers.

And earlier this month, Volkswagen announced it had awarded an astounding $48 billion in contracts to purchase batteries. CEO Herbert Diess promised, “By 2020 we will offer our customers more than 25 new electric models and more than 20 plug-in hybrids … the world’s largest fleet of electric vehicles.”

What’s driving these announcements and investments?

Electric vehicle sales have seen exponential growth this decade.
Electric vehicle sales have seen exponential growth this decade.

Certainly the steady rise in gasoline prices in recent months has made the environment better for such investments. But the primary driver is the exponential growth in EV sales as the above chart illustrates.

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The EV industry had essentially zero share of global car sales in 2010, but EV-Volumes projects that “it reaches close to 3% in December 2018 and 2% for the complete year.”

The massive investments are also based on projections that this exponential growth will continue in the years to come, with EVs potentially hitting a 50 percent market share in two decades, as Bloomberg New Energy Finance predicts.

Projected global electric vehicle (EV) sales.
Projected global electric vehicle (EV) sales.

The exponential growth in sales is, in turn, due primarily to the stunning improvements in the price and performance of batteries over the past decade.

In addition, the projections of future sales growth are based on projections of continued improvements in battery price and performance, especially in energy density, which results in cheaper batteries that are also smaller and lighter.

Plummeting prices for batteries and rising energy density are  expected to continue for years to come. CREDIT: The Economist.
Plummeting prices for batteries and rising energy density are expected to continue for years to come. CREDIT: The Economist.

The most optimistic future projections, however, are not just based on incremental improvements in lithium-ion batteries.

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Indeed, earlier this month, the Japanese government announced a new initiative to develop next-generation solid-state batteries. That’s what the BP investment in Israeli start-up StoreDot was about — a solid-state organic polymer battery.

The “promise” of solid-state batteries, the journal Nature explained in 2015, “is that they will replace the heavy and sometimes dangerous liquid electrolyte” with a “lighter, more versatile solid alternative.” As one MIT materials scientist put it, “Imagine batteries that do not catch fire and do not lose storage capacity. That is the promise of solid-state batteries.”

The promise is also that a solid-state battery could be available in five years that “delivers 2.5 times the energy density of typical lithium-ion batteries, with the potential of costing one third of the 2020 projected price of those batteries,” Green Car Congress reported in Novmember

And solid state batteries are the ones that can be charged in a matter of minutes,  just like your gas tank can.

With next generation batteries, an electric car will match or beat gasoline cars in every respect. The future of EVs is very solid.