Today, Mak and I look at the increasing popularity of electric vehicles, what they can do that gas cars can’t, and how this shift will affect the future economy…
Electric vehicles are getting more and more popular, they have less maintenance costs than gas cars, are safer, and some can even drive themselves.
But with self-driving cars becoming a reality, and the steady move away from oil consumption how will this affect our economy?
Today, Mak and I dive into the world of electric cars, and what the future of driving really looks like…
“More people like electric cars, they’re quiet, save money by using electricity and they’re like a computer on wheels.” – Mak
“Electric cars are generally safer in an accident because of the batteries which are heavy and in the floor, it’s much harder for a car to roll over in an accident.” – Mak
00:20 – Changes in the market this week and how we’ve been in a bull market.
01:19 – The different electrical cars we’re now seeing on the road.
02:10 – The way batteries have improved over the years.
02:56 – Tax credits you can get from the government for certain EVs.
03:49 – Why maintenance costs are so much less for EVs compared to gas cars.
05:07 – What ‘Ludicrous Speed’ is and why people are moving towards EVs.
06:32 – The self-driving feature for EVs and how it works.
08:23 – Why EVs are more suitable for self-driving than gas cars.
09:06 – The number of jobs that could be replaced by EVs.
Connect with Ben Jones:
GRANT: Welcome back to Money with Mak & G. This episode is for the week ended August 27, 2021. Here’s my beautiful, creative and intelligent baby sister.
MAK: Thanks G. My name is Mak and these are the markets. Another crazy week, with the Nasdaq flying past 15,000 and the S&P busting through 4,500. The Dow didn’t break into new territory, but still flying high. I know it’s hard to remember, but markets don’t always go up, even though it looks that way.
GRANT: You’re absolutely right. Bitcoin lost a bit of momentum, but nothing major, while Apple is holding solid, close to 149 at the end of the week. Ever since that 30% or so drop in March of 2020, we’ve been in a bull market, which is up much more than 20%. If my calculations are right, the Dow, S&P, and Nasdaq climbed 85, 96, and 120% from that drop. It was a rough ride, but for those who stuck with it, it definitely turned out well. Don’t you like what I did there?
MAK: Excellent G. You worked in a bit of our education from last week about bulls and bears. Very good. This weekend, dad got shocked trying to put in a ceiling fan. We heard a few words we can’t repeat. He’s good, but it made me think about electricity, and then mom’s Tesla.
GRANT: It is fun to think about. We’re seeing quite a few more electric vehicle or EV cars on the road, and not just from Tesla. Everybody is in on it:
G: And more
MAK: There are lots of startups out there too, including:
GRANT: And more. Everybody seems to want to be involved in the action. Oh, did you see that a Ford F-150 hybrid can actually work as an electrical generator? You can use it camping, to power your tools and even your house if there is a blackout. Let’s keep dad away since we don’t want another “adult word” screaming party. That’s pretty cool. Lots of new tech to see.
MAK: It is really interesting to watch. Batteries keep getting better all the time, and the distance a car can go keeps increasing. The Tesla Model S can go 400 miles. Even though the average drive to work is less than 40 miles roundtrip, that’s a lot. You’d really never run out of a charge.
GRANT: Mom has a bit of that “battery anxiety” thing. She gets nervous she’ll run out of battery, but we have a gas station in our garage!! It’s really only an issue when she goes to grandma’s. But there are a couple of Tesla Superchargers on the way. 15 minutes and she can get an extra 200 miles. Just enough for us to hit the restroom and mom to grab a coffee.
MAK: When we have our Ipads, the time flies. It’s super quiet too. More and more people are buying them. Yes, and dad loves this part. The government gives you a tax credit, which is like free money. You don’t get it with a Tesla, but some over $7,500. That’s a ton. The rules depend on different things and aren’t always that big, but it can be substantial.
GRANT: Car companies are jumping on board, and making a huge push to start building more and more of them. Ford will invest $25 Billion by 2025 and try to eliminate most of their gas vehicles by 2035. That’s a HUGE change. They actually said “Eliminate”. Do you think this will have any effect on the economy? Absolutely, because it will change how money moves around.
MAK: I agree bro. Ok, this is what I’ve learnt from dad talking about it ALL THE TIME. First, the maintenance on the car is very different from a “regular car”. A regular car has a combustion engine. That’s means gas combusts in the engine. Ok, too technical. It means the gas explodes when the spark plug fires. You create a spark next to gas, it explodes. That energy is used to turn the wheels on a car.
GRANT: Way to boil that down. If you don’t have an engine that uses gas, you don’t need:
M: Spark plugs
G: An oil change
M: Engine Air Filters
G: A timing belt
M: As many replacement brakes
G: Other fluids and more
MAK: There are no sparks to make the gas explode. So, no spark plugs. Since there are fewer moving parts, no more motor oil. The engine has to suck in air to work, so you don’t need air filters. The timing belt is something only for gas engines. And, you brake less with an electric car, so dad says your brakes last about twice as long.
GRANT: Without all the needed maintenance, Consumer Report says you save between $6,000 and $10,000 over the life of a vehicle. Not bad, but electric cars are usually more expensive. These differences would change things if all the companies that support gas engines no longer have to make those products.
MAK: Yep, that does change a number of things in the economy. Fewer jobs in those industries, but it creates new and different jobs. Since an electric car is super quick, dad said he had a couple of small heart attacks when using “Ludicrous” speed in a test drive. Yes, “Ludicrous” speed. That’s super-fast and comes from the movie Spaceballs. When dad hits the “electric” it jumps out of its skin. You can’t say he hits the “gas”, because there is no “gas”.
GRANT: The car accelerates so fast, you pull 1 G of force. And, that’s on the ground. It’s like being in a jet plane. Nuts.
MAK: Well, it looks like more people like electric cars. They’re quiet, save money by using electricity and they’re like a computer on wheels. Mom and dad can actually loan the car to us and put a limit on how fast the car is allowed to go. Plus, it tracks where the car is at all times, and they can see its speed on your phone. Talk about Big Brother.
GRANT: Do you need me? Why did you say “Big Brother”?
MAK: “Big Brother” is a saying. It means someone is watching you.
GRANT: Oooo, that’s spooky. Here’s one for you. Electric car sales went up by 41% in 2020 when car sales DROPPED globally by 16% due to COVID. And, in the first 3 months of 2021, global sales rose by around 140% compared to the first 3 months of 2020. Crazy growth.
MAK: That is a lot of buying. One big part of electric cars is the self-driving feature. That’s where the car drives itself and not a person. It’s a computer with lots of sensors that view things on the road like cameras and radar. They believe electric cars are the future of self-driving.
GRANT: First of all that’s weird having no person in the driver’s seat. But, tests have shown it’s super safe. Waymo, which is Google’s self-driving car division drove over 6 million miles with a human, and its fully driverless vehicles drove 65,000 miles. That’s over 500 years of driving. Do you know what it found out?
MAK: There were 47 “contact events”. That’s their version of an accident. The company said, “nearly all” of these collisions were the fault of a human driver or pedestrian. If you do the math, that’s less than one incident in every 10 years of driving, but none were due to the computers. Plus, NONE of them resulted in “severe or life-threatening injury.”
GRANT: Well that’s cool. It might be weird not having a driver, but you know we never see the pilot on a plane ACTUALLY flying. How do we know they’re really in the cockpit?
MAK: Good point. You don’t know. Planes have autopilot, which is self-FLYING. There is a lot of focus on EVs, especially from ride-sharing companies, like UBER and Lyft. If a driver is paid $40k per year, and an electric car costs $30,000 with much lower cost to operate, that changes things.
GRANT: You’re right, the autonomous car would never sleep, and they would expect it to drive 5 or more times more than average to around 60-80,000 miles per year. That would drop the cost by 85% or more. The people building the cars believe electric cars are better for self-driving for a couple of reasons.
MAK: Exactly. Electric cars are easier to drive by computer because there is no delay in acceleration. Gas engines have some delay because when you hit the gas the spark plug has to ignite the gas and transfer that energy to the wheels. Not the same for an electric car.
GRANT: But, the computer system needs lots of energy, and the electric car is more stable at supplying it. Since electricity is much cheaper than gas, Uber and Lyft love it. Plus, it’s easier to recharge an electric car than a gas car if you don’t have a driver. You don’t really spill electricity….
MAK: Right you are. Electric cars are generally safer in an accident too because the batteries, which are heavy, are in the floor. It’s much harder for a car to roll over in an accident then.
GRANT: That’s cool. But, I know there are other concerns because self-driving cars could replace MILLIONS of jobs in the US and the world. You have taxis, trucks, ride-sharing, delivery companies, forklifts, and other stuff. But, there are about 5.5 million car accidents per year, and over 80% are caused by us humans. Computers are faster, don’t get tired, and make fewer mistakes.
MAK: If it saves lives, we would need fewer Emergency Rooms at hospitals. Jobs would be lost driving, but new jobs would be created in making batteries, new charging technology, software, building the electric car, and more.
GRANT: That would clearly change parts of the economy. The money would flow to different areas. If everyone was sharing a car, there may be new companies to time share a self-driving car. That would mean fewer total cars on the road. However, some people who lose their job may not have the right skills for the new jobs. We won’t know until all happens.
MAK: To put it in perspective, the US economy is about $23 Trillion and the car industry is estimated at about $2 Trillion. Changes in the industry can have a huge effect. Plus, that’s NOT counting all the jobs with driving which is close to 4 million jobs in the US. So, this will be big.
GRANT: That seems pretty easy to see it could be huge. I have a question before we leave. If a self-driving car is safer, will car insurance go down?
MAK: Great question. Forbes magazine, which is focused on business and investing has an estimate it could reduce the amount you pay by 75%. But, it could still be a couple of decades away. I love the way you think. Imagine a car dropping you off at work, and then driving home until it needs to pick you up.
GRANT: That would affect parking lots too. There would be less gas stations and since self-driving cars are more precise, they say they can get more lanes on a road for people to drive on. You’d reduce the number of roads that need to be built.
MAK: This is a big deal, and there is one thing for certain, besides death and taxes, and that’s change.
GRANT: You got that right. Thanks for being here. We’ll see you next time for more….
GRANT/MAK: Money with Mak & G. Bye!!