No abstract

The transition from oil to electricity for personal transportation is underway with virtually every automaker now seeking to produce an electrical automobile, of some form, under its brand. The pace of this transition, however, is dependent upon both technical and institutional changes. Electricity has the opportunity to play both a disruptive role in transportation and a transformational role in renewable energy, to the benefit of moderating climate change. In transportation, electricity can be both a cleaner and cheaper fuel than petroleum. Moreover, automobile batteries can play a pivotal role in enhancing the use of renewable energies in our daily lives. Development of the full potential of this transformation awaits the formulation of an innovative and clever business plan or value package that integrates the automobile industry with a changing electricity sector.

The transformation from conventional vehicles to electric vehicles is underway, but its timeline is still uncertain. The battle against climate change provides the essential backdrop, leading governments to encourage this transformation by providing both consumer incentives to purchase electric vehicles and by establishing regulations requiring automakers to produce them. Behind this prodding are a set of fundamental forces that both encourage and discourage consumer interest, as set forth in the text. Fortunately, intensive battery research and development is proceeding that should alter market forces and make electric vehicles more attractive to segments of the population not now in the market for an electric vehicle. Hence, even if the timeline for battery improvement cannot be predicted with certainty, continued government support, and upstart automakers, such as Tesla, should ensure that the transformation will proceed over time.