"On April 14th 2021, Jefferies published a research note entitled “Are EVs as ‘Green’ as They Appear?”
in which they conclude an electric vehicle must be driven 200,000 km (or 124,000 miles) before its “whole of life” carbon emissions equals that of an internal combustion engine.
Their analysis is very similar to ours and details the tremendous amount of energy (and by extension CO2) needed to manufacture a lithium-ion battery.
... they point out that a typical EV is on average 50% heavier than a similar internal combustion engine, requiring more steel and aluminum in the frame.
They conclude the “embedded carbon” in an EV (i.e., when it rolls off the lot) is therefore 20–50% more than an internal combustion engine.
Our analysis suggests a modern lithium-ion battery has approximately 135,000 miles of range before it degrades to the point of becoming unusable.
An extended-range Tesla Model 3 has an 82 kWh battery and consumes approximately 29 kWh per 100 miles.
Assuming each charge cycle has a ~95% round-trip efficiency and a battery can achieve 500 cycles before starting to degrade, we conclude a Model 3 can drive 134,310 miles before dramatically losing range.
... Tesla’s Model 3 warranty covers the battery for the lesser of eight years or 120,000 miles and does not apply until the battery has degraded by at least 30%.
If the Jefferies analysis is correct (and we believe it is), then an EV will reach carbon-emission parity with an internal-combustion vehicle just as its battery requires replacement.
This will come as a huge disappointment for those believing that EV adoption will have significant impacts on CO2 reduction.
On March 22nd, The Wall Street Journal published a similar report entitled “Are Electric Cars Really Better for the Environment?”
The authors agree the embedded carbon in an EV is much greater at the point of manufacturing but argue it would only take 20,000 miles to “break-even” with an internal combustion engine.
By 120,000 miles they argue an EV would have emitted 45% less carbon than an ICE and that by 200,000 miles the EV would be 54% cleaner.
While this report accurately identifies the large embedded carbon in the manufacturing process, we believe it makes two errors.
First, it compares a Tesla Model 3 (a sedan) with a Toyota Rav4 (an SUV).
An entry-level Honda Civic, which we believe is a more appropriate comparison, would improve the ICE fuel efficiency by 20%.
Next, after consulting the footnotes, The Wall Street Journal article assumes 80 kg of CO2 emission per of battery.
This estimate appears to come from a 2019 Swedish Energy Agency report in which they reduce their carbon intensity by half compared with the year prior.
The motivation for lowering their estimates was the use of “close to 100 percent fossil free energy [...] which is not common yet, but likely will be in the future.”
In other words, the cost and carbon-intensity of lithium-ion batteries is predicated on renewable energy which itself requires cheap and carbon-efficient lithium-ion batteries.
Even if The Wall Street Journal figures are accurate, we believe most investors still do not appreciate how little the magnitude of potential carbon savings from lithium-ion EVs is.
Assuming a 130,000-mile battery life, an EV would emit between 40–50% less carbon than a comparable ICE according to The Wall Street Journal’s very generous figures.
All transportation makes up approximately 25% of global CO2 emissions and passenger use is less than half of that at 10.8%.
Using The Wall Street Journal’s figures, if every passenger car was switched to an EV tomorrow, global CO2 would likely fall by 5%.
Using the Jefferies data (which is consistent with our data), the difference would be negligible — there would be no reduction in CO2 output."