Are Electric Cars Good for the Environment?

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This article is Part 5 of an 11-part series analysis of Tesla, Elon Musk and EV Revolution. You can read other parts here.

My wife loves driving the Tesla Model 3, not for all the selfish reasons I like to drive it (it is fast and quite the iPad on wheels) but because she feels she helps the environment. Is she right?

Unlike an internal-combustion engine (ICE) car, which takes fuel stored in the gas tank, combusts it in the engine, and thus creates kinetic energy, Tesla takes electricity stored in the battery pack and converts it directly into kinetic energy. That’s a very clean and quiet process. However, the electricity that magically appears in our electrical outlets is not a gift from Thor, the thunder god; it was generated somewhere and transmitted to us.

As I write this, I am slightly disturbed by how the topic I am about to discuss has been politicized. I am not going to debate global warming here, but let’s at least agree that an excess of carbon dioxide (CO2) and carbon monoxide (CO) is bad for you and me, and for the environment. If you disagree with me, start an ICE car in your garage, roll down the windows, and sit there for about 20 minutes. Actually, please don’t, because you’ll die. So let’s agree that a billion cars emitting CO and CO2 is not good and that if we emit less CO and CO2 it is good for air quality.

Roughly two-thirds of the electricity generated in the U.S. is sourced from fossil fuels. The good news is that only half of that comes from coal; the other half comes from natural gas, which produces half as much CO2 as coal (though it has its own side effects – it leaks methane). Another 20% of U.S. energy comes from nuclear, which produces zero carbon emissions. The remaining 17% comes from “green” sources, such as hydro (7%), wind (6.6%), and solar (1.7%).

So if tomorrow everyone in the U.S. switched to an electric vehicle (EV), and our electrical grid was able to handle it, we’d instantly cut our nation’s CO2 emissions by more than a third – that’s a good thing.

Aside from all the reasons above (including going from 0 to 60 mph in 4.4 seconds), the reason I am a big fan of electric is that it gives us choices. Gasoline cars run either on oil or on oil. Electric cars open the door for alternative energy sources. That flexibility means oil might stop being the commodity that dictates our geopolitics, and that could mean we’ll have fewer wars.

There are alternatives to fossil fuels that have much less impact on the environment – and on you and me. There is nuclear energy, for one. To me, this is a no-brainer. Nuclear power plants have little environmental footprint – they spit out steam. But we have had Chernobyl, Three Mile Island, and Fukushima. It is unclear how many people died in those disasters, because the death toll estimates range from a few dozen who died from direct exposure to thousands who died from cancer caused by radiation.

If cooler minds had prevailed, we would not be on the fourth generation of nuclear reactors but the four hundredth. Nuclear should be our core energy source: It is cheap; it produces very little CO2; it provides stable, predictable output; and the latest versions are safe (they cool themselves down if there is loss of power). However, what I have learned in investing is that what I think should happen doesn’t matter; only what will happen matters. Here is the good news: Nuclear production is expected to increase by almost 50% over the next 20 years, and 90% of the increase will come from the two most populous nations – China and India.

Read the full article here by Vitaliy Katsenelson, Advisor Perspectives


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