In truth, it is about to turn into a bloodbath. Lots and lots of big companies with very deep pockets are about to throw a ton of money at the industry, and so are the venture capital firms.
A problem? Not really. Sure, some money will be lost. But it will also mean consumers have a lot more choice; the development of the technology will be rapidly accelerated. Boom and bust investment cycles get a bad press – but this is one we should be celebrating.
At this rate, a few more billion of investment will be thrown at the electric vehicle market before the end of January. Every week seems to bring more competitors into the market.
We might think of Sony as a film and music company that also makes TVs but very soon we could be driving around in one of its products as well.
The company that converted the world to the CD and the games console shouldn't be written off. It has taken cutting edge technology into the mass-market plenty of times before.
Amazon is starting to dabble in the market, both with huge orders for vans, and its investment in the start-up manufacturer Rivian. Mercedes is planning one of the longest range vehicles yet, and, of course, the traditional auto giants are still in the fight.
Volkswagen has an increasingly impressive range of electric vehicles, and Toyota and Ford are ramping up investment. With relatively few moving parts it is a lot easier to get into the electronic car business than it ever was to make old-style combustion engines.
It is going to be about design, connectivity, and the ability to access capital. Lots of different companies have some or all of those skills. The result? The market is about to get very crowded, very quickly, with a pile of money thrown at carving out a slice of the market.
Is that something we should be worried about? Not really. True, some investors are going to lose a lot of cash. Sony might never get a single yen back of the money it has spent on its prototype, and neither might Apple.
Plenty of the VC-backed start-ups will be remembered only by a handful of vintage EV collectors some time in the 2080s, while Mercedes might well find that no one really wants to drive 600 miles without stopping for a coffee and a charge-up. For the rest of us, however, massive over-investment in the sector is great news. Here's why.
First, consumers will have far more choice, and even better, they will effectively be subsidised by the venture capital firms, and the auto and tech industries.
We will see a bewildering array of different kinds of battery-powered cars. Do we really care that much about range, given we typically only drive 10 or 20 miles a day? Is connectivity to entertain us along the way the key? Does design and prestige matter, as it did with petrol vehicles, or is it just another functional gadget?
Will we actually want to own an EV, or would we prefer simply to rent one via an app for the few hours a week when we need it? The market will decide. The important point is this, however. The market can make a far better decision if it has plenty of options to choose from – and that is what we are about to get.
Next, intense competition, combined with lots of money, will accelerate the development of new technologies.
There is still a huge amount of innovation to come. Different kinds of batteries may still be developed, and they may use more plentiful, cheaper materials. Tesla, for example, is switching the chemistry of its batteries to help it ramp up production, but there is still plenty of scope for new thinking.
We may see different types of bodies to reduce weight, or heating systems to reduce power consumption, while charging times may be dramatically reduced with new types of cable. We will see. The point is all the money pouring into the industry means that will happen a lot faster than it otherwise would.
Finally, it will mean petrol engines are eliminated far more quickly.
Just a couple of years ago, the idea that the combustion engine would be all but eliminated by the end of this decade would have seemed like the stuff of science fiction.
With more than a quarter of the new vehicles sold in the UK last month battery-powered, it hardly seems far-fetched at all. With so much investment, and prices coming down rapidly, it will happen very soon – and that will be better for the environment.
Investment bubbles are usually criticised, especially on the business pages. And no one would deny that they have their downsides. Capital is wasted, time is spent on failed projects, and investors get caught up in the hype and end up losing a lot of money.
And yet a simple fact remains: they are also a great engine of progress – and we are about to see that all over again in electric vehicles.
