The Coming Electric Vehicle Transformation: Impact on House Values

[RCA]

Just yesterday the October 25, 2019 issue of Science Magazine came in with a couple of interesting articles predicting the rate of adoption of electric and hybrid vehicles in the coming years. This is something appraisers should keep in mind when valuing properties located on roads and highways, where noise and smog pollution has been a negative factor in valuations. Electric vehicles are nearly silent and don't pollute the air; so as their adoption becomes more widespread, we should expect traffic to have less impact on property value.

While the rate of adoption indicates that in the US, it may still be several decades for 100% adoption of electric vehicles, just the fact that they are replacing gas and diesel should have a major impact. Here is a table summarizing the two articles:

1. "The Coming Electric Vehicle Transformation: A future electric transportation market will depend on battery innovation", page 422, Science, October 25, 2019
2. "How Lithium Dendrites Form in Liquid Batteries: Studies of interfacial reactions and mass transport may allow safe use of lithium metal anodes", page 426, Science, October 25, 2019.

Note that the second articles discusses a new technology that proves to not only double the capacity of current lithium batteries, thereby doubling the range of current electric vehicles to make them competitive with fuel vehicles, but also will greatly extend the life of lithium batteries.

Here is a summary of the trends and predictions, where I have injected my conservative projections based on the information.

Country	100% of All Vehicles Electric/Hybrid	100% Sales of Electric Hybrid	2030: % of New Car Sales Electric	2018 % of Global Elec. Vehicle Market
Norway	2025​		100%​
Germany	2040 (Projected)	2030​	100%
France	2050 (Projected)	2040​	>50%
Great Britain	2050 (Projected)	2040​	>50%
China	2045 (Projected)		28%​	50%​
Europe	2050 (Projected)		26%​	20%​
United States	2060 (Projected)		8%​	20%​
United States (Urban)	2045 (Projected)
United States (Suburban)	2050 (Projected)

I think the impact on prices is just beginning, and I would expect that by 2030, with the expected improvements in fuel efficiency and reduction in emissions, together with the increasing numbers of electric vehicles, coupled with the advertising potential of being on a main road or highway (useful for home run businesses), that there will be minimal influence of traffic on property values.


ALSO: The main reason the adoption of electric vehicles will be slower in the United States, is because we are a much larger country than countries like Germany and France, and consequently Americans drive further than drivers in those countries, making range a more important factor in vehicle choice. Also, the United States lacks the public transportation infrastructure you find in Europe and Asia.

 

[J Grant]

I don't see it having anything to do with home prices ...it might affect gas station owner's income, though likely they may close down some gas pumps and make battery charging stations there instead.

 

[RCA]

I don't see it having anything to do with home prices ...it might affect gas station owner's income, though likely they may close down some gas pumps and make battery charging stations there instead.

I've done regression in areas where I in fact see a positive influence on price because if you are in the right location in the right town, a sign in the window and a parked van with signage out front can bring in extra business ... for free! Likewise, I've seen areas where traffic is such a nuisance, that prices are definitely lower on the main thoroughfares. The dynamics of this are a little complicated, with various factors involved, such as the average setback of homes from the road, the more setback the less negative influence of traffic, the quality of the neighborhood (you won't likely get good advertising if you are located in a dumpy neighborhood), the number of "good" roads going through a particular community and so on. But these dynamics will all change with the coming of electric vehicles.

 

[Randolph Kinney]

Looks like the adoption is not so great in other states outside of California. As a percent of total vehicle sales, EV is small potatoes.

 

[Mr Rex]

Regressing by definition means "return to a former or less developed state." Just saying Bert, life ain't all defined by mathematical calculations. The Home values that may be affected are likely the ones down the road from the coal plant recharging the magic electric cars.

FWIW, I drive a Hybrid Prius when I am appraising because it gets almost 50 miles an hour with my foot in it almost all the time. I also have a single axle 1 ton Dual Cab Diesel Pickup that has almost 400 HP and bellows black smoke when I put my foot in it despite of the DEF additive I have to use. So I see both sides of the spectrum. Kinda hard to pull a trailer with a backhoe on it with the Prius.

 

[RCA]

Regressing by definition means "return to a former or less developed state." Just saying Bert, life ain't all defined by mathematical calculations. The Home values that may be affected are likely the ones down the road from the coal plant recharging the magic electric cars.

FWIW, I drive a Hybrid Prius when I am appraising because it gets almost 50 miles an hour with my foot in it almost all the time. I also have a single axle 1 ton Dual Cab Diesel Pickup that has almost 400 HP and bellows black smoke when I put my foot in it despite of the DEF additive I have to use. So I see both sides of the spectrum. Kinda hard to pull a trailer with a backhoe on it with the Prius.

Yea, we have a Prius (V) as well. Love it for the gas mileage. But it''s too noisy for comfort.

I also have a Tacoma pickup I bought new in 2009. Tacomas are too small to make campers out of and they can't tow much - and the gas mileage is only about 22 miles/gallon. But it beats a Ford with 15 miles/gallon. I would like to get a Ford-250 for retirement traveling, but when I think of what it is going to cost for gas, I loose motivation. My wife still has 3-4 years to work before we go traveling, but there is time to think about it. I would bet I settle on a used Ford-250 with about 30K miles and a good size camper that is easy to detach, probably gas. We will just have to go slow and easy on the driving - but when you are retired you have all the time in the world.

 

[Mr Rex]

I have a Truck Camper (some folks call it a slide in camper) that the 3500 doesn't know is on it. I wanted a Truck camper so I can pull the boat all in one trip for local trips to a 50,000+ acre lake and another 30,000+ acre lake within 15 and 30 minutes respectively. Going to the Outer Banks in the morning (3 hours), I can drive the 4x4 truck and camper on the beach and camp and fish for days in some areas. This weekend I'm dropping the camper off in a campground and taking the truck fishing on the beach due to local regulations. Takes about 5-10 minutes to off or re-load the truck camper with electric jacks. It's too small to spend long weekends inside if its raining, but has a Queen Bed and a Dinette that converts to a bed, 2 burner stove and microwave, a "wet bath" inside and an outdoor shower, awnings (1 automatic and 1 manual). I am enjoying it so far. If I can get everything set up computer wise, I can work from home Tuesday through Thursday and be remote camping for 4 day weekends and no one will be the wiser.

 

[Randolph Kinney]

Regressing by definition means "return to a former or less developed state."

A confounding variable is an “extra” variable that you didn’t account for. They can ruin an experiment and give you useless results. They can suggest there is correlation when in fact there isn’t. They can even introduce bias. That’s why it’s important to know what one is, and how to avoid getting them into your experiment in the first place.

So what does buying a Prius have to do with buying a home?

 

[Terrel L. Shields]

There will be plenty of cars around for the next 50 years that use liquid fuel. Electric cars have advantages but until it overcomes the recharging issue, there is no way to drive long distances. I drove 280 miles to attend a class Monday, 280 coming back, then went 240 RT Wednesday to a courthouse. I would have had to stop a total of 3 times to refuel IF I could have found a station at convenient sites. A physical limitation exists in any heat generated is a measure of efficiency. Electricity is not 100% efficient either. In fact an incandescent bulb is roughly 20% efficient. Natural gas is a far better option.

Likewise a combine, tractor, semi-truck, service truck, etc. may take 300 gallons or more fuel and have a range of 500 miles (or in the case of a tractor 12 hours) before refueling. I doubt there will ever be an electrical storage device that is that efficient nor a way of refueling in remote areas. Some unknown process will be necessary to store electricity in a lighter medium, and so far that doesn't exist.

 

[Randolph Kinney]

The rest of the world will be using electricity generated by coal.

Coal demand is expected to double to almost 400 million tons a year by 2040, the agency said in its Southeast Asia Energy Outlook published Wednesday. That’s 2.5% higher than its forecast from two years ago, even as renewable power capacity is seen more than tripling through 2040.

https://www.thegwpf.com/southeast-asia-coal-demand-to-double-by-2040/