Engines of Change:

Motoring Toward a Lower-Carbon Future

By Walter Dauksher

SCIENCE | PLANETARY HEALTH

Photo by Kumiko SHIMIZU on Unsplash

May 31, 2024

Motors drive a lot more than cars. They are a ubiquitous and established technology that currently consume roughly ¼ of all energy produced on Earth. So you might think the motors surrounding us would be maximally efficient, right? Not so fast. Both internal combustion engines (ICE) and electric motors have been around for >200 years and are integral to our everyday lives. They power our cars, our portable generators and household appliances, our HVAC systems, as well as countless other applications (wondering what makes your phone buzz when someone calls? There’s a motor for that). All that work that motors do on our behalf requires a lot of power, which in turn leads to outsized GHG emissions: ICE and electric motors collectively produce ~24% of global CO₂e annually when counting emissions from ICE vehicle tailpipes and from power plants supplying electricity. Both motor types are big energy hogs in aggregate but this masks a key differentiator between them: efficiency.

Electric motors are at least twice as efficient as ICE and the difference is even greater when factoring in further losses from converting motor energy into vehicle movement. When you picture inefficiency, what comes to mind? Perhaps a loud muscle car spewing noxious fumes. Believe it or not, the startling inefficiency of ICE is not limited to this caricature: they are all laggards when it comes to efficiency.

ICE vehicles immediately lose ~60% of their starting energy (from liquid fuel, like gasoline) to the environment as heat and sound after ignition, leaving only ~40% of the energy to turn the motor. Further losses occur downstream when transferring energy from the motor to the wheels, and ultimately just ~20% of that fuel’s original energy is actually used to move the vehicle.

In contrast, EVs lose just ~15% of their starting energy (from electricity stored in batteries) to the environment, leaving ~85% of the energy to turn the motor; even when factoring in downstream losses, EVs use ~60% of their starting electric energy to move the vehicle, making them ~3x more efficient than ICE vehicles (or 2 – 3.5x more efficient when factoring in variability across both types, see figure).

Given the dramatic efficiency difference, the most impactful change in motors involves converting ICE vehicles to EVs. A full conversion would save an amount of energy equivalent to 4x the current annual electricity consumption of the United States – every year, along with tremendous economic and environmental benefits. Replacing all ICE vehicles with EVs would imply energy savings of 60% – 70%, which is equivalent to ~16k TWh annually; for reference the yearly electricity consumption of the US is ~4k TWh. The direct economic benefit would be a savings of $400 – $850B in energy spending every year. There are also multiple indirect economic and environmental benefits. A switch to electric vehicles would reduce emissions of CO₂e by 2.4 – 3.5 Gt annually, while also massively reducing the emissions of NOx, particulates, and other pollutants that cause smog, kill 7 million people per year, and cause hundreds of billions to trillions in annual damage to the economy. Put another way, converting to electric motors is a win for people, planet, and profits!

While electric motors have vastly superior efficiency relative to ICE, they currently have an Achilles heel: most designs use high-power permanent magnets that are expensive and have geographically constrained supply chains. Most electric motor architectures require the rare earth element neodymium. The biggest issue with neodymium is not its rarity (for reference, there is about as much neodymium in the Earth’s crust as there is copper) but its highly uneven geographic distribution (see figure), which greatly constrains its availability and can lead to price volatility. Although magnetic components constitute a relatively small percentage of a motor’s mass, they account for up to half of its material costs. Supply constraints could make this already pricey element even more expensive, making permanent magnets and the electric motors that rely on them prohibitively expensive. There are emerging technologies to reduce rare earth elements in electric motors to lower costs and price volatility, and startup companies are doing everything from reducing the rare earth content of electric motors (e.g. Niron Magnetics, CorePower Magnetics) to improving rare earth recovery from mine tailings and e‑waste (e.g. Phoenix Tailings, Cyclic Materials).

The future is electric but we need improved ICE. Electric motors have some intrinsic advantages over ICE but the latter will still have a place. Historically, efficiency improvements to ICE have been driven by more stringent emission regulations, but moving forward, ICE will likely find new use cases to help decarbonize hard-to-abate industries. ClearFlame is working on ways for heavy trucks and offroad vehicles to run on green fuels. Companies like M2X and Emvolon are also doing exciting work to run ICE ​“backward” so they act as a compressor/​reactor that can turn waste gasses into green chemicals or fuels. 

Innovations to both electric motor and ICE designs can save money while at the same time bringing benefits to human and planetary health. The Planetary Health team here at RA Capital recognizes that the electric motors are riding a global megatrend of ​‘electrification of everything,’ but there’s a place for ICE in both the near and long term, which is why we included ICE in our competitive landscape of the motors space. Both motor types have market opportunities worth hundreds of billions of dollars, both are ripe for improvement, and their ubiquity means that even incremental changes can have an outsized planetary impact. While news and commentary tends to focus on EVs, there are innovations happening with ICE that we believe demonstrate solid unit economics while also meaningfully reducing emissions. With ICE, we see promise in efforts to expand green fuel compatibility or potential to turn waste gasses into ​‘green’ chemicals and fuels. Electric motors are already close to maximally efficient in some cases but there is still room for improvement generally, and we are also excited about novel materials and architectures that reduce the reliance on rare earth elements to lower costs and stabilize supply chains. If you are working on solutions that drive innovations in motors, we would love to hear from you.