Charging ahead with electric cars

As the electric car is business gets more and more crowded, it feels like we are approaching a breakthrough. It could come from a U.S. automaker like GM with its Volt, from a European company like Renault (and its partner Nissan) which are committed to electric cars through an alliance with Better Place, from a Japanese firm like Toyota which has led the way with hybrid cars like the Prius, from a Chinese or Indian carmaker, or from one of the many startups—Tesla, Think, Fisker, ZENN—that are hurrying to market.

I’m fascinated by electric cars, so I went to a panel on “Bringing Electric Cars to the Mass Market” at the Net Impact conference at Wharton. They had great people—Michael Granoff of Better Place who has the title, “head of oil independence policies;” Charles Gassenheimer who is CEO of Ener1, a startup company that makes lithium-ion batteries for electric cars; Vicki Northrup, an industry veteran who has worked for Think, Zen and is back at Think, and moderator Bill Moore, who runs a terrific website, EV World, and knows the business inside and out.

Of course, it’s not much of a business yet. Sure, Toyota has sold more than 1 million hybrids, but most everyone agrees that today’s hybrids (which recharge their batteries from the braking power of the car) are an interim technology, a bridge to the future. They are likely to give way, first, to plug-in electric hybrids (where the battery can be recharged by plugging in the car) and then to pure electrics. After all, it doesn’t make a lot of sense of build a car with both an internal combustion engine and an electric engine—that’s one reason the Prius and other hybrids are pricey. Besides that, the Prius battery technology will soon be surpassed by lithium-ion batteries, the kind used in laptops and cell phones, most experts think. They are more efficient, lighter weight and more powerful. Gassenheimer said a government energy lab tested a Prius with one of his company’s lithium-ion batteries and found that it delivered 77 miles per gallon, even before the software was optimized for the new battery.

Batteries are the key to the electric car business. The trouble is, lithium ion batteries that are powerful enough to provide a reasonable range—say, 60 to 100 miles on a single charge—and long-lasting enough so that they can be charged and discharged year after year are frightfully expensive. They can easily cost $15,000 to $20,000, the panelists said, accounting for as much as 50% of the cost of a plug-in electric hybrid or an all electric car.

So how do you get costs to come down? Several ways, it turns out.

First, obviously, is by improving the technology. Lots of big and small companies are working on that—Panasonic, Toyota, Sanyo, BYD, startups Ener1 and A123 and a venture-backed firm called eeStor.

Economies of scale will surely help. “Getting the battery into volume production is the best way to drive down costs,” Gassenheimer said. Ener1 has a deal to make batteries for the Think cars, which should ramp down their costs; they are building a production line now in Indianapolis.

Another approach: Radically transform the automobile business model, as Better Place wants to do. Their plan is to own the batteries and charging stations, and recharge and replace them when needed. This should assure wary buyers, if they believe in Better Place. “You subscribe to Better Place for your energy,” Granoff says. “You pay for the miles that you drive.” Better Place has struck deals to build out electric-car infrastructure in Israel, Denmark and Australia, with more to come, I’m told. You can watch this video of Shai Agassi, Better Place’s charismatic CEO, at the EV World website.

Still another approach is to lease the batteries. Think is thinking about this idea, according to Northrup, but is wary of trying to introduce a new technology and a new business model at the same time. “We’re not sure Americans will go for it,” she says.

One thing I learned from the panel: Batteries, when they are no longer powerful enough to drive a car motor, can still hold enough charge so that they could be resold to electric utilities that want to store intermittent renewable energy from the wind or the sun.

Finally, the government can and probably will play a role in driving the adoption of electric cars. The $700-billion financial rescue bill included $7,500 tax credits for the first 250,000 buyers of plug-in electrics, which could help the Chevy Volt and the Prius plug-in if they come to market, as expected, by 2010.

Gassenheimer says: “The only way to encourage penetration at this early stage ,when the prices are higher than consumers are willing to pay, is government intervention.”

I’ve come to believe that plug-in hybrids and then all-electric cars will reach the mass market in the next three to five years, although I can’t tell you how we will get from here to there. The fundamental reason is that electric car engines are more efficient than gasoline engines, although there’s debate about how big the efficiency advantage turns out to be. Besides that, electric cars are cleaner, they will help wean us from imported oil and they are quieter than gas-powered cars.

As Carlos Ghosn, CEO of Nissan and Renault, said last month, when Nissan and France’s biggest utility announced plans to roll out an electric-car network in France:

We have decided to introduce zero-emission vehicles as quickly as possible in order to ensure individual mobility against the background of high oil prices and better environmental protection.

Comments

  1. the idea of plug-in electric is all well and good, but what generally seems to escape the conversation in the electricity infrastructure that would have to be developed to provide the energy to power the cars. In a pill, this means more power plants – many of them conceivably coal-fired – scattered across the landscape.

  2. Bob Wallace says:

    Abraham-

    Other places people are actively discussing how to provide green energy both to replace current dirty sources and to power future electric cars.

    Wind would seem to be an ideal source. It’s currently the cheapest way to produce new green energy. It provides both day and night. That means that wind energy can be used to provide more peak hour power on hot afternoons when it’s most needed and then can be used for charging vehicle batteries at night when grid demand is low.

  3. While I would love an all-electric car in theory, I think many people who are pushing these things need a reality check. Look at how many cars are on the road today — how many millions is it? Can we really replace all of those with battery powered cars? Don’t these batteries contain significant amounts of precious metals? Is it really feasible from a standpoint of dwindling resources to do this, or will we “run out” (ie. become prohibitively expensive) of some essential component first? What about our roads, which are made from asphalt (an oil product) ? I don’t know the answers, I’m just asking.

    I think it would be better to invest in public transport again. 80 years ago we had electrified light rail and trolleys everywhere. People were fully able to travel from any town to any town, and the suburbs, without a car. Why don’t we do that again? Then you only have to build a relatively finite amount of infrastructure (rails, which last much longer than roads) and a somewhat finite number of transport vehicles that are purposed to carry tens of millions of people over tens of millions of miles throughout their lifetime (as opposed to a car, which may get 200,000 miles and carry a few dozen different people over its lifetime). We should be doing this NOW, before oil really becomes scarce — we’ll need it to run the heavy machinery required to build railroads.

  4. Ben, you are asking the right questions. I think there are about 900 million cars on the road, globally, about 15 million a year are sold in the U.S., so replacing gasoline engines with electric motors will take a lot of time. I believe that lithium, a key ingredient in the batteries, is plentiful although some people are worried about its price increasing.
    I wish I agreed with you that public transport is the answer. The problem is that we are so scattered as Americans. And that freedom and mobility are so important to people. I strongly support public transportation as well as car taxes, but I think we will need to develop and produce cleaner cars as well.

  5. You are right as well. I don’t think cars will ever be gone but I do believe that we could probably cut out at least 80% of current car/vehicle use without any ill effects, as long as the right type of public transport was in place. Not to mention that in a lot of cases, people could just stop being lazy and ride a bike (trips less than 5 miles). I saw this in action when I lived in Portland, Oregon. It is possible, cheap, convenient, and a pleasure to ride TriMet.

    Yes, there will always be people who live out in the country (I will soon be one of them), but most people live within 20 miles of a major metropolitan area. This is easily serviced by rail with bus interconnects. For the times when people “need” their freedom and mobility (such as a trip to the mountains or whatever), the answer is car co-ops or rentals.

    My worry is what will happen in the meantime. Next year, two years from now, whenever, when gas is $5-10 per gallon, electric cars are not here yet (or if they are, nobody can afford them), and there is no decent public transportation outside of the 10 largest cities. What will we do when it costs people more to drive to work than they make during the day?

    Rail systems take a considerable amount of time to implement. I’m afraid that we’re too little, too late, especially given how poor the US is these days.

  6. today’s hybrids (which recharge their batteries from the braking power of the car)

    Not exclusively. Some hybrids use gasoline engines to drive generators, in addition to employing regenerative braking. Some hybrid designs never use the gasoline motor to drive the wheels directly; rather, they rely on the hydrocarbon-fuelled engine to produce electricity for batteries and electric motors.

  7. Thought you might like this link:

    Swapping Peak Oil for Peak Lithium?

    http://www.hybridcars.com/hybrid-batteries/swapping-peak-oil-peak-lithium-25219.html

  8. I believe that peak oil is true and that we are now past the point of peak oil. I understand many of the current events have to do with this understanding and it won’t be long before the main stream media and population wake up and understand what is going on. For me and my family, we are preparing for the next generation.

Trackbacks

  1. […] posted by Jennifer Krill in Freedom from Oil, Global Finance, RAN General on November 17th, 2008 Check out yesterday’s blog post from Marc Gunther: […]

Speak Your Mind

*