If electric cars are the answer, what’s the question?

An eVgo charging station

An eVgo charging station

Like many environmentalists, I’d love to see lots of people driving electric cars. If  broadly adopted, electric cars will go some way towards limiting air pollution, reducing greenhouse gas emissions and undermining the power of oil oligarchs in the Arab world and elsewhere. Electric cars produce what economists call “positive externalities,” that is, consequences that benefit people other than their owners.

But what problem to do they solve for electric-car owners? That question has been on my mind since my recent visit to Israel, when I drove a Better Place car and experienced, first-hand, one of the obvious drawbacks of electric vehicles: They don’t go very far without refueling. [See my January blogpost, Better Place is alive but not well.] This is a problem not just for Better Place, but for other sellers of pure electric cars, like the Nissan Leaf and the Tesla Model S.

Today, I took a closer look at Better Place in a story for the YaleEnvironment360 website. Here’s how it begins:

If you want to sell electric cars, Israel looks like a great place to start. It’s a small country, with most people clustered around Tel Aviv and Jerusalem. Gasoline costs more than $7.50 a gallon, and oil revenues help support Israel’s Arab foes. So it’s easy to understand why Shai Agassi, an entrepreneur who was born in Israel and made a fortune in Silicon Valley, chose to launch his Better Place electric-car company in Israel, while preparing plans to expand in Europe, Australia, Japan, China, and the U.S.

What’s harder to understand is why things have gone so badly. Better Place, which staked out its position in the electric car market with an innovative battery-swapping technology, has sold only about 750 cars in Israel, while piling up losses of more than $500 million. Agassi was forced out of Better Place in October, his successor as CEO quit in January, and the company has put its global rollout on hold. Better Place needs to raise more money this year, and that won’t be easy, insiders say.

Start-ups often stumble, of course, but Better Place’s woes raise questions that matter to anyone who cares about electric cars and their future in a low-carbon economy. Has Better Place sputtered because of its own mistakes, or are the company’s difficulties a sign of the broader challenges facing electric cars?

As part of my reporting (much of which didn’t make its way into the story) I spoke to executives at General Motors, Nissan, the charging network eVgo and others, to see how electric cars are faring here in the U.S. Last year, Americans bought 52,000 all-electric cars or plug-in hybrids–vehicles, that is, designed to run primarily on electricity, like the Leaf,  the Chevy Volt and the Tesla. That’s about 0.35% of U.S. car sales, which topped 14.5 million in 2012. By comparison, the best-selling passenger car, the Toyota Camry, sold 405,000 units, without, incidentally, the benefit of the billions of dollars in government loans, grants and tax credits that have flowed to the electric car industry. EVs have attracted lots of attention but they have been slow to penetrate the mainstream. [click to continue...]

What’s the true cost of an electric car?

 

An electric car motorcade

Detroit’s the Motor City. California’s car culture is unsurpassed. But when the electric car industry staged an “innovation motorcade” of electric cars and trucks today, it did so in Washington, D.C.–fittingly, because, without the government, there would simply be no electric car industry.

Indeed, the market for electric cars is so distorted by government subsidies that it’s all be impossible to determine the true cost of an electric car.

Notice that I said cost and not price; there’s a difference, and it’s relevant to any conversation about business and the environment. Coal-powered electricity is cheap but the price doesn’t reflect the costs of burning coal, including lung disease, mining accidents and greenhouse gas emissions. (See Fossil Fuels: A Legacy of Disaster from the Center for American Progress.) Hamburgers are cheap but the true cost of beef includes methane emissions, farm subsidies and, arguably, heart disease. Gasoline-powered cars externalize costs that include smog, carbon emissions and, some would say, a foreign policy that favors stability, i.e., autocracy over democracy in the Middle East.

Markets, needless to say, work better when prices reflect true costs.

So what’s the true cost of an electric car? Hard to say. Sticker prices are high–Chevrolet’s Volt has an MSRP of $40,280, while the Nissan Leaf is priced at $32,780–but buyers get a $7,500 tax credit that reduces the cost. The government even gives tax credits to buyers of the $109,000 Tesla Roadster.

The tax credits are merely the most visible form of federal support. [click to continue...]

GM’s sustainability chief: charged up about the Volt

Outside the door to General Motors’ Washington office is a photo of the Chevy Volt framed by the U.S. Capitol.

GM loves to market the Volt, the 2011 Motor Trend Car of the Year (“A car of the future you can drive today.”) It’s an engineering breakthrough, a darling of the “green” media and evidence that stodgy old GM knows how to innovate.

So why, I asked Mike Robinson, GM’s vice president of environment, energy and safety policy, is GM selling so few Volts? Just 321 in January, 281 in February, according to GM’s monthly sales report. By comparison, Chevy sold nearly 70,000 Silverado pickup trucks during those two months.

“We’re on target,” he assured me. “We’ve probably got orders for every one we can build in the next year.” Chevy plans to sell 10,000 Volts this year, and another 45,000 next year and, if all goes well, a lot more after that.

“This is not a science project,” he said. “We really want to build a mass-market vehicle. We  believe that electric cars are a better long-term solution than pure gasoline.”

Strong words from an executive at GM, which remains the No. 1 automaker by sales in the U.S., selling 2.2 vehicles last year. If GM believes in electric cars, chances are we’ll be seeing many more of them in the years ahead. [click to continue...]

CODA electric cars, charging ahead

CODA sedan

No one said it would be easy for CODA Automotive, the California-based startup that makes all-electric cars and battery systems.

Two months ago, CODA delayed the introduction of its first car and said that its dynamic chief executive,  Kevin Czinger, was stepping down. Even before then, pundits wondered whether the company could survive (here and here).

When, after all, was the last time a U.S.-based startup broke into the capital-intensive automobile industry?

But, while CODA has a tough road ahead, it turns out that some smart money is betting on the privately-held firm: Last week, CODA announced that it raised another $76 million and brought in two new venture investors, Harbinger Capital Partners and Riverstone Holdings. Previous investors include Hank Paulson, the former treasury secretary and CEO of Goldman Sachs; Thomas “Mack” McLarty, Bill Clinton’s former chief of staff, whose family owns auto dealerships; and John Bryson, the former CEO of Edison International.

The company has now raised about $200 million, and hopes to raise another $50 million soon, says Steven “Mac” Heller, an investor, co-chairman of the board and now the company’s interim CEO. Heller spoke today (on a panel with GE’s Jeff Immelt) at the Brookings Institution, and we sat down afterward to talk about CODA. [click to continue...]

From the Gulf to the Volt

When trying to save the planet, every litter bit helps.

But let’s not lose sight of the forest when we’re saving a tree–or when General Motors is recycling “plastic boom material used to soak up oil in the Gulf of Mexico” into auto parts in the Chevrolet Volt.

Recycling is laudable–indeed, it points the way to a sustainable, zero-waste future where nothing is thrown away, and everything is made into something else. The Chevy Volt, meanwhile, is an innovative and efficient car–the “car of the year” according to Motor Trend. So the people at GM deserve kudos for developing the car and, now, for turning waste into auto parts, as illustrated in the photo below, which shows some of the materials that go into “underhood parts” of the car:

These materials (l to r): recovered boom material, shredded and densified boom material, post consumer plastic and recycled tires from GM's Milford Proving Ground are combined to create airflow management components for the Volt.

Nor is this effort to reuse and recycle an isolated effort. Just last week, according to Automotive News, GM reported that more than half the waste generated at its 145 plants worldwide is now “landfill free,” meaning the waste gets reused, recycled or converted into energy. Those plants employ more than 70,000 people–all of whom, presumably, are learning that it’s possible to reduce and reuse waste.

What’s more, GM last month announced that it was adding 1,000 jobs in Michigan to develop more hybrid and electric cars similar to the Volt, said The New York Times. GM’s chief executive, Daniel Akerson, said then that “electrification is critical to the global automotive industry.”

But a little perspective is required.

Chevrolet expects to sell about 10,000 Volts in 2010, and up to 45,000 more in 2011.

But GM is selling more than 8,000 cars and light trucks every day, according to Ward’sAuto.com, and most of those are SUVs and light trucks. [click to continue...]

Five myths about electric cars

Mary Ann Wright

Today’s guest post comes from three co-authors. Mary Ann Wright is vice president of technology and innovation for Johnson Controls Power Solutions, the largest maker of automotive batteries, including traditional lead acid batteries as well as advanced batteries for hybrid and electric vehicles. Evan Hirsh and Kasturi Rangan are a partner and principal, respectively, with Booz & Company, the big consulting firm.

It’s timely because Nissan has just introduced the all-electric Leaf to the U.S. market, and Chevrolet has introduced its Volt. On a personal note, I’ve been thinking about electric and hybrid-electric cars recently, too, because my beloved Honda Fit was totaled in an accident a couple of months ago. I was attracted to the idea of the Leaf or Volt but replaced my car with a lower-cost 2008 Honda Civic Hybrid–largely because I calculated that I’m unlikely to recoup the added costs of  the battery, even if gas prices rise, because I drive so little (roughly 6,000 miles) a year.

This points to a problem with all-electric cars that the authors highlight below. (See Myth 3) The limited range of electric cars means that they will appeal to customers–city dwellers, those who live in close-in suburbs, people who commute using public transport or work-at-home types like me–who have not not have to drive much each day. But  the higher upfront costs mean that the economics of electrics work better for people who drive a lot of miles.

Consumers want greener, more fuel-efficient vehicles for all the right reasons. Gasoline leaves a carbon footprint. It comes mostly from politically unstable regions, which puts our economic security at risk. Perhaps most of all, it’s become expensive over the last few years, and future prices are unpredictable.

Kasturi Rangan

But is the much-talked about all-electric vehicle (EV) the right alternative? Governments are providing incentives, carmakers are introducing new all-electric models, and the media has generated quite a bit of buzz, giving the impression that the widespread adoption of the EV is a done deal.

Much of the faith in a future of EVs, however, is based on five ideas that have more to do with myth than math. The facts point to a different outcome, especially in the U.S., over the next decade: that the winner of the alternative vehicle sweepstakes will be the gas-electric hybrid – not the all-electric car..

Myth 1 – The desire to go green will drive EV sales

Vehicle buyers want to be environmentally responsible, but they don’t want to pay a lot for it. It’s well documented that the vast majority of people are highly rational when they buy an automobile (typically their second largest purchase after a home). They are sensitive to sticker prices (including taxes, rebates and subsidies) and pay close attention to operating costs, such as fuel and maintenance. They make decisions based on the sum of all those parts – what experts call the Total Cost of Ownership.

In fact, pure electric vehicles, due to the expense of their large batteries, can cost more than twice as much as a comparable internal combustion engine vehicle. The initial price tag is a big deterrent, and the savings in operating costs aren’t enough make up the difference. Although environmental responsibility will drive some sales, mass adoption will come only if the total cost falls much further. [click to continue...]

My favorite green technology

No offense to those working hard to bring wind, solar or geothermal energy to scale, or to people who are jazzed about energy efficiency, but I’m going to end my blogging for 2009 by saying that I am really excited about electric cars. It’s my favorite green technology, and one that’s on the verge of a breakthrough.

Recently, I’ve had a chance to ride (briefly) in the Coda and in the Renault Fluence EV, part of Better Place‘s Denmark rollout. I’ve written at length about BYD, the Chinese electric-car company owned in part by Warren Buffett’s Berkshire Hathaway. And next year I am hoping to check out the Chevy Volt and the Nissan Leaf, as well as the Aptera from entrepreneur Bill Gross and the Tesla if the price comes down.

The electric car could bring about the biggest transformation of the auto industry since its invention. If  all goes well, we will be seeing many more of them on the roads in 2010 and especially 2011.

With thanks to Plug In America, a nonprofit group that promotes plug-in vehicles, which put this list together, here are12 myths about electric cars that, just in time for the 12 days of Christmas. Plug In America began as a group of electric vehicle (EV) drivers, so its members are speaking from experience.

I’m now going to do my best to slow down and stay away from my laptop between Christmas and New Year’s Day–so enjoy your holidays, happy new year and I’ll be back in 2010.

Aptera

Aptera

1. MYTH: EVs don’t have enough range. You’ll be stranded when you run out of electricity

FACT: Americans drive an average of 40 miles per day, according to the U.S. Dept. of Transportation. Most new BEVs have a range of at least double that and can be charged at any ordinary electrical outlet (120V) or publicly accessible station with a faster charger. The latter, already in use, will proliferate as the plug-in infrastructure is built out. At present, all it takes is planning for EV owners, who can travel up to 120 miles on a single charge, to use their cars on heavy travel days. Alternatively, a PHEV goes at least 300 miles on a combination of electricity and gasoline.

2. Myth: EVs are good for short city trips only

FACT: Consumers have owned and driven EVs for seven years or more and regularly use them for trips of up to 120 miles. [click to continue...]