Will electric cars enter the mainstream?

Nissan Leaf

Nissan Leaf

Of all the clean technologies out there, few generate as much buzz as electric cars. If only they generated more sales.

My story for Guardian Sustainable Business this week looks at electric cars, why they have been so slow to enter the mainstream and what the prospects are for quicker uptake of electric vehicles.

Here’s how it begins:

Pardon my metaphor, but is the tank half-empty or half-full when it comes to electric cars?

The bad news: start-up electric-car makers Aptera, Better Place, Coda and Fisker are out of business, or close to it. Of the 14.4m cars sold last year in the US, only 52,835 – one out of every 270 cars sold – were plug-in hybrids, like the Chevy Volt, or pure electric cars like the Nissan Leaf. Even with generous government subsidies, including a $7,500 (£5,000) tax credit for electric-car buyers, there is no hope of getting a million electric vehicles on the road by 2015, a goal set by president Obama in his 2011 State of the Union address.

And yet, virtually all the big auto-makers are charging ahead, with GM, Ford, Toyota, Honda, Volkswagen and BMW expanding their electrified offerings. So far this year, sales of electric cars are up by 123% over 2012, the Electric Drive Transportation Association (EDTA) reports. Influential publications such as Consumer Reports and Motor Trend rave about electric cars – in particular the new Tesla S. And all indications are that electric car owners are pleased with their vehicles.

“There is no buyer’s remorse,” says Arun Baskota, owner of a pure electric car and, more importantly, the president of eVgo, a startup company owned by utility NRG Energy that is building out electric-car charging infrastucture.

To get a sense of where the market is going, I sat down with Baskota after EDTA’s annual convention in Washington, and spoke by phone with Siddiq Khan, the co-author of a new report called Plug-In Electric Vehicles: Challenges and Opportunities, from the American Council for an Energy-Efficient Economy (ACEE). Both are optimistic about the future for electric cars, but they caution that mass adoption will take longer than most people (including, evidently, the president) expected.

The story goes on to argues, as I have before [See my blogpost, If electric cars are the answer, what's the question?] the the electric-car industry has yet to give car buyers a compelling reason to go electric. And the economics remain a challenge. With a very few exceptions–notably, the all-electric Nissan Leaf–the fuel savings that come from driving an electric vehicle are not big enough to pay back the higher initial costs of the vehicle.

Of course, predicting the future is very hard. Battery costs could drop, and battery performance could increase; in fact, they almost surely will. But until they do, electric cars will remain a niche product.

You can read the rest of the story here.

Better Place is alive, but not well

A Better Place battery switching station

A Better Place battery switching station

I’m driving a Better Place Renault Fluence all-electric car from Tel Aviv to a kibbutz in the northern Negev, about a 60-mile trip. I can’t decide whether to keep my eyes on the road, on the GPS system to make sure I don’t miss my exit or on the data flowing out of my 22 kWh  battery, telling me how much electricity I’m using at any given moment, how much remains and how much, in theory, I’ll have left when I reach my destination. A wrong turn or two, and I could run out of juice–and without an internal combustion engine in the car, a nearby gas station will be no help at all.

Suddenly, I understand “range anxiety.” Breathe slowly and deeply, I tell myself, trying to recall a meditation DVD I’d listened to a few days before.

Eventually, I relaxed and, by the time I’d made it to the kibbutz and back to Tel Aviv, I’d thoroughly enjoyed the trip. The Renault all-electric car ran smoothly, and silently, and it was fun to drive.. The ingenious, fully-automated battery-switching technology that the company has designed to make long-distance driving easier worked (almost) flawlessly. Better Place’s customer service, which I called upon on couple of times, was first-rate.

Having said that, Better Place appears to be running out of gas, er, electricity, well, actually, money and time. That’s a shame. This is a very cool company that set out to change the world. [click to continue...]

Enterprise and FedEx: Bullish on electric cars

The company that owns more cars than any other in America is buying more electric vehicles.

Andy Taylor, who is chairman and chief executive officer of Enterprise Holdings, which owns the flagship Enterprise Rent-A-Car brand as well as Alamo Rent A Car and National Car Rental, said at a Washington energy forum today that the company is expanding its offerings of electric cars as fast as it can.

Andy Taylor of Enterprise Holdings

“We are finally getting the vehicles in some numbers,” Taylor said, at the National Summit on Energy Security, where he and Fred Smith, chairman, CEO and president of FedEx Corp.

Smith, too, made an impassioned plea to electrify the U.S.’s cars and light trucks. If the goal is to displace imported oil, Smith said, “there has never been a technology that offers this much opportunity,” he said. [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...]

Must-see TV: What’s wrong with our energy policy?

Today, few words but a couple of videos instead, one from the left and one from the right (because we strive to be nonpartisan here at www.marcgunther.com).

The first, from the activist group Rainforest Action Network, is about the tragedy of mountaintop removal coal mining. RAN is running a campaign against banks that finance mountaintop removal, notably PNC, Citi and UBS. More here.

One thing I learned from the video: MTR coal accounts for just 7% of the coal burned in the U.S. Is this really necessary?

The second one-minute video comes from the conservative end of the political spectrum, namely, Fred Smith, the founder and CEO of FedEx. An advocate of electric cars, Smith is bothered by America’s dependence on imported oil.  He’s got a business agenda of course–high oil prices hurt FedEx–but the benefits of electrifying the U.S.’s transportation sector go well beyond cost to include reduced greenhouse gas emissions, air pollution and national security:

Thanks to Mitch Jackson for posting this on the FedEx blog. More info here. I’d encourage Fred Smith to talk to some of his Republican friends about why the threat of climate change is worth taking seriously.

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...]

Charge it! The challenge facing electric cars

With all the dismal environmental news of late–from the nuclear crisis in Japan to the Republican attacks on EPA in Congress–it will be a pleasure this week to turn my attention to one of the most exciting developments on the sustainability front: the arrival of electric cars in the U.S.

To be sure, the sales figures so far for the Chevy Volt and Nissan Leaf are tiny–Chevy sold 281 Volts in February and Nissan sold fewer than 100 Leafs–but both vehicles are, for now, available only in limited quantities and locations. What’s more, there are few places outside of their homes for owners to charge the cars.

On Thursday, I’ll be moderating a free webinar on the charging issue for The Energy Collective. It’s called The eMobility Challenge: Electric Cars and How to Keep Them Charged, it’ll be held at 1 p.m. ET/10 a.m. PT, and your can sign up here. We’ll take questions from listeners throughout the hour. Here’s info on details and panelists:

Electric vehicles offer a major opportunity for more energy-efficient transportation, as well as reduced dependency on carbon-producing fuels. However, the cars themselves are only half the solution. We must create a new charging infrastructure to get those cars the power they need. [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...]

“Where is Noah’s ark to save human beings?”

BYD's e6 electric car

Great companies have a purpose that goes beyond making money. Google wants to organize the world’s information. Walmart seeks to save people money so they can live better. The Walt Disney Co. tries to make people happy. (Or at least it used to; Disney’s current mission statement is a bunch of gobbledygook.)

Purpose matters. It’s a big reason why people go to work every day.

BYD, the Chinese company that makes electric cars, batteries and solar panels, has a grand purpose: It wants to save us all from climate change, which it calls “slow suicide.”

In a new company video (below), BYD says:

Glaciers are melting. Sea levels are rising. Who can guarantee that the next victims won’t be us?

Where is Noah’s ark to save human beings?

Where, indeed?

I’ve been fascinated by BYD — the letters are the initials of the company’s Chinese name, but they have come to stand for Build Your Dreams — since writing a FORTUNE cover story about the company in 2009. Two years ago, I visited BYD in Shenzhen, met with its founder and chief executive, Wang Chuan-Fu, and spoke about the company with Warren Buffett, Charles Munger and especially David Sokol of Berkshire Hathaway, who sits on the BYD board. Through its MidAmerican Energy subsidiary, Berkshire Hathaway bought 10% of BYD for $230 million in 2008. Despite some recent stumbles at BYD, the company’s market capitalization has grown to about $33 billion, so Berkshire’s stake is now worth about $3.3 billion. Not too shabby.

Lately, I’ve been in contact with  U.S. investors  who are bullish about the firm. One of them, Shai Dardashti, a Buffett admirer who runs a small money management firm, pointed me towards this seven-minute company video. It’s worth watching (although it ends abruptly for reasons that I haven’t been able to determine).

This video is fascinating in light of  BYD’s remarkable but brief history. Since 1995, it has evolved from a manufacturer of cell-phone batteries into one of China’s largest automobile companies and it is now making a major push into clean energy, both with the manufacturing of solar panels and  utility-scale batteries to store energy. (For more on BYD’s energy storage plans and MidAmerican Energy, see Warren Buffett’s Big Battery Play at GreenBiz. Recently, the city of Los Angeles’s Department of Water and Power (LADWP) and BYD said they would work together to develop a grid-scale battery project for renewable energy storage. [click to continue...]

How electric cars will save you money

If you are someone who watches your dollars and cents, you probably don’t own a plug-in hybrid. Sure, they deliver good gas mileage but it’s not good enough to offset the higher sticker price needed to cover the costs of the battery. (That’s why I own a Honda Fit.) Cars like the Toyota Prius and Honda Insight are expensive ways to say, ‘I’m green.’

Nissan Leaf

Electric cars are another story, and that’s why the arrival of the Nissan Leaf and the Chevy Volt in just a few months could become a watershed moment for the auto industry, as well as for the environmental movement. Unlike the Prius, the Leaf and Volt are not aimed at the early-adopter, eco-conscious, well-to-do niche buyers on the coasts and in places like Amherst, Ma., and Ann Arbor, Mi. They are being built for the mass market.

The economics make all the difference.

That, at least, is my takeaway from a discussion about electric cars held earlier today at a Washington Post Live event called Energy Now. (Video will be posted on the site, the newspaper says.) The panel was stacked with electric-car enthusiasts–Tony Posawatz from Chevy, Carlos Tavares of Nissan, David Crane of NRG Energy, David Vieau of battery-maker A123 Systems and a lone skeptic, Alan Crane of the National Research Council. But with the exception of Alan Crane, they all argued that electric cars will be not only fun to drive, not only convenient (because you don’t need to drive to a gas station to refuel) and not only good for the climate and for U.S. energy security, but also cheaper to own over the life of the car.

Chevy Volt

That’s essentially because (1) electric car engines are more efficient than internal-combustion engines and (2) generating electricity from a big coal, natural gas or nuclear plant is more efficient than burning gasoline in millions of cars.

This isn’t a new argument. I’ve heard it from people like David Sokol of Berkshire Hathaway and BYD, and from Shai Agassi (See Electric cars: all systems go) but David Crane’s explanation today laid out the math in clear terms.

Describing NRG’s plans in Houston (see Why the Petro Metro wants electric cars), Crane said the NRG-owned utility company, Reliant Energy, is working with Nissan and plans to offer Leaf owners an all-you-can-eat model for buying electricity to power the car. Here’s the selling proposition:

First, NRG would buy and install a Level 2 car charger for the home. Those are worth $1,500 to $2,000, Crane said, and they can fully charge a Leaf, which has a range of about 100 miles, in four to eight hours. “You come home from work, you plug it in, and in the morning it’s ready to go again,” he said. Second, NRG will build a network of charging stations around the city of Houston. “At no point will you be more than five miles away from a fast charge,” he said. )The business model for sustaining the stations remains uncertain.)  Third, NRG will offer  unlimited mileage for three years at a price still to be determined, but estimated at $70 to $80 a month, added to the utility bill. After the three years, the price would drop because by then NRG will have recouped the cost of the charging station and would only need to pay for the electricity.

So how does the math look? At $80 a month, fuel costs for the Leaf would be $960 a year. By comparison, assume that you drive a conventional car 15,000 miles a year and get 20 mpg. You’ll buy 750 gallons of gas. At $2.58 per gallon, the current average price on the Gulf Coast, you’ll pay just under $2,000 a year.

You can challenge my assumptions, but that $1,000 a year in fuel savings will over time offset the upfront cost of the Leaf, which is roughly $25,000 after a federal rebate in most places and $20,000 in California which offers a state rebate as well. If gas prices rise, the deal looks sweeter. It looks better yet if, as seems likely, the costs of batteries (and the sticker price) falls.

Then there are the psychic benefits. A123′s Vieau said the company has already hired 300 people at the battery-making plant it just opened in Livonia, Mi., and expects to hire many more. “We’re shifting dollars spent on oil overseas to create jobs at home,” Vieau said.

People who care about the environment, meanwhile, can take pride in the fact that they are driving cleaner cars.

“American’s want to make a difference if they can,” NRG’s Crane said. “Look at the organic food business.”

Now, a couple of caveats: Today’s electric car business is heavily subsidized, it must be noted. Buyers get tax breaks. Battery maker A123 got a $249-million stimulus grant, a federal loan guarantee and state subsidies and Nissan was given a $1.4 billion energy department loan guarantee to retool a plant in Smyrna, Tennessee. GM, of course, got bailed out.

The second caveat is that it will take years for electric cars to have a major impact. The Chevy Volt will be available in only seven states at first, Posawatz told me that Chevy will make only “thousands” of the cars in the first model year, and “tens of thousands” after that. “If the demand is there, we’ll keep building more,” he said.

Nissan will make about 60,000 Leafs in  Japan during 2011, for the world market. Nissan had been taking pre-orders for the Leaf on its U.S. website, but stopped today because 20,000 have been ordered. The company will be able to build more starting late in 2012 when it opens the Smyrna plant, which has a capacity of 150,000 units a year.

To put that in context, there are more than 250 million cars on the road today in the U.S.

Still, I received an interesting 62-page report earlier today from HSBC Research called Sizing the Climate Economy. (If you Google it, you can download a PDF.) Its best guess is that the market for low-carbon vehicles — essentially, electric cars — will grow to $473 billion worldwide by 2020, making low-carbon transport business a bigger investment opportunity than low-carbon energy.

Electric cars, in other words, are going to be a very big deal.