14 Mar 2011: Opinion

Can Electric Vehicles Take Off?
A Roadmap to Find the Answer

Electric cars are finally coming to market in the U.S., but what is the future potential for this much-touted technology? A good way to find out would be to launch demonstration projects in selected U.S. cities to determine if, given incentives and the proper infrastructure, the public will truly embrace plug-in vehicles.

by john d. graham and natalie messer

As instability in the Middle East pushes oil prices past $100 per barrel and gasoline prices toward $4 a gallon in the U.S., the need to find better ways to fuel our vehicles has never been more urgent. Some advocates see electric cars as the most promising solution and are urging policymakers to ensure their widespread use through federal subsidies or regulation, such as a requirement that all automakers offer a certain percentage of plug-in vehicles in their fleets. Skeptics argue that electric cars are too expensive, that taxpayer money should not be used to stimulate the purchase of luxury goods, and that market forces alone should determine the future of electric cars.

We believe that the right policy lies between these positions and that there is a clear path to test whether electric vehicles can be viable on a mass scale. The U.S. Department of Energy — in partnership with automakers, car dealers, electric utilities, universities, and local governments — should coordinate a national demonstration program of 500,000 to 1,000,000 electric vehicles in 10 to 20 designated communities from coast to coast. That was the chief recommendation of a recent in-depth study, in which we participated, that was conducted by a group of national experts on electric vehicles. These experts said that by concentrating the many pieces needed to create a viable market for electric vehicles — a variety of cars and trucks for lease and sale, a robust network of charging stations, state and local policies to make home recharging easy — these demonstration projects would give the country a clear sense of whether electric vehicles will play a significant role in the nation’s transportation future.

Nissan Leaf electric car
AFP
The Nissan Leaf has generated considerable interest from consumers, but its lithium-ion battery is heavy and expensive.
At first glance, the market outlook for electric vehicles seems bright; when compared on an energy-equivalent basis, electricity prices are 60 to 80 percent lower than gasoline prices. Yet the future of electric vehicles is far from assured. Will the high price of batteries come down sufficiently as economies of scale kick in? Will oil prices fall again as new reserves and drilling technologies are discovered, as has happened with natural gas? Will other technologies — such as hybrid cars or vehicles powered by natural gas, ethanol, or hydrogen — win the competition against electric cars?

Such questions may not be answered in the near future, but a well-planned national demonstration program for electric vehicles can help determine the promise, limitations, and costs of this technology. And once the demonstration is over and the facts gathered and disseminated, electric cars should be forced to compete in a technology-neutral marketplace where other promising alternatives are also considered.

How would a comprehensive EV demonstration program work?

The most cost-effective demonstration would stimulate sales or leasing of electric cars in a limited number of designated communities that have a range of weather patterns, commuting norms, electric utility systems, and
The goal of the projects is to push the number of electric cars and EV infrastructure toward a tipping point.
mass transit policies. Nissan and GM currently are concentrating some of their early marketing for electric vehicles in selected states, including California, New Jersey, North Carolina, Tennessee, and Texas. Given the current state of battery technology, demonstration projects should focus on commuter cars and delivery vehicles in urban areas because these vehicles typically make round trips within the range of a single charge.

The goal of the demonstration projects is to increase the number of electric cars and electric vehicle infrastructure in a community toward a tipping point. To reach that point, government and the private sector must take several key steps: municipalities and electric utilities should begin to modernize their practices, such as streamlining the permitting process for setting up home rechargers and implementing time-of-day pricing of electricity so recharging occurs primarily at night; more businesses to supply recharging stations for homes, workplaces, and shopping malls must be launched; and the development of a competent service and repair system for electric vehicles must emerge. Perhaps most importantly, as the infrastructure for electric vehicles grows, initial owners can be better assured that they will be able to re-sell their vehicles in the used-car market.

Without government leadership, no single company has adequate incentive to coordinate all of the stakeholders and agencies to bring a meaningful demonstration to fruition. The creation of 10 to 20 demonstration sites would not involve appropriating new public funds, but rather reallocating and focusing already-authorized government funding. If the demonstration sites are created in the near future, the results of this preliminary leap into the world of electric vehicles should be clear by 2020.

By electric cars, we refer to plug-in vehicles that make use of the electric grid for all or most of their energy. The Nissan Leaf and GM Volt, both now for sale, are generating significant consumer interest, at least among the
Incentives for electric cars may be spread too thinly, without a focus on a smaller number of communities.
“early adopter” community. The Leaf uses no gasoline whatsoever but has a range of only 70 to 100 miles before it must be recharged. The Volt, with a small back-up gasoline engine, can travel 375 miles before it must be recharged or refueled, and is sometimes classified as a plug-in hybrid. However, the lithium-ion batteries in both of these vehicles are heavy and expensive. While the real cost of batteries is declining, an electric car today still costs $10,000 to $20,000 more than a similar-sized gasoline car.

Congress, the Obama administration, and regulators in California and Washington, D.C. have already enacted numerous policies to support the production, sale, and use of electric vehicles. These include a generous federal tax credit — up to $7,500 — with some states adding up to $5,000 more in purchase incentives. The federal economic stimulus package is subsidizing recharging stations in various cities around the country, including Chicago and Baltimore. Federal loans and grants are available to manufacturers throughout the supply chain, from makers of lithium-ion cells to selected firms that assemble electric cars. California has mandated that each large vehicle manufacturer offer a small number of “zero-emission” vehicles by 2016, and some states and communities are offering HOV lane access and special parking benefits to users of electric vehicles.

So there is no shortage of political interest in electric cars. But current policies have two key shortcomings. The first is that incentives for electric vehicles may be spread too thinly around the country. The second is that no coordinated plan exists for evaluating the de facto demonstration that is now underway. Key data — who chooses to buy the vehicles, how the vehicles are driven, where they are recharged, and how utilities adjust their billing systems — is not being collected. Without rigorous evaluation, it will be impossible to learn from the successes — and failures — of an electric vehicle rollout.

As a nation, we do not need to use more taxpayer dollars to persuade technological enthusiasts and green consumers that they should buy an electric car. Tens of thousands of them will purchase a Leaf or Volt, despite
A technology may die after a successful pilot, before barriers to mass commercialization can be overcome.
the high price and a shortage of public recharging stations. But for sales of electric cars to achieve critical mass in any single community, the sales must expand to fleet buyers and mainstream retail purchasers. In the absence of government incentives, these buyers are unlikely to be convinced that the benefits of electric cars justify changing their driving behavior and paying a high sticker price. So instead of expending more public money in all communities, the existing public commitments need to be concentrated in a few.

But why should taxpayers support a national demonstration of an expensive, emerging technology? Part of the answer is the demonstrated failure of markets to address the persistent problems of oil insecurity and climate change. Yet even if the price of gasoline were raised high enough to account for these concerns, emerging technologies (such as the electric car) would still be disadvantaged compared to mature technologies because of imperfections in the process of innovation in the auto industry. This is in part due to imperfections in patent laws in the auto sector, which allow one manufacturer’s innovation to be easily copied by others, thus discouraging companies to be the first to invest in new technologies like electric drive systems.

In addition, once an innovative technology is invented and pilot-tested on a small number of vehicles, manufacturers and their suppliers face a “valley of death” in the commercialization process. Even a promising technology may die after a successful pilot, before the barriers to mass commercialization can be overcome. Someone needs to spend significant resources to educate the public about electric vehicles, change the permitting practices of municipalities, coordinate with local utilities to ensure uninterrupted electricity supplies, and create an entirely new supply chain — including servicing and disposal — for electric vehicles.

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For sure, most automakers will offer a few plug-in vehicles to satisfy California regulators and achieve good publicity. But without some temporary government support — consumer tax credits, loan guarantees for automakers, and research and development funding — to reduce the risks of high-volume production, no manufacturer has adequate incentive to be the innovator who takes the big risk of mass producing electric cars.

A national demonstration program, coupled with community information programs, can reduce the risk to manufacturers and suppliers of making high-volume production commitments. The demonstration will also let the public see how this technology operates in the real world — its benefits, costs, and complications. Once the demonstration is over, all public subsidy of electric vehicles — except for basic R&D into new battery chemistries — should be terminated.

It is too early to tell if electric cars will be a key piece of the technology portfolio that addresses the global problems of energy insecurity and climate change. The technology has potential. Now it is the responsibility of policymakers to nurture and test that potential to give it a fair chance in the marketplace.

POSTED ON 14 Mar 2011 IN Business & Innovation Business & Innovation Energy Policy & Politics North America North America 

COMMENTS


A few thoughts:

1) for now, given the range limitations of electric, PEV's remain our preferred choice. A PEV will be our next car purchase -- we can't wait. Ideally, we'll charge it on a home solar system. Ultimately our dream is an EV charged by a home solar system.

2) What of Better Place? I can't help but think that their battery replacement system holds hope for solving a number of critical logistical problems people have with EVs. For example: a) range limitations: most driving is fine on one battery. But want to take a road trip? How about purchasing or RENTING an extra battery or two and perhaps a charging unit..? This would seem to be possible with a Better Place type system...

b) charge time: the possibility of pulling in and getting a fresh battery in a minute or two is certainly more convenient than having to charge for hours.

c) end of life: once batteries wear thin, this type of system would seem to be ripe for a cradle-to-cradle approach to battery life, where the deliverer of new batteries to stations can also pick up ones that have reached the end of their usefulness. I know that also happens today, but it would seem to be particularly easy with Better Place systems.

Could somebody please comment on whether any of the major automakers are working on partnerships with Better Place, and if not, why? (While I'm a scientist, I'm no EV expert - I've just read about these systems and they've seemed to make the most sense out of any of the EV approaches)

Thanks!

Posted by Jon Gelbard on 14 Mar 2011


This sounds almost exactly like what the Electrification Coalition proposed over a year ago. Is there any content here incremental to that?

Posted by Tim Kusolski on 14 Mar 2011


In the article, you say "when compared on an energy-equivalent basis, electricity prices are 60 to 80 percent lower than gasoline prices". Actually, prices are fairly close on an energy-equivalency basis. A $4 gallon of gas contains about 33 kWh of energy, or $4 worth at 12 cents per kWh, close to the US average.

The lower fuel cost of electric cars is due to the fact that electric engines are far more efficient than a gas engine, and require 60-80% fewer kWh to power the car an equivalent distance.

Posted by WholeBuffalo on 14 Mar 2011


I can comment on the Better Place model. I've been driving a production EV for over 8 years now (Toyota RAV4 EV circa 2002). I recently purchased a LEAF and have about 2 months behinds its wheel.

I rode in a Better Place converted Nissan SUV in Tokyo last June while it drove into the battery swap facility and 60 seconds later drove back out with a full battery. Very slick.

Here's why it won't work, at least not for general use.

The battery packs in the modern EVs are integrated into the structure of the such that they can withstand tremendous impacts, and therefore a quick release, while not impossible to engineer, is at least very expensive. There is no standardization of the battery chemistries or the size of the packs, so each of the battery swap stations will have to stock numerous copies of potentially dozens of packs, keep them charged and wait for a particular car to come use one. The batteries are rather expensive, so the capitalization costs of building the station and buying lots of packs combined with the operational costs of staffing and supplying the electricity are substantial.

With that in hand, what is the income stream? Well, most BEVs will have a capacity of anywhere from 20 kWh to maybe 30 kWh. The average cost of a kWh in the U.S. is 10 cents. The station will have to buy those from a utility, then mark them up for their profit. You'll make maybe a dollar or two if lucky.

This doesn't come close to penciling out.

And when you see that the competition to battery swapping is fast charging on 50 kW, and even 120 kW DC chargers, taking 15-30 minutes to fill the battery, you begin to see that the swap idea isn't viable by a long stretch. You also have the plug-in hybrid as a competitor for long distance trips. Or, the BEV driver who only goes on long trips now and then could just borrow a friend's Prius or rent a car.

Shai Agassi has raised a lot of money on this concept, but when you think it all the way through, it's not really viable. I'd prefer he stick with getting a good BEV on the road asap. We need as many as we can get, and we need them fast!

Posted by Paul Scott on 15 Mar 2011


At long last people are beginning to see the alternatives. The only issue I can see is the retention and charge up times of the batteries. So to combat the issue, why not designate battery sites alongside pump stations, and literally change the battery?

Posted by Peter Kuo on 15 Mar 2011


I keep waiting for an obvious use/test of many new alternative vehicles, the Postal Service.
Their fleet has stop and go driving demands and is visible to all. What a terrific opportunity.

Posted by Frank on 15 Mar 2011


And is coal the power behind these vehicles?

If so, not clean.

Also all this focus on driving is just a cultural con from the auto industry.

Posted by M Munn on 17 Mar 2011


I think many of the problems we face are due to private car use - no matter what fuel/energy system they use. Cars are the problem - they take up huge amounts of resources and far too much space. They also kill and maim people at an astonishing rate which we seem to have come to accept as the price of progress. Electric cars are only marginally better since they produce no emissions as they are used - but they do produce all kinds of issues starting with the extraction of rare earth metals all the way through to how they are disposed of at the end of their life. And in use they cause just as much traffic congestion and require just as much parking space. Their drivers are no safer than IC car drivers. Worse there is the Jevons paradox that encourages people to use them more because they think that somehow driving an EV or hybrid exempts them from all controls. Indeed, many states encourage this view by allowing them into HOV lanes, or giving them favourable parking places.

EVs are are a dangerous distraction from the real needs of this planet - which is to get people to use more of their own motive power (walking and cycling) and - where that is impractical - public transport of all kinds. Moreover EVs are really essential to the promoters of nuclear power generation as they provide an essential place to dump excess power in off peak periods (nuclear power stations being really hard to turn off!)

Posted by Stephen Rees on 17 Mar 2011


Firstly I fully support demonstrations of new transport technology. That is the best way to let people see options. The present global reliance on oil based cars is very mature from a marketing/economic point of view and subject to considerable change with emerging concerns about oil and carbon emissions. If a demonstration is promoted by an R&D group or local govt etc why not look at a wider range of alternatives. Why not improve the second transport corridor(currently called bike paths) and allow as well as bikes, low speed powered micro vehicles including Segways, faster mobility chairs, mini golf carts etc., hopefully at low cost, (covered from rain ?) maybe with licencing for safety mgt, to get people from home to transport nodes, shops, work etc, say for up to 8kms (5 miles) as a way of maintaining mobility and flexibility, but maybe for one family member (relating to a % of the current fleet) substituting a say 50 kg machine for a 1500 kg car, with significantly lower cost in manufacture, running, and possibly road building. This could cause a different approach to urban planning so no one would consider without proven demonstrations.
I own a car and ride a bike to work, but most people don't or wont.

What bothers me about the current developments in electric cars is that they are trying to replicate oil based cars. The Volt is around 1,400 kilograms with high performance. While cost will reduce with scale there is still a lot of energy to make and operate one for moving a person around. The main pluses seems to be efficient running in urban areas, use of off-peak power supply and avoiding reliance on imported oil. A modern small diesel car seems to use less energy than an electric one on a long trip.

Posted by Ron Wilson on 19 Mar 2011


Does this mean that the price of the electricity will go up? And in the future will not be able to pay electricity for our homes caused by the raise of demand??

This doesn´t seem to be the way, it´s more of the same. Will be completely dependent of the electricity companies like now we are from the oil companies.

Posted by João Crawford on 20 Mar 2011


Excellent article. China has ambitious plans to promote Electric vehicles and so is US. Future belongs to electric vehicles which are pollution-free.

Dr.A.Jagadeesh Nellore(AP),India

Posted by Dr.A.Jagadeesh on 04 Apr 2011


Electric vehicles have no exhaust pipe, so are often touted as pollution-free.

They are anything but. The first generation of electric vehicles will be fuelled by power from our national grids and most of that is from fossil fuels.

That still makes them marginally less polluting than a gasoline engine vehicle, but marginal is the operative word.

Electric cars that can virtually match the performance of gasoline cars are a non-solution, though they may be a 'feel good' purchase.

The public sentiment that to buy one will give us a free green ticket to heaven is badly misplace. Small electric cars will have a place in the energy mix of the future, but we should get away from any romantic sense that they are inherently green.

Posted by Chris Harries on 06 Apr 2011


I believe it is unfair to talk about electric vehicles and not mention Tesla Motors Once. If you want to push electric..Help the ALL ELECTRIC-AMERICAN AUTO COMPANY..Thank you...that is all.

Posted by John Fowler on 09 Apr 2011


Thought provoking article on Electric Vehicles by John D. Graham and Natalie Messer.

China is advancing Electric Vehicles in a big way. In fact the very concept of Electric Vehicles was mooted in US.

Dr.A.Jagadeesh Nellore(AP),India

Posted by Dr.A.Jagadeesh on 04 May 2011


There seems to be little understanding here of EOREI (energy output relative to energy investment), and that 3 times more energy is used to make/maintain/dismantle a car than it uses on the road in it's lifecyle.

And of course this takes for granted that roads will be there, and in A+ condition into the future.

I still occasionally use a car, and whenever possible I ride an electric-assist cargo bicycle. It is ecologically light years ahead of any car, regardless of what fuel the car runs on. It allows me to do a lot of my round town work as a Permaculture gardener/designer. I also run a stall at the local market via the bike and a trailer.

Cars require roads and a settlement pattern that is not sustainable. The cultural imperative of cars and roads really needs to be looked at.

In the face of the 6th Mass Extinction event, it is severe hubris and highly anthropocentric to think that modern industrial "civilised" humans must have a continuance of car culture.

On ya bike! Go local so you work at or close to home and don't need a car.

Posted by Ted Howard on 20 May 2011


"As a nation, we do not need to use more taxpayer dollars to persuade technological enthusiasts and green consumers that they should buy an electric car."

No, but to give EV's a chance on an uneven playing field caused by fossil fuel prices that don't reflect the harm the do and to help the R&D of this new technology.

In my opinion we should put a tax on fossil fuels, but since that is far from possible in the U.S...

Posted by Diego Matter on 19 Aug 2011


Gasoline & Diesel vehicles carry only half their fuel: the other half is atmospheric oxygen. The electric vehicles need half-a-ton of batteries, and still have limited range.

I'd say they should expand beyond golf carts into local delivery vehicles with a defined route. USPS would be one good example. For long range vehicles, I'm not feelin' it for the future of EV's. They'd need to develop batteries that could compete with today's gasoline tank: a pourable liquid that fully utilizes chemical bonds throughout the whole liquid, wasting none of it on structure, with the other half of the fuel taken in through the air cleaner. How can you compete with that?

Better to use the electricity to fabricate synthetic fossil fuels.

Posted by Doug Selsam on 28 Sep 2011


Comments have been closed on this feature.
john d. graham and natalie messerABOUT THE AUTHORS
John D. Graham is dean of the School of Public and Environmental Affairs at Indiana University (IU). He served as the administrator of the Office of Information and Regulatory Affairs at the White House from 2001 to 2006 under President George W. Bush. Natalie Messer is a Masters of Public Affairs student at the School of Public and Environmental Affairs. The views of the authors are based in part on the report of IU’s Transport Electrification Panel (TEP), “Plug-in Electric Vehicles: A Practical Plan for Progress.

 
 

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