The Road to an Electric Car Future

by Larry Smith

Tough Call spent three days last week at a conference in Washington DC sponsored by the Electric Drive Transportation Association, an industry grouping that supports the commercialization of electric transportation technologies. Speakers included top executives and engineers from mainstream and niche automakers, battery and component producers, electric utilities, the US Department of Energy and venture capital funds.

Although oil demand has collapsed due to the global recession (prices have plunged $100 per barrel in only four months), the mid-term forecast is for continuing volatility, with some experts predicting a price of $300 per barrel when the economy recovers. The Bahamas gets all of its energy from imported fossil fuel, and the transportation sector is a big consumer. And if we can't import enough oil for whatever reason, our economy will shut down.

Burning oil not only wastes our scarce foreign exchange, it pollutes the air and contributes to global warming, which scientists say could melt enough polar ice to inundate our islands. But there are interesting things afoot that could change all that  - if we have the vision to take advantage of them. What follows is an up-to-the-minute report on the current state of the electric car industry. Next week we will talk about how this industry may relate to the Bahamas.

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Hundreds of auto and energy industry leaders, as well as scores of media representatives, were in Washington DC the first week in December for the Electric Drive conference - an event aimed at transforming the transportation industry.

There has been unprecedented interest in electric vehicles lately, and some conference sessions were standing room only. Many of the speakers made special note of this heightened interest in a technology that is still a few years away from mass production.

Many also pointed to the irony of the big three auto chiefs driving from Detroit to Washington in hybrid cars to ask Congress for billions of dollars to restructure their companies as conventional vehicle sales plummet.

Perhaps 13 million new cars and trucks will be sold in the US this year, down from more than 16 million in 2007. And some analysts predict that sales could drop to 11 million next year. There are 250 million vehicles on the road today in the United States and 750 million worldwide, and this figure is expected to grow to more than a billion in a few years.

Advanced vehicle technologies still have a long way to go to penetrate this market. Sales of hybrids, for example, (which combine electric and internal combustion engines) were just over 300,000 last year in the US.

But only five years ago the Toyota Prius - the first mass-produced hybrid - was an expensive and rare California novelty. It is now Toyota's third best seller, and there are 20 other hybrids on the market. And every major manufacturer plans to offer all their models as hybrids in the near future.

And that's just the tip of the iceberg. President-elect Barack Obama has promised to put a million plug-in hybrids on the road by 2015. Whereas hybrids recharge their batteries by regenerative braking, plug-in hybrids can recharge from the utility grid, and generally get greater fuel economy - over 75 mpg in fact.

"There is no better potential driver that pervades all aspects of our economy than a new energy economy," Obama has said. "That’s going to be my number one priority.“

Meanwhile, several companies are working on highway-speed vehicles powered solely by electricity. They include 5-passenger, mid-priced sedans from start-ups like Miles Electric, Tesla Motors and Zenn Motor Company, as well as entries from mainstream manufacturers like Mitsubishi and Nissan.

These will be no-compromise, fully-equipped models powered by advanced lithium-ion batteries with 100-mile ranges and speeds of more than 80 mph. The production horizon for significant numbers of these vehicles is about 2012. In the meantime, some manufacturers are offering low-speed (35 mph) smart cars with 40-mile ranges using less costly lead-acid batteries.

Production costs and timelines for highway-speed models depend on both the supply of lithium and increased battery manufacturing capability. The current world production of lithium is about 100 kilotonnes, most of which is used in small batteries for electronic goods. Auto batteries are much larger and global demand of 500 kilotonnes a year is forecast just to supply a niche market. If EVs become widespread, far more could be required. 

The United States has about 20 per cent of the world's lithium reserves and China has just under 12 per cent (as well as most of the world's battery production capacity). About half of global reserves are in South America, especially Bolivia. Lithium batteries have achieved 180-mile ranges in test drives and have 10-year lifespans.

Speakers at the Electric Drive conference agreed that more battery production capability was critical to bring costs down and achieve major market inroads. The technology is ready, but to produce millions of batteries to meet the Obama administration's timeline requires a major investment in new factories

The Chevy Volt that GM plans to introduce in 2010 is powered mainly by lithium ion batteries, but includes a small gasoline engine to extend the range by 300 miles. The Volt will have a top speed of over 100 mph and a price in the $40,000 range. A non-working model was on display at the conference.

Tony Posawatz, director of the Volt programme, was a featured speaker at the conference, assuring everyone that this new generation GM electric car would in fact be built. But at the same time, his boss, Rick Wagoner, was on Captitol Hill telling Congress that GM would be out of business in a month without a public bail-out.

The Electric Drive Transportation Association is the pre-eminent trade grouping for the electric vehicle industry in the US. Its membership includes automotive and component manufacturers, energy companies, technology developers, and government agencies. 

Opening the December 2-4 conference was Senator Byron Dorgan, Democrat of North Dakota who chairs two energy committees in the Senate. He said a new energy bill would be passed early in the Obama administration, and it would include fresh incentives for energy production, conservation and efficiency, with much greater emphasis on renewable fuels.

"The change must come in large part from the auto sector, which consumes 70 per cent of the oil we use. Recently, $4 gas caused Americans to have a seizure, but now that it is $2 a gallon it is no less urgent to change. No matter what the price we have to change. And this moment may mark the first time there will be real change in the auto industry."

He was referring to a growing consensus that electrification of the transportation system is the most effective way to solve a range of pressing issues - from energy security to global warming and pollution. And mainstream automakers are buying into this future.

Mike Carr, Senate Energy and Natural Resources Committee counsel, told a conference session that "Detroit's business plan shows that (electrification) is where they want to go. We need to think creatively about how we can get consumers on board to achieve the orders of magnitude changes that are needed."

Alan Salzman of Vantage Point Venture Partners, was one of the major financiers taking part in the conference. His investment firm manages $5 billion and was a principal backer of the high-performance Tesla electric roadster, which is on sale now at a sticker price of over $100,000.

"We focus on industries that are going through rapid transformation and we bet on the inevitable. The electrification of transportation is just as inevitable today as PCs supplanting mainframes was in the 1980s," he said. "Transformation takes place in fits and starts until it reaches a tipping point and then it accelerates. I think we are at that tipping point now in the transportation industry."

Or, as one observer in the audience put it: "If government gets its shit together this thing will be gigantic."

EDTA President Brian Wynne said he could not have predicted the changes that have occurred over the past two years since the association's last conference: "There is a growing perception that electrification of transportation is critical to reducing oil imports and carbon emissions, and increasing green jobs."

Mike Andrew of Johnson Controls, a leading battery and component producer, said Detroit (the home of the American auto industry) was known as the arsenal of democracy during the second world war, but its manufacturing capabilities have slipped. He said transforming the energy sector was the key to maintaining America's manufacturing base.

 "We can't divorce our energy future from our manufacturing future. Government aid has to drive forward a new paradigm for the transportation industry. The key is electrification across the board to the greatest degree possible."

Most of the speakers urged government to set clear social policy goals and put carbon mandates in place to support the transition to a new energy economy. Among the measures called for were more funding for battery research, consumer incentives, and kick-starting demand with public sector fleet orders.

One of the most interesting initiatives discussed was Project Better Place, which has partnered with Israel, Denmark, Australia, California and (most recently) Hawaii to deploy the world's first electric car networks by 2012. This project is also backed by Vantage Point Venture Partners. 

Better Place describes itself as a mobility operator that builds networks of charging spots and roadside battery switching stations powered by renewable energy. Electric cars to use the networks will initially be provided by Nissan and Renault.

The roadside swap stations are for longer journeys. But experts point out that most driving is within 40 miles of the home, so visits to these stations will be infrequent when compared to the number of times drivers currently have to pull into a gas station. Charging spots will be installed at parking garages, stores, street curbs and homes so drivers can keep their batteries topped up. 

Under the Better Place business model, drivers will pay to access this network of charging spots and battery exchange stations, while the cars themselves will be made more affordable—like cell phones—by the financial and environmental incentives to add drivers to the network. Transforming transportation is the goal - a process that is best described on the Better Place website:

"As consumers, we can continue our love affair with cars, and even rekindle that relationship by experiencing transportation as a sustainable service. As nations, we can redefine the economics of transportation by breaking the connection with oil. And as a global population, we can see our environment flourish because of our economic growth and prosperity."

Comments

[Erasmus Folly]

As always, so far ahead of the curve! Wonderful. This is where dialogue in this country should be, but, sadly, Bahamians still dream of SUVs and Maximas with rims...

Stupid is as stupid does...

The education bar in this country must be raised, so that the politicians can't pander to so many stupid voters. We have massive challenges. The voters must demand more, but to do so, they must know more.

[Chef Dawkins]

You failed to mention that years ago a type of environmently friendly car was being built or assembled in freeport, and that also in the past most of the public transport in the US was electrical.

One of the reasons the bahamas cannot get it's act together is that our governments do not have long term objectives because they are usually in power for five years - and what happens? Petty politics instead of focusing on important issues.

we talk about sun, sea and sand but do nothing to harness energy from the sun and sea or the wind mainly because government is happy with the tried and the true.

As you said "if government gets it shit together this thing will be gigantic."

Thank you for that excellent work of penmanship. Please look into the freeport debacle.

[las]

Actually I wrote about the Silver Volt in February of this year...

http://www.bahamapundit.com/2008/02/those-awful-new.html

And also here...

http://www.bahamasecoforum.com/2008/03/recalling-the-s.html#more

This is now a fuel cell vehicle, and they claim their research is ongoing. See...

http://www.electricauto.com/history.html

My article today was a report on last week's conference.

I agree with you totally about the five-year cycle.

But kudos to you for recalling the silver volt!

[Rick]

Like Larry, I think the electric vehicle is an important first step, even though the reality is four years away in the US.
I honestly believe fuel cell is where the world is ultimately headed, further along than electric vehicles of course.
We must not lose sight of the higher prices for new technology though.
The other questions are when/will they be available to our market and will people buy?
And... how does all this jibe with consumer choice?