Who's Leading the EV World Race?

By Bill Moore

Posted: 09 Apr 2010

Chris Paine, the director of 'Who Killed the Electric Car?,' asked me an interesting question this morning via email. Apparently someone had asked it of him and so, quite naturally, he decided to turn to me. I say this with tongue-in-cheek, since there are a lot of other people more qualified than I am he could ask, and probably should. Here's his question:

Who and where in the world is the most progressive when it comes to leading the way with electric cars? And what are they doing that puts them at the head of the game? China? Israel? The US? France? California? Hawaii? or....

Now, I want you to think about this for a moment. Who would you say is the most progressive in our nascent EV world? Go ahead, take your time. While you're thinking about this, here's my 'shoot from the hip' response to his inquiry:

Tough question, Chris.   Lots of showboating, but no real breakthroughs, in my view, at least at the consumer level, with the possible exception of Nissan's latest Leaf pricing announcement. Most governments seem to be implementing some good policy, but on the consumer acceptance side, it's a hard call.  EVs in China are too expensive compared to cheap ice's.  Hawaii just seems to be getting started.  Israel has the right incentives (policy, energy costs-wise, and BP business model). US seems to be coming on like 'gang-busters' with Obama Admin.  France talks a lot, but its OEMs seem to be concentrating outside the country.  Spain's an interesting place... could be the dark horse.   UK is very interesting, especially with Boris Johnson in London.  California's budget woes cast a long shadow over how much support it will be able to give.   

At the moment, it's a horse race, too close to call.  

One of my jobs, as I see it, is to try and keep tabs on what governments around the world, as well as manufacturers, are doing to promote the adoption of sustainable vehicle technologies. What has emerged over the last couple years is that there is serious recognition that not only do more sustainable mobility options offer a pathway away from dependence on petroleum and all its environmental, political and economic baggage, as well as a means by which, if done properly, to reduce a nation's carbon footprint, it also holds the promise of creating thousands of new jobs and industries, which is critically important to political leaders around the planet just now.

A new study just released by the Electrification Coalition, and performed by the University of Maryland's Interindustry Forecasting Project and Keybridge Research LLC, estimates that shifting America's light-duty fleet away from oil to electricity could generate by 2030 as many as 560,000 new manufacturing jobs, 276,000 more jobs in travel and tourism, and 73,000 new jobs in professional services. They forecast, "Employment in the motor vehicle industry (including motor vehicle parts) would be about 106,000 jobs higher than the base. Employment in the industries that supply key electric and electronic components to electric vehicles would increase by 112,000 jobs." Presumably other nations with automotive production sectors would experience similar employment trends.

But as to the question of who's leading the "race" technologically and policy-wise, I don't think anyone has a clear lead. If you focus on volume battery production, Asia wins, hands down. Most of the world's advanced batteries for hybrids come from either Japan, Korea or China, with the latter being driven by the explosive growth of electric two-wheeler bicycle, moped, and scooter sales numbering in the tens of millions annually. China also currently holds a strategic monopoly on the rare earth minerals that make electric vehicles possible.

In terms of actual vehicle production, that depends on what level of electrification your are talking about: In micro-hybrids using BSG (belt-starter-generator) technology, the Europeans, and France, in particular, have a noticeable lead. Conventional hybrids will have to go to Japanese OEMs, but with U.S. OEMs -- Ford in particular -- not far behind. Plug-in hybrids are a neck-n-neck race between Japanese, Chinese and U.S. OEMs, with the most serious contender -- at the moment -- being General Motors and the Volt. While BYD was out of the starting gate a good two years ahead of GM, its sales of the F3DM have been disappointing to date. However, GM cannot assume the Volt will hold any serious lead for long, not with Toyota's Prius PHV coming up from behind and Hyundai now promising a PHEV by 2012. For the time being, Renault-Nissan own the battery electric car field between the LEAF and Better Place's 100,000 car order with Renault. Second place goes to Mitsubishi's i-MiEV and rebadged Ion in Europe. Think can be a player, but it'll take time and probably a larger partnership, perhaps with Russian billionaire Mikhail Prokhorov, who is developing an electric car in Togliatti. A major shareholder in Think is EnerOne, whose largest investor also happens to be Russian. Since the Think city is currently being built in Finland, I would think there would be some strategic synergies for Prokhorov to tie up with Think rather than develop his own model, which leaves a lot to be desired from early concept drawings.

What about Tesla, you ask? In terms of public mindshare, they are clearly serious contenders, but there has never been a successful independent auto maker launch for the last half century or more. The companies that are still around, are the ones that were around in 1920, with the possible exception of Jeep, which itself has gone through several corporate identity makeovers. There might be some others, if you exclude Asian car companies, but not many survive for long. If Tesla can successfully launch the Model S and doesn't find itself absorbed by Daimler, which has now allied itself with BYD in China and Renault-Nissan in Europe, then it stands a chance of being the first new brand to succeed. The same can be said for Fisker. Certainly the U.S. government has placed heavy, multimillion dollar bets on both "horses." Then there are the countless start-ups operating in or just emerging from "stealth" mode: EnVision Motor Company, V-Vehicles, GreenTech Automotive, ARRA, Bright Automotive, GEV, just to name a few. While the bankruptcy of GM and Chrysler demonstrate that history and size isn't a guarantee for success in the car business, it certainly can't hurt in terms of customer confidence and sheer scale of economics.

As for government and public policy, I would certainly give passing marks for the U.S. government under President Obama, but then the same can be said for the leadership in China, Britain, even Spain. Jobs and national prestige are the drivers here, and each has a slightly different game plan, tailored to their individual political and economic circumstances.

Take Israel, for example; the first nation where Better Place will implement their "pay-by-the-kilometer" business model. Geographically and politically, they have an strong incentive to cut their fragile umbilical chord through which its petroleum flows, much of it through one of the Better Place's largest investors: Israel Corp. It has a literate population and high energy costs, with tax incentives that favor electric cars. If Better Place's model can't work here, it may not work anywhere else. Fortunately, it appears that many Israelis 'get it,' with 50 people day supposedly signing up for the program when it starts in earnest in 2012.

However, as the Electrification Coalition report soberly notes, four factors "can be expected to hinder the adoption of grid-enabled vehicles:"

1. The current high cost of batteries;
2. The current lack of reliable access to refueling infrastructure for GEVs;
3. Regulatory and coordination problems that will complicate interface with the electric power sector; and
4. Consumer acceptance issues.

These factors can be applied just as easily in China, Australia, Italy or Sweden, as in America. The Coalition recommends a number of policy initiatives, all of which or politically gridlocked, that won't be easy. However, as the latest report points out:

It is also critical to note that the status quo is not free. That is, oil dependence, driven largely by the U.S. transportation sector, inflicts significant economic damage on the United States each year. During times of high and volatile oil prices, the damage is particularly striking. For example, researchers at the Oak Ridge National Laboratory estimate the combined economic costs of U.S. oil dependence to be more than $5 trillion (2008 dollars) since 1970. In 2008 alone, the combined cost was nearly $600 billion.2 In 2009, a year in which oil prices averaged just $62 per barrel and U.S. oil consumption was significantly reduced compared to 2005-2007 levels, the United States still ran a $200 billion trade deficit in crude oil and petroleum products. In that context, the government spending of $120 billion over 8 years—particularly as it is directly tied to high penetration rates of grid-enabled vehicles—can be thought of as a relatively affordable down payment on future economic stability.

They estimate that by 2030, if these policies are implemented in a timely fashion, the net cumulative effect with be an additional $336 billion U.S. federal surplus. That's a number that should warm the heart of any fiscal conservative. Here's the two relevant charts from the study.

If you have a personal favorite country in the EV world 'race,' let me know who and why. Use the comment form below. I am sure other readers would love to hear your thoughts, including Mr. Paine.

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