Is the Chevy Volt Just Hype?
Almost every major auto manufacturer has now announced plans to offer a plug-in hybrid vehicle that can run on electricity for 20-40 miles before switching to gasoline. Since half of American cars travel under 25 miles a day, plug-ins allow people to do most of their driving on electricity, but still have a car for long-distance trips that can be easily and quickly refuelled with gasoline.
The most highly anticipated of all the plug-ins is the Chevy Volt, whose new design was recently rolled out by GM. It will be offered to the public by the end of 2010, and, soon after that, GM expects to be selling 60,000 a year.
One key advantage of electricity as an alternative fuel is that it is much, much cheaper per mile than gasoline at current prices. GM says it will cost $0.02 per mile to drive the Volt less than 40 miles per day, versus $0.12 per mile for gasoline at a price of $3.60. If gas prices continue to rise over the next decade, as many think, the fuel savings from plug-ins will only grow.
Another advantage is that electricity can come from pollution-free sources that do not contribute to global warming. There simply is no other alternative fuel that offers a more affordable and practical path to sharply reducing the transportation sector's greenhouse gas emissions.
That said, the lithium-ion batteries required for plug-ins have never been used for this application before. As one battery expert told me: "There are only pilot production of various Li-Ion batteries" around the world. An alternative fuel vehicle expert told me that GM has "already sunk at least $1bn into the Volt and cannot reasonably expect a profit from a $45,000 new car in an economy which is imploding. The actual cost of the vehicle may be higher."
So to succeed, plug-ins like the Volt will require several years of sustained government support. But that should not be a surprise. No country in the world has achieved significant market penetration of an alternative-fuel vehicle without major government incentives and mandates.
Yet while Barack Obama strongly believes in such incentives and mandates, John McCain has a quarter-century record in Congress strongly opposing them. Indeed, he has voted with oil-patch senator James Inhofe and against clean energy and alternative fuels a remarkable 42 out of 44 times since the mid-1990s, not even counting the last eight consecutive votes on renewable energy incentives that he didn't bother to show up for.
His campaign's big new idea for pushing plug-ins? He proposed a $300m government prize to whoever develops a car battery that far surpasses current batteries. But every energy and car company on the planet already knows they'll get rich by improving batteries. Indeed, the world is probably spending $1bn a year in this quest. This $300m prize is a pointless gimmick.
Obama has committed to putting one million plug-ins on the road by 2015. He has proposed a $7,000 tax credit for the purchase of such vehicles. Finally, to help jump-start a plug-in market, Obama has committed that "half of all cars purchased by the federal government will be plug-in hybrids or all-electric by 2012."
If this country doesn't strongly embrace plug-ins, Europe may well become the leader. After all, gas prices are considerably higher in Europe, which means plug-ins will provide consumers there far larger fuel cost savings. Also, Europeans drive about half as much as Americans, so they may be able to avoid gas consumption almost entirely with a well-designed plug-in, perhaps one with a smaller all-electric range.
Indeed, GM has made a mistake by giving the Volt a 40-mile all-electric range. The batteries are by far the most expensive thing in plug-ins. Also, the batteries add weight and take up considerable trunk space. So a smart designer will put in the fewest batteries needed to capture the most consumer benefit.
The vast majority of people commute much less than 40 miles a day. This is true in US and even more so in other countries. In addition, as plug-ins become popular, we will very quickly see electric outlets in parking garages, malls and the like, so people will be able to charge at home and then again at work or when shopping.
So I think a plug-in that goes closer to 20 miles all-electric before reverting to a gasoline hybrid makes much more sense, especially for initial market introduction where the cost of the vehicle still reflects the use of expensive batteries that have not come down in cost. Ultimately, economies of scale and improvements in manufacturing and technology will make the batteries and the whole electric drivetrain more affordable.
The twin problems of global warming and limited oil resources make plug-ins inevitable. The only question is which companies and which countries become the leaders. That will be determined in part by the marketplace and in part by the US election.
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