March 05, 2011

The EV Saga Charges On

As regular readers know, Iíve been following the dubious fortunes of the Chevy Volt, and by extension, the other electric vehicles already on the market or in the design and production pipelines. In a recent ďQuick TakesĒ (here--scroll to the bottom), I noted several interesting trends and unexpected consequences, including very low sales volume, Consumer Reports panning the very existence of the Volt, and the fondness of rats for warm Volt battery packs and tasty, expensive wiring. Yum.

For an additional bit of interesting information from the Pacific NW, visit Rob at PACNW Righty, who is doing a fine job operating behind opposition lines, so to speak, as he outlines some of the EV silliness in that neck of the woods (here).

Now, from ďThe Truth About CarsĒ (here) comes the news that Ford CEO William Ford, speaking at a recent Wall Street Journal Economics Conference in Santa Barbara, CA, is less than, well, charged up (sorry; couldnít resist), about the viability of electric vehicles:

ďPrior to the Model T, a third of all vehicles in this country were electric...this isnít a new technology. The reason it died away was the ubiquity of charging. Today, we have the same issue.Ē

The Wall Street Journal also reported that Ford:

ď...has no certainty that an electric grid will be developed that is capable of supporting droves of electric vehicles on the roads.Ē

In my several forays into the often magical realm of contemporary electric cars, Iíve been accused of hating technology, being somehow racist toward EVs, and even of wanting to give away the store to the Japanese, as one commenter felt that America should not surrender what he apparently saw as a burgeoning EV market to the Japanese. Iím inclined to think that the Japanese, in honor of the Kamikazes of the past, are welcome to it.

There are a number of problems regarding EVs, but Iíll summarize the current state of affairs by speaking to only a few of the most daunting, each by itself sufficient to render the entire enterprise an exercise in futility:

(1) The technology has not caught up to reality.

(2) There is essentially no infrastructure and no reasonable possibility of building it in the foreseeable future.

(3) There is insufficient demand.

THE TECHNOLOGY HAS NOT CAUGHT UP TO REALITY. Current technology cannot produce batteries of sufficient power, capacity, light weight, small size and low manufacturing cost. The Voltís battery, for example, weighs hundreds of pounds and is very large. With a full charge, its range is only approximately 40 miles, and the early experience of very few owners reveals itís as low as 25 miles, particularly in cold weather, but more on that later. Replacements costs are, at best, uncertain. Spinning furiously, Chevy has claimed that the batteries will last at least ten years--or so--and would cost no more than $8000 dollars to replace (this is one of several spins), but of course, there is no real world, practical experience upon which to draw, so itís not unreasonable to expect a shorter lifespan and higher replacement cost.

A serious related issue is charging time. With 110V house current, Volts take from 8-12 hours to fully recharge. With an optional 220V ďfastĒ charger, the recharge time is, according to Chevy, reduced to 4-5 hours. Did anyone mention that the ďfastĒ charger costs $2000, not including installation? Chevy addresses range and charging issues by also installing a gasoline engine, but this is nothing less than a tacit admission of the severe limitations of the technology, the concept, and the vehicle itself. Remember that Chevy at first tried to suggest that the wheels would never be directly driven by burning fossil fuels. Only recently has Chevy admitted that when the battery reserve drops to a certain level, the gasoline engine will, in fact, directly drive the vehicle, making it a ridiculously expensive, overly complex pseudo hybrid which pretends to be something new. Oh yes, and the gasoline engine accepts only premium fuel.

Another limiting factor, particularly anywhere in the world exposed to winter weather, is just that: Cold. Cold rapidly diminishes battery power and capacity, slowing charge times, and weakening the battery. Early experience indicates that Volts are limited to a 25 mile range or less on battery power in even moderate winter weather. Trying to address this fundamental issue by using heated garages or additional heaters to keep batteries warm is self defeating--if the point is saving energy and environmental purity--and yet another admission of the fundamental flaws in technology and concept. One method of increasing range is by substantially lightening the vehicle, but again, current technology would require greatly reducing the size and utility of such vehicles to the point of making them impractical for most of the public, as well as stunningly unsafe for their occupants in collisions. In short, absent breakthroughs in battery technology that no one can foresee, the technology just isnít there to allow EVs to successfully compete with conventional vehicles.

THERE IS ESSENTIALLY NO INFRASTRUCTURE AND NO REASONABLE POSSIBILITY OF BUILDING IT IN THE FORESEEABLE FUTURE. Even for the well-heeled willing and able to install a home fast charger, the problem of charging away from home remains daunting indeed. Few employers or businesses will be anxious to provide free electricity, particularly at 220V rates, to owners of EVs. And for true EVs, this is a serious matter. Even if a business or employer did provide outlets for EVs, charge time remains a significant issue. Few owners will be willing to abide 4-12 hours for a charge when a 5-10 minute stop at a gas station is the alternative. Yes, the Volt runs on gas too, but that is, again, a tacit admission of the problem, not a real solution to it.

Other than good will, there is no economic incentive to install charging stations, which themselves cost many thousands of dollars. Lacking that incentive, there is no realistic possibility of building the kind of massive, far-flung infrastructure necessary to make EVs a viable choice for most Americans, unless, that is, government takes a hand, but more about that later.

Even if one makes the unwarranted assumption that EVs will at some point be, say, 10% of the vehicles on the road, from where will the extra electricity necessary to charge those vehicles at all hours of the day and night come? Our power grid is already aging and strained, and in some states, brownouts, even brief blackouts, are becoming more and more common. Rather than supporting the building of new power plants of every type, the Obama Administration has all but prohibited them, and should any enterprising capitalist attempt to go ahead anyway, there are legions of greenie groups willing and able to stop such projects with years of lawsuits.

THERE IS INSUFFICIENT DEMAND. And considering the realities Iíve briefly outlined here, why should this be surprising to anyone? The auto business is not difficult to understand. Manufacturers are willing to spend the several years and hundreds of millions of dollars necessary to bring an entirely new design to market because they can have a reasonable expectation of not only recouping their design and development costs, but of making a reasonable profit through a sufficient volume of sales. While Chevy isnít publicizing this kind of information, there is reason to believe that in this instance, market reality has been suspended for the Volt.

It is highly likely--and please, GM, correct me if Iím wrong--that the Volt costs more to manufacture than can be offset by the price GM charges dealers for the vehicle. The Volt is, after all, a Honda Civic-sized car with a manufacturerís suggested retail price (MSRP) of $41,000, a wheelbarrow full of dollars that could purchase two Honda Civics. Unfortunately, dealers are charging as much as $65,000 for the vehicle, and some people--as can be expected--are actually paying it. Of course, if one can afford to pay $65,000 for a vehicle with no practical advantage over vehicles costing a fraction as much, an additional $2000+ for a fast charger isnít likely to be much of a burden.

As it is, GM is on track to sell less than 4000 Volts in its initial model year. GM and the Federal Government recognize that without a $7500 tax incentive, virtually no Volts would be sold, and even with it, the sales volume is plainly awful. GM must be losing substantial money--likely many thousands--on each and every Volt.

Why arenít people flocking to the car of the future here today? As Consumer Reports is discovering, itís a mediocre EV, and itís a mediocre gasoline powered vehicle. Conventional vehicles and existing hybrids are far more flexible, and in many circumstances, as fuel efficient or even more fuel efficient than the Volt, and those vehicles cost tens of thousands of dollars less. Even if the hopelessly optimistic projections for Volt energy efficiency ever came to fruition--and thatís unlikely--it would take a decade or more to break even on the purchase price of the vehicle, even considering the tax credit. Most people donít keep a vehicle for a decade, and on the used car market, a Volt would likely be even less attractive than on the new car market, particularly for those of modest economic means who primarily populate that market. After all, who would buy a Volt if its battery pack might need to be replaced in a year or two at a cost that exceeds what they paid for the entire car on the used car market?

Ultimately, the Volt is a political creation, from a company rescued--sort of--from bankruptcy by a 61% infusion of taxpayer money. What rational businessman would sink untold millions into a product that few want, that would cost far too much to manufacture and sell, and which has no real advantages over much cheaper products? The Volt is the product of environmentalist wishes and intentions, wishes and intentions that conflict with reality. But as with high-speed rail, another mega-buck boondoggle the public neither wants nor needs, Mr. Obama intends to spend mega millions installing charging stations in several amenable locations such as the Berkeley of the South, Austin, TX.

Absent multiple miracles, the Volt will be nothing more than the plaything of the wealthy who can afford a toy car while still maintaining a fleet of conventionally powered vehicles for every day reality. Certainly, some will pay the ridiculously high entry price for the environmentally sensitive cachet an EV will provide in certain circles, but their numbers arenít sufficiently large to turn a profit for GM, even if GM wasnít losing money on every Volt before it left the assembly line. How long will the taxpayers subsidize such owners? It is cold comfort that the money lost will be, due to low demand, relatively low, but in our current budget crunch, why should any taxpayer funds be spent to maintain the wages and benefits of unions? After all, unless a product is actually making a profit, it is the taxpayers, not private businesses making rational economic decisions, that are paying GMís autoworkerís wages and benefits.

It hardly requires a Nostradamus to predict that when Mr. Obama leaves office, the Volt will be quietly withdrawn from GMís product lineup. Thatís when the fun begins as the EPA spools up to deal with the disposal of the toxic elements in the Voltís battery packs. Oh, I didnít mention that EVs contain many toxic chemicals and their batteries can fry unwary first responders and mechanics unless they use special equipment and procedures? Now that I think of it, GM hasnít been publicizing this either. I wonder why?

But wait a minute! Isnít GEís CEO Jeffrey Imelt now a part of the Obama administration as the head of Mr. Obamaís panel on job creation? And isnít GE the primary, hopeful, domestic manufacturer of EV charging stations? Surely there couldnít be any collusion, any conflict of interest? Yes, there is, and donít call me Shirley.

But wait another minute! Arenít Mr. Obama himself, and others in his Administration, such as Energy Secretary Steven Chu, anxious to see energy prices ďnecessarily skyrocketĒ as Mr. Obama said, in order to better force Americans to abandon modern conveniences such as automobiles and to force them to accept such concepts as EVs and public transportation? Indeed they are.

But wait yet another minute! Why isnít Ford anxious to jump on the EV bandwagon? Oh, thatís right: Unlike Gm and Chrysler, Ford is a privately owned company and canít spend unlimited taxpayer dollars on unprofitable ventures. You know, if you think about it, that almost makes sense.

Posted by MikeM at March 5, 2011 09:47 PM

There is a reason we use Gasoline and Diesel. They work. Of course there is no reason for government regulators to be burdened by such restraints on their vision.

Posted by: Professor hale at March 6, 2011 03:17 AM

TImely article. This month's Technology Review magazine has a few letters from contrarians on this issue.

One astute engineer points out that even assuming (unreasonably) that a battery-powered car achieves 80% energy efficiency, it has to be recharged from a power plant operating at 41% efficiency (33% if nukes are unavailable), and is therefore only minimally more efficient than a gasoline car and actually LESS efficient than a diesel.

Posted by: Henry at March 6, 2011 05:54 PM