Earth Day: Higher Oil Prices Could Improve EV's Prospects

Last week, we blogged about a blue ribbon study from Indiana University that looked at the future of electric cars. Plug-In Electric Vehicles: A Practical Plan for Progress, suggested that the U.S. won’t have a million electric cars on the road by 2015, but offered recommendations so that consumers may make informed decisions about the technology. Among its recommendations:

 ·         The federal government should create a national PEV demonstration program to help motorists and consumer to become more familiar with plug-ins.

·         Create incentives to encourage more consumers to invest in the vehicles.

·         Invest more broadly in PEV infrastructure.

·         Sponsor more long-term research and development of batteries.

 Today, we offer a Design News question and answer session with Dr. John D. Graham, Dean of Indiana’s School of Public and Environmental Affairs.

Design News: Oil prices are spiking a little bit right now, even since the release of the study. Will that spike affect the country’s ability to put one millions PEVs on the road by 2015?

When oil prices are high, sales of alternative vehicles like the Prius or highly fuel-efficient vehicles go up, and in the used-car market the price for these vehicles rises. A main selling point for a PEV is the fuel savings from purchasing cheap electricity and using it in an efficient engine, so high oil prices, if sustained, could improve the prospects of the one million by 2015 goal.

Design News: The study mentioned a need for “truth in advertising.” Are consumer expectations inflated at this time and, if so, why?

The primary concern related to truth in advertising is the range of the vehicle. In the past, Nissan and GM have promoted range estimates based on ideal conditions for the battery—they weren’t inaccurate, but many drivers would not have been able to drive as far as they were led to believe by these estimates in real-world conditions. Both manufacturers have now either revised their estimates downward after new EPA estimates came out (GM) or added more information to their website about battery range in different conditions (Nissan). Dealers and manufacturers need to continue to be transparent about how these vehicles will perform, because a few bad media stories about drivers stranded after only traveling within their estimate range could be very damaging to the reputation of the technology.

Design News:  For the sake of the environment, many groups believe that gasoline-burning plug-in hybrids don’t solve our environmental problems because they aren’t zero emission vehicles. What is the current long-term forecast for battery-electric vehicles (BEVs)?

It is true that PHEVs aren’t able to displace as much fossil fuel consumption as BEVs, but they remain an important technology for environmental progress. A key advantage of PHEVs is that they fit the needs of consumers with longer commutes, those in more sparsely populated areas, or single-car households. They may also be a bridge technology that helps ease consumers from the conventional model of driving to an electrified transportation system.  BEVs are likely to succeed only in niche markets in urban areas unless there is a significant battery technology breakthrough that extends their range substantially.

Design News: The study mentions that the National Research Council predicted that lithium-ion battery pack costs would be $500/kWh in 2030. It also said that the U.S. Advanced Battery Consortium’s long-term goal of $100/kWh “would not be realized for many decades.” Did your panel agree with those assessments or are those forecasts considered pessimistic?

The panel believes that these forecasts are pessimistic. It is not clear that the council considered the cost reductions that would be achieved from economies of scale once more of these vehicles are produced. The estimates also don’t account for the increased funds for battery research that have been allocated in the Recovery Act. Furthermore, some sources estimate that the Nissan Leaf has battery costs that meet or exceed the $500/kWh figure that the NRC stated would not be reached by 2030.

Design News: Would the EV movement be better off if we focused our government subsidies on the creation of batteries with lower cost and higher energy density, as opposed to subsidizing the sale of today’s electric cars, which seem to have limited consumer appeal?

Both are important policies, and they can be complementary. Subsidizing the sale of electric vehicles reaps short-term rewards by encouraging early adopters and thus allowing manufacturers and policymakers to learn about the technology’s performance in the real world. Sales in the near-term will also allow manufacturers to ramp up production and benefit from economies of scale and learning-by-doing. Research and development does nothing in the short-term, but could be a huge factor in the long-term success of the technology. Battery research and development is most crucial for BEVs, which don’t have the gasoline engine to extend the car’s range beyond the range of the battery.  Lower cost and higher density batteries will be necessary for these vehicles to gain a foothold in the mainstream consumer market, because the 70-100 mile range that they currently get is not sufficient to meet most drivers’ perceived needs.