The first electric cars are expected to hit U.S. showrooms by the end of 2010, a major step in the reinvention of the automobile. But hopes for a fast transition away from oil are looking premature.
Two new reports — one from the National Resource Council (NRC) and a second from consulting firm Pike Research — question whether the high costs of lithium-ion batteries, which power most plug-in electric hybrids (PHEVs), such as the Chevy Volt, and all-electric cars, such as the new Nissan LEAF, can drop fast enough to achieve mass-market adoption.
The industry will know by 2012 what is possible, Pike Research suggests.
By then, the "passionate early adopters" will have purchased their first electric cars, thanks in part to the federal government’s current electric-car tax credit of up to $7,500. But after 2012, the consumer incentive could disappear — along with at least some of the billions in government grants now being dished out to automakers and battery manufacturers.
"Whether or not a broad audience of consumers would be willing to pay 50% or more for a vehicle than can drive most of its miles on battery power is unknown," the report said.
According to Pike Research, the costs of lithium-ion batteries will have to drop to $300 per kilowatt hour (kWh), or less, for plug-ins and all-electric cars to be appealing enough for mass purchasing.
In 2010, batteries are expected to cost around $940 per kWh, down from $1,070 in 2009. By 2015, those costs should be cut in half to $470 per kWh, the study predicts.
That should help spur the industry, but not by enough to move electric cars beyond niche-market status. Less than 2.5 percent of the world’s fleet in 2015 will be run on battery power, the firm said.
The NRC, a Congress-chartered organization run under the National Academy of Sciences, took an even even less optimistic view of the electric car’s future:
"A fundamental breakthrough in [lithium-ion] battery technology, unforeseen at present, would be needed to make plug-ins widely affordable in the near future."
By the near future, it means two decades.
According to the NRC, PHEVs in the U.S. will account for just 4 percent of the expected fleet of 300 million vehicles by 2030. The reason: batteries.
Production of the first generation of power packs will cost between $3,300 and $14,000, depending on how many miles they can handle in pure electric mode, according to the NRC.
In 2010, it will cost $18,000 more to manufacture a PHEV than to churn out an equivalent fuel-sipping vehicle, the council said. Come 2030, that gap will shrink, but not by enough. The Chevy Volt, a PHEV-40 — sized for 40 miles of electric-only driving — will still be priced more than $10,000 higher than a non-PHEV.
"PHEV-40s are unlikely to achieve cost-effectiveness before 2040 at gasoline prices below $4 per gallon, but PHEV-10s may get there before 2030," the authors wrote.
NRC’s glum findings set off a firestorm among electric-car makers.
"The NRC study significantly overestimates current battery costs," said the Electrification Coalition, a group of industry CEOs that includes the heads of Nissan, Fedex and electric utility PG&E, in a response to the study.
"Fully assembled battery costs for the GM Volt, a series format PHEV-40 with a 16 kWh nameplate capacity (identical to the specifications of the PHEV-40 in the NRC report), have been reported at between $500 and $625 per kWh — significantly less than the NRC’s estimate of $875/kWh," the group wrote.
Robbie Diamond, president and chief executive of Electrification Coalition, said NRC ignores economies of scale — that as battery technology continues to improve, prices will plummet.
According to NRC, upfront costs won’t decline without "subsidies in the tens to hundreds of billions of dollars."
The Electrification Coalition disagreed:
"Based on current and expected industry costs, a PHEV-40 will be cost effective for consumers in 2015 — without any government subsidy whatsoever."
The reason being that "fuel savings over the life of a PHEV-40 in 2015 will more than compensate for the vehicle’s cost premium," the group said.
Government Subsidies
Still, the Electrification Coalition said that if a huge electric-car scale-up is to take place, then government assistance is needed.
In November, the group published a 180-page roadmap for how to get 14 million PHEVs on the roads by 2020 and another 100 million by 2030. According to its estimates, such a ramp-up would require a massive $120 billion over an eight-year period in tax credits and loan guarantees.
The U.S. is a very small fraction of the way there.
During the presidential election, President Obama pledged to put 1 million PHEVs on America’s roads by 2015, as part of his platform to curb global warming emissions.
As a first step, in March, the president announced that $2.4 billion of federal stimulus money from the American Recovery and Reinvestment Act of 2009 would go toward battery technology, manufacturing capacity and battery infrastructure demos for PHEVs.
In June, Nissan was awarded $1.6 billion in U.S. loans to retool a plant in Tennessee for electric car production, and in August it won an additional $200 million to help deploy the charging network that will power them.
Pike Research said the government’s commitment so far to green cars is "providing a temporary crutch." A reduction in support, which it said is likely, would remove "a vital safety net," and there are no guarantees any more is on the way.
"New or extended government support could depend on the recovery of the global economy and the political efficacy of additional government spending in an election year," the firm said.
See also:
Surprise: Nissan’s Electric Cars to Be Made in the USA
Nissan Scores $200 Million for Biggest-Ever Electric Car Grid Project
A Case for Electric Cars in Carbon-Heavy Canada
Obama’s Job Description for GM’s Next CEO: You Will Build Clean Cars
500,000 Electric Cars Would Take 10% of World Lithium. Only
1st Greenhouse Gas Emission Rules to Give Detroit a Low-Carbon Makeover
U.S. Postal Service Could Deliver America the Electric Car
(Photo: mulford / CC BY-NC-ND 2.0)
