Will plug-in automobiles be a success?

Will plug-in cars be a success?

If by success, we mean “sell lots of vehicles” the answer is probably “no” unless the price comes down a lot–say 50% from today’s prices, so that price is in line with what common people can afford. People don’t pay more for a car than the loan officer will approve for a loan, plus their available down payment. Today’s high price puts plug-ins out of the price range for most people unless there are huge government subsidies–subsidies that governments cannot afford. The cars have other drawbacks–like limited range and the possible need for expensive battery replacement long after the warranty has expired–further cutting back on the marketability of the cars.

The high cost of plug in vehicles is not just the batteries–it is the cost of the cars themselves. Unless these costs can be brought down, the use of batteries with lower capacity to recapture braking energy and to provide an acceleration boost, similar to the way today’s Prius does today, may be a better choice, and is likely to produce a car which is salable to a wider range of potential buyers.

Even with their drawbacks, I expect plug-in cars will find at least a small market, for a number of reasons that I will explain in this post. One of these reasons is that many people believe that plug-in automobiles will reduce CO2 emissions. In my view, this belief is false–but this belief, as well as a number of other hopes and fears, are likely to lead a steady interest in plug-in automobiles by those wealthy enough to afford them, as well as support by politicians who want to appear to be doing something useful.

The Cost Problem with Plug-In Electric Automobiles

A major issue is the high front-end cost of plug-in electric autos. The government cannot possibility afford to pay subsidies to a large number of auto owners, and auto companies cannot expect to offer cut-rate deals, once they are selling very many of the vehicles. The current Nissan Leaf’s base list price (before subsidies) is $35,200, which includes the cost of a 24 kWh battery estimated to cost $15,600 (or $650 per kWh). The Chevy Volt has a base price of $40,280, which includes a 16 kWh battery estimated to cost $10,000 (or $625 per kWh).

Figure 1. Breakdown of Nissan Leaf Battery Costs according to Wall Street Journal

According to the WSJ article High Battery Cost Curbs Electric Cars

. . . researchers such as Mr. Whitacre, the National Academies of Science and even some car makers aren’t convinced [the high cost of batteries will come down], mainly because more than 30% of the cost of the batteries comes from metals such as nickel, manganese and cobalt. (Lithium makes up only a small portion of the metals in the batteries.)

Prices for these metals, which are set on commodities markets, aren’t expected to fall with increasing battery production—and may even rise as demand grows, according to a study by the Academies of Science released earlier this year and engineers familiar with battery production.

We know that metals costs are closely related to oil costs, because oil is used in their extraction. So reducing battery costs may be a challenge. And it is not just battery costs that are high–it is the rest of the car cost that is high-priced as well, especially for the Volt, which runs on either gasoline or electricity (but only for 35 miles on electricity). Furthermore, at current pricing, it is doubtful that auto manufacturers are making money on the cars. They likely will need cost decreases, just to be able to keep sales prices at their current levels, if they are to earn a reasonable profit.

If sales prices remain at their current levels, and the government is not able to keep up subsidies, monthly payments to buy the cars will put the cars out of reach for many buyers. For example, if a person starts with a $35,000 car and a $5,000 down payment (or a $40,000 car and a $10,000 down payment), the amount to be financed will be $30,000. The monthly payment will be $753.87 (assuming 6% sales tax on $35,000; 6% interest on loan, and 4 year term). How many buyers can afford this high a monthly payment?

The second problem comes on resale of the vehicle. According to the calculator I used, the market value of the (originally $35,000 car) after 4 years will be $19,600. But how many people will want to buy a four-year old car for $19,600, knowing that they may have to buy a new battery for the car for $10,000 or $15,600 (or a refurbished one, for a little less)? Prius has had very good “lasting power” with its NiMH battery, with batteries said to last up to 180,000 miles, but it is not as clear that lithium-ion batteries will last that long, according to this article.

There are other problems from the point of used car buyers. Many potential used car buyers don’t have garages for their cars, making charging more difficult if there is not a commercial charging location near-by. Apartment building owners could theoretically add charging capability, and put in the capability to bill the costs back to the appropriate owner, but unless there are a lot of potential plug-in buyers looking for this service, it is difficult to see this happen.

Loan terms for a used cars are shorter than for new cars (often 36 months), putting the financing of expensive used cars out of the range of less well-off buyers, as well. Interest rates may also be higher.

Both Nissan and Chevy have put together better than market leasing arrangements for their new Leaf and Volt, in which they apply the full $7,000 rebate to the three-year lease term, and assume generous residual values. But even at these prices, the cost of the lease plus the electricity for the Nissan Leaf is more than the cost of a Nissan Versa (the corresponding non-plug in electric car) plus the cost of gasoline, unless gasoline costs average higher than $5.07 per gallon over the three-year period (or $5.97 per gallon, if the Leaf owner has to pay the cost of road repairs, in addition to electricity).

Lease comparison calculations–for those interested:

A Nissan Leaf leases for $349 month, after taking full credit for the $7,500 rebate and a $1999 initial payment. A Nissan Versa would lease for $200 month, with a $1999 initial payment. The monthly gasoline cost of the Nissan Versa (assuming 1,000 miles of travel, a fuel cost of $3.63 gallon, and 30 miles per gallon for the Nissan Versa) would be $121, and the lease cost plus fuel cost would be $321. The Nissan Leaf would use electricity estimated at 2 cents a mile, or $20, so the cost of the Nissan Leaf lease, plus its fuel costs would be $369 month. Thus, the monthly cost would be $48 higher with a Nissan Leaf compared to a Versa at a fuel cost of $3.63 month.

Road maintenance and repairs average about 3 cents a mile or $30 month for 1,000 miles of travel, based on a comparison of Highway and Public Street construction costs to vehicle miles traveled. These are to some extent covered by gasoline costs, but are not included in the electric pricing. If the Leaf owner had to pay for road maintenance costs in addition, the total cost of the Leaf would be $78 higher. To bring the Versa cost up to the cost of the Leaf, a person would need a price of an average gasoline price of $5.07 during the three-year period, not including road maintenance costs, or $5.97 including road maintenance costs.

If Saving Gasoline is a Goal

Non plug-in hybrids, such as today’s non-plug in Toyota Prius, require much less batter capacity than plug-ins–about 1.5 kWh compared to 16 kWh for the Chevy Volt, and 24 kWh for the Nissan Leaf. This lower battery requirement keeps the cost of the vehicle lower, and keeps the replacement cost of the battery lower. If the real issue is saving gasoline, it may be that use of cars such as today’s Prius provide more “bang for the buck,” and are also be more salable to second-hand vehicle buyers. According to John Peterson, there are five generic vehicle configurations, each with a typical fuel savings:

Figure 2. John Petersen's list of vehicle configurations and fuel savings.

Peterson makes the following comparison. If a car is driven 12,000 miles a year and gets 30 miles to a gallon, it will use 400 gallons of fuel a year. If there are 96 kWh of batteries available to reduce fuel consumption (the amounts are scalable):

  • 96 kWh of batteries would be enough for a fleet of 64 Prius-class hybrids that will each save 160 gallons of fuel per year and generate a societal fuel savings of 10,240 gallons per year;
  • 96 kWh of batteries would be enough for a fleet of six Volt-class plug-in hybrids that will each save 300 gallons of fuel per year and generate a societal fuel savings of 1,800 gallons per year; and
  • 96 kWh of batteries would be enough for a fleet of four Leaf class electric vehicles that will each save 400 gallons of fuel per year and generate a societal fuel savings of 1,600 gallons per year.

Thus, if high battery costs present a problem from the point of view of automobile salability, or if battery supply is constrained, it would seem to make more sense to use batteries in Prius-style hybrids, rather than in plug-in vehicles.

Can We Expect Plug In Automobiles to Reduce CO2Emissions?

Many people believe that plug-in automobiles will reduce CO2 emissions, and will buy the cars, with this belief. I disagree with the assessment, however. I expect that using plug-in cars will raise CO2 emissions. My argument is as follows:

World oil production is basically maxed out. The world will extract as much oil from the ground as it is able. If you or I don’t use a model with a gasoline engine, and instead buy a plug-in model, admittedly there will be a reduction in the gasoline that you or I would use. But we live in a world market for oil. If we don’t buy the oil, the oil will not be left in the ground. Instead, the price of oil may drop by a tiny bit, and the oil will be bought by someone else. In fact, if we save money by buying electricity instead of oil, we may ourselves use the leftover money to buy something else that uses oil.  Because world oil production is now virtually flat (inelastic), regardless of oil price, the fact that we save oil doesn’t really make any difference in the whole scheme of things. Unless there is a fairly large drop in price, there will be no drop in world oil production and consumption.

I would argue that what electric cars do is allow us to raise our demand for other sources of energy (mostly coal and natural gas–sources of supply which are more elastic), so that we end up burning those sources faster, in an attempt to allow more people to have cars, without exhausting our liquid fuel supply, or to allow people who have cars to drive them further.

Of course, if we simply compare the emissions of plug-in cars to emissions of cars with internal combustion engines (ICE), there will be appear to be appear to be a CO2 emission savings per car, with the amount depending on what fuel is used for electricity (coal, natural gas, nuclear, wind, etc.). We don’t have the choice of using more ICEs though–our other choice is to “do without.” And furthermore, the oil we would have used stays in the world supply, to be used elsewhere.

But many people do not make the comparison I make, and will want to purchase plug-in vehicles, on the assumption that because of the efficiency of electric engines, there is at least a small savings in CO2, relative to ICEs, even with coal as a source of electricity.

Other Reasons for Wanting Plug-In Vehicles

Apart from these issues, it seems like there are several other reasons why some people will choose to buy plug-in vehicles or will argue that subsidies should be used, to encourage greater use by many drivers. These reasons include the following:

Save money on fuel. Is the purpose of plug-in vehicles to give the small number of people who are rich enough to purchase them the chance to save money on fuel, if they keep their cars long enough? Some people believe that oil prices will rise to $20 a gallon (and the economy won’t collapse at the same time). If this is their concern, and they can afford the high cost of a plug-in vehicle, they may choose a plug-in auto, even if the price is high relative to other cars.

Allow individual drivers to drive longer. Is the purpose of plug-in electric vehicles to provide those who have enough foresight to buy the plug-in electric vehicles a chance to motor around, when others are unable to, because gasoline is unavailable? People may buy them with this view, but I would argue that there is no point in subsidizing costs if this is the purpose–owners will get their reward, if there is a reward of this sort.

Reduce oil imports. Natural gas and coal used to run power plants are mostly fuels from US sources. Wind and solar PV are mostly one-time investments, that don’t require much ongoing fuel supply (except for maintenance). If we can use these instead of imported oil to power vehicles, the argument goes, it will reduce our dependence on imported oil.

Figure 3. US imports of petroleum products, based on EIA data. 2011 data is for the partial year.

I would argue that oil imports will decline, regardless of what we do. The issue is really one of making whatever we do have go farther (which is next on my list of reasons).

Allow more people to drive vehicles, and drive them further. Anything that allows what liquid fuel supply we have to go farther, such as supplementing oil powered cars with cars powered by electricity, allows more people to drive cars, and to drive them further. I would argue that this is a primary reason for both plug-in autos and for higher mileage standards for cars in general. If we are entering into a period of fuel shortages, this might be a major reason for electric vehicles, if the price of electric vehicles can be brought down low enough. The efficiency arguments given earlier would suggest that non-plug-ins should be given preference, but if batteries can be made cheaply and total vehicle costs can be brought down, this difference may not be an issue.

Show Off. I would argue that for some people, a major motivation for buying a plug-in vehicle today is to be first in the neighborhood with such a car. A related purpose might be “to have the latest electronic toy.” Providing subsidies (based on taxes of people less well off than the drivers of these vehicles) would seem silly if this is the main purpose for at least some of the cars.

Allow business as usual (BAU) to continue longer. It seems to me that this may be what is in the back of some people’s minds. If we don’t have enough fuel for gasoline vehicles, perhaps electric vehicles will solve our problems, and we can continue to motor along for the next 50 or 100 years.

I don’t think this is a reasonable expectation. BAU will stop for whatever reason it stops–perhaps financial reasons. It will stop, whether we have used our electric vehicles for their full lifetimes or not. Not everyone will see things this way, however, and the people who believe differently will want to purchase what they think will help for the long term.

Allow politicians to look like they are doing something. I think this is a big part of the push for plug-in automobiles. Whether or not the vehicles are really scalable, will save CO2, or will help Detroit automakers, I think this is a major reason for plug-in electric vehicles.

Concluding Thoughts

There is a common belief that if there are two options, Option A and Option B, buyers will choose Option A if the cost of Option A is less than that of Option B. This is true up to a point. People won’t buy either Option A or Option B, if neither is affordable, or if the option won’t fit with their current lifestyle.

The cost of a Nissan Leaf over a lifetime of 20 years (200,000 miles) is the cost of the vehicle, plus the cost of a second battery, for a total cost of $50,800, or a cost of 25.4 cents per mile. The lifetime cost of a Chevy Volt is similar, if we include the cost of an extra battery. The total cost is $50,280, or 25.1 cents per mile.

In addition, the Nissan Leaf will need to buy electricity over the life of the car, currently estimated to cost 2 cents per mile–probably more than this in the future, if electricity prices rise, in response to higher fossil fuel prices. If plug-in vehicles get to be any reasonable share of the total vehicles, governments will need to find a way to tax the owners to collect fees for road construction and maintenance. These costs, according to my calculations, amount to about 3 cents a mile. So total costs (ignoring maintenance and other costs) are about 30 cents a mile, plus interest payments on debt. These costs will be shared very unequally among owners, with the early owners paying a disproportionate share of the costs.

If a vehicle owner buys a 30 mile a gallon car for $15,000, and it also lasts for 200,000 miles, the cost of vehicle ownership will be 7.5 cents per mile. The cost of fuel will be 12.1 cents per mile, at today’s price of $3.63 gallon, making the total cost (excluding interest on loans and vehicle maintenance) 19.6 cents per mile.

If debt were completely interest free, and buyers valued a dollar today the same as a dollar 20 years from now, theoretically an average fuel cost of $6.75 over the life of the vehicle would balance costs out (since this would imply a gasoline cost of 22.5 cents per mile). But in the real world, this is not the case. If one needs to account for interest issues, the average cost per gallon would need to be much higher than $6.75–perhaps be double this amount, depending on the interest rate.

There are huge additional questions:

1. Will there really be enough electricity for plug-in vehicles, 10 or 20 years from now? Japan and German are taking nuclear off line now. Coal transport depends on oil. It may be that electricity supplies are as constrained as oil supplies.

2. How will financing of the high cost vehicles be achieved, and at what interest rates? There are limits as to what governments can do.

3. Will resale markets of plug-in vehicles work out as planned?

At this point, I personally would not make a push for plug-in vehicles, but I can understand why some people might want to do so, especially if they are of the belief that costs can come down substantially in the future.

75 thoughts on “Will plug-in automobiles be a success?

  1. Hi Gail,

    Here in Australia a popular rationale for plug-in cars argues this: A very large numbers of plug-in cars can act as a giant sponge (electricity can be charged and discharged from them into the grid depending on the time of day or night) and via this means peaks in the larger electricty system can be ironed out and the power system can thus operate much more efficiently.

    In this way, it is argued, the improved efficiency in the electricity system will be adequate to totally energise those cars without needing any augmented sources of power.

    I am unaware if that rationale has hit the US, but would be interested if the argument is based on solid logic or wishful thinking. It sounds neat enough, but I am not sold on the idea. The theory certainly appeals to those who think there is a free lunch.

    • Chris
      I believe I’ve read that the additional charging and discharging would cause the batteries to wear out more quickly. If this is correct, it would mean that more batteries would have to be produced, and this would necessitate additional resource consumption.

      • I have read that that is one of the issues. The number of charge / discharge cycles is important. Also, long slow charging seems to be better for batteries than the quick charge approach.

    • I think the giant sponge idea has been disproved as impractical, and also that the quantity of storage would be too small. I don’t think I can find a link, though.

      There is also the issue of whether people would be happy, if when they go to drive the car, the battery has been drained to help supply needed electricity elsewhere.

      The cost of installing the system for what I expect would be a fairly small number of users would seem to be prohibitively high as well.

      • It would be far better to store electrical energy in hot water heaters using smart metering than electric cars even considering the costs of the batteries in cars.

        • I am pretty sure you are right. Even if the whole thing of storage could be worked out (and leave the person with electricity to drive the car when needed), adding and subtracting electricity would wear out the battery more quickly, and there would be an electrical loss in the round-trip.

  2. Plug-in cars wont succeed,even if they appear to, because the problem with cars, as it turns out, is cars themselves. How they are powered is almost becomeing irrelevent. Only a few people realize the high cost of car-dependency does not lie strictly in the price of gas, or what a barrel of oil will go for in 10 years, but all the other costs of maintaining a car-dependant system are whats really going to drag us down. All those roads, bridges, traffic cops, accidents, deaths, sudsides to oil and auto-makers. Thats whats really crippling us, not ‘how’ the cars are powered. Sure gas is makeing a colossal mess of everything too, but governments love oil and oil companies, and looks the other way at the damage they do.

    However, even if cars were made marginally …..cleaner, I cant bring myself to call them green, b/c that would be a lie, none of the other problems created by personal, private 1 person per 4000 pound metal and plastic box get resolved-not one. Well perhaps local air quality *might* marginally improve over time, but even that is in doubt since imo, car-culture will collpse long before any of the benefits of so called plug-ins even become detectable.

    OFW is asking a pointless question. Strange a blog called finite world wouldnt realize that cars, and the machinations of corporations and governments to keep them rolling along,are what are draining the world. In every way.

    One last point. Compareing the cost of a PIH@25.1 cents p/m, then saying an ‘efficent’ gas-burner comes in a 19.6 cents. A few thoughts. First, most amerikans dont own or want to own efficent gas-burners, some to be sure, but not many. So the actual costs for more amerikans is undoubtably not as good as 19 cents. Second, amerika heavilty sudsidizies both the production and consumption of fossil-fuels in ways to numerous to list. Bottom line is, amerikan gas is at least 1/2 or maybe even a 1/3 if what is should be. On a strictly dollars and cents basis, gas-o-line would be a clear loser on anything like an even playing field.zThis is not to say I think PIH are a good idea, they are not. Only that gas has been made arftically cheaper than it ought to be. That said, the immense subsides the US has historically lavished on oil companies are probably not going anywhere, but I think its worth considering gas is only ‘cheap’ because amerikan and world taxpayers subsidize it so heavily in the first place.

  3. Gail:

    Why do you see a shut-down in imports as a likely possibility (which would be the death-knell for any technological “solutions”)?

    My father argues that the rest of the world depends upon exporting goods to the United States. While there is some merit in this argument, it also seems rather rooted in the 1950’s and ignores a declining dollar, competing economies, and increasing finance difficulties.

    Your thoughts?

    • My concern is about the connectedness of the international financial system. One of the current issues is the ability of the Euro to stay together, because the current structure isn’t working (in part, because of rising energy prices and recession). A recent UBS publication says:

      The Euro should not exist (like this)

      Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change.

      Fiscal confederation, not break-up

      Our base case with an overwhelming probability is that the Euro moves slowly (and painfully) towards some kind of fiscal integration. The risk case, of break-up, is considerably more costly and close to zero probability. Countries cannot be expelled, but sovereign states could choose to secede. However, popular discussion of the break-up option considerably underestimates the consequences of such a move.

      . . .(Section on economic cost skipped)

      The political cost
      The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.

      I would put the likelihood of breakup higher than the report suggests, especially over, say, a two year time frame. There is also the possibility that the US’s debt problems (or those of the UK, or some other large power) could lead to payment problems among nations. Perhaps this is an issue I am overly worried about. If international finance doesn’t “work,” international trade becomes much more cumbersome. It can still work, on a more limited scale, with more controls. But it is hard to see how we would get the steady stream of new products and replacement parts that we now depend upon.

      • Gail,

        International trade worked before there was an effective international finance system. It still works in places where there is no effective international finance system: as an example, look at Iran, where even with most trade theoretically prohibited, foreign goods are widely available. Or look at Somalia (http://en.wikipedia.org/wiki/Economy_of_Somalia) where trade flourishes in a country with no finance or government in the conventional sense.

        I can envision widespread international trade even following a complete collapse of industrial civilization. Remember that there was trade between Europe and China (the Silk Road) over 2000 years ago. Even after a collapse some parts of the world will want goods from another part, and have some other goods with which to pay for them. For example, a small-scale steel mill may be set up, in a town where there is available coking coal and scrap iron, making products such as steel tubing for bicycle frames. Another small factory might be set up near a rubber plantation to make bicycle tires. Bilateral trade between two such enterprises would be logical, and could be carried out by small sailing ships using practically no fossil fuel.

        We would no longer be looking for a “steady stream of new products”, but we could still get a steady stream of simple and durable products which are beyond the capabilities of local sources.

        • I agree that trade would go on in the way you describe–bilateral trade, using small sailing ships, for example. I don’t think it would permit our current BAU lifestyle, though. The real test would be whether the electrical system could be kept operating–if there would be enough spare parts. Without the electrical system, it is hard to transport oil (pipelines use electricity, pumps use electricity) and to refine oil. So we would be at risk of losing the oil (and probably natural gas) systems as well.

  4. Gail,
    Sorry for the OT, but how is the book coming along? You said back in March: “I have signed a contract with Springer to write a short (125 page) book, tentatively called “Beyond Hubbert: How Limited Oil Supplies Cause Economic Crises.” Do you have a release date yet? Looking forward to it.

    • I think things are kind of stalled–too many issues with summer vacations of critical people. I need to check into the situation, and maybe do some rewriting.

      On a different administrative subject, the “star” rating on posts are currently messed up, (although I noticed some stars for this post suddenly appeared this afternoon). I checked on the WordPress tech support blog, and there were a large number of people complaining about rating stars on their blogs disappearing, for many older posts as well as current posts. It would be nice if the system got fixed.

  5. The Leaf and Volt are both awesome science experiments, both culturally, and technologically. A step in the right direction..

    First shot, miss. At least we’re using the catapult.

  6. Perhaps this idea of individual transportation (aka cars, air travel) is all we would have to say good by to? This concept is becoming obsolete on many fronts.

    Commuting to a job site? Not really needed for most of the workers, only old fashioned management styles keeps that concept alive http://www.teleworkresearchnetwork.com/outdated-management-practices-block-telework-and-flexible-work-styles/6127
    (This is not so much fantasy, I and many folks I know can now work from anywhere – choosing home most often; I do not commute any more. And I do not need to travel a lot either although in my job a couple years ago one would travel >50% of their time. All that thanks to technologies which make a lot of personal meetings aspects obsolete).
    Air travel for exotic vacation or to meet people in person? C’mon – we can live without that just fine.
    Soooo….how would a world look like in which the individual transportation concept has collapsed? No car industry, whether electric or conventional – simply not needed. No jobs there, no air travel and (or very little and highly expensive), no jobs there, related industries shrinking or collapsing also. But resources ($, productivity, energy) flowing into other, new and yet to emerge industries which would provide the alternatives/similars. Food costs will skyrocket – but that also will probably drive folks to try growing stuff close to home.

    Very expensive delivery services (medical, materials, maintenance, goods) seem to be needed – and would this way be shared by many and use much less oil compared to our current regular driving to shopping sprees)…

    To me this looks like a potential way to decompress slowly.

    • It is going to be a slower world, we will try to do less. My father following his day of work and my little league practice (in our small town), thought nothing of sitting on his front porch swing drinking a beer and talking to the neighbors who were passing by, or on their own porches. This is how I remember the 60’s. He told me that after WW2, it was an even slower lifestyle.

      While it is possible that there will be no cars at all in a total doomer world, in descent I would say that there will be cars, and it will be what he described to me in the 30’s and 40’s. Some people had them in the family or whatever, and you borrowed them for the critical trip to the hospital, a medical specialist, or a relative’s death or a very very special event. In Africa I see this for the clinic and funeral all the time. There are no cars, but the countryside can be canvassed to hire one for these critical trips.

      The problem is rebuilding what was there that allowed for this. In his home town, the 1500 square foot slaughter house doesn’t exist. The small market is gone, as is the truck farming that supported it (they are now all dairy). The train station is gone, as are the tracks, but the bed is still there. The bus stop (for between towns) went away in the 60’s, but interesting returned last year at least for going to the big city (of 45,000).

    • It would be possible to cut back, but there are limits.

      It would be difficult to run the international companies without air travel. At some point, it is necessary to check up on workers in person. In China, we hear about companies with fraudulent financial statements. I think working with India would be the same.

      There is quite a bit of local work that can’t be done long-distance. If someone is going to run a day care, it can’t be done long distance (but it can be done in the home). Making goods usually has to be done in a factory. Quite a bit of health care has to be done in person.

  7. Gail, that’s an incredibly thorough and well-connected evaluation of plug-in vehicles. Great comments from readers, too.

    Let me start with a glimmer of hope, before I move on to the grim reality: There are reports the Nissan LEAF battery costs Nissan much less than you state in your article:


    This article puts the cost of the LEAF battery at $375/kWh. Of course, this begs the question then why the LEAF is still so expensive. The optimistic thought is that Nissan is just exploiting its uniquely low battery cost, pricing relative to the competition, and reaping the additional profit. Given the battery supply constraint (which you mention) there’s no point in Nissan trying to increase volume with lower prices, since battery supply is not very elastic.

    Of course, this glimmer of hope does little to alter the conclusion of your article: There are plenty of other factors lined up to limit or negate any large-scale social benefit of plug-in vehicles.

    The core of the solution has to be behavioral changes that transform our culture into one that requires very little energy-consuming activity in the first place, even before we start looking to efficiency. Equipping everyone with Priuses that get double the average fuel efficiency does nothing if consumers use that to double the miles driven. I’ve long advocated the most important solutions to transportation emissions are: 1) drive less, 2) carpool more, and 3) use more efficient modes of transportation. Without 1 and 2, there is little hope of 3 having much effect.

    Use of plug-ins falls into category 3. Assuming we can first accomplish 1 and 2, the discussion of how best to switch to more efficient modes becomes relevant. First, there are more efficient modes than personal vehicles, which require the transport of 3000 pounds of car to move 150-300 pounds of payload (1 or 2 passengers). The most efficient concept in urban environments is personal rapid transit (PRT), which uses a 1500 pound pod on an electrified monorail to carry up to 6 passengers, a ratio of 250-1500 pounds of vehicle per pound of passenger (“v/p”), compared to 750-300 v/p for a typical passenger automobile.

    Setting aside solutions other than personal automobiles, your analysis of various vehicle options is right on. Given the constrained battery material supply, it’s much more effective to equipment many people with conventional hybrids than to equip a few people with all-battery plug-ins. Unfortunately, social and political factors prevent such an efficient deployment of battery resources.

    Taking all factors into account, the best solution would be to equip the most needy people with the least expensive vehicles. A wealthy individual benefits from a fuel efficient car much less than a poor individual does. Ideally, the poorest car buyers should get the largest subsidies to purchase the most efficient cars. Of course, this is a socialist idea that would never gain traction in the U.S.

    A (slightly) more acceptable alternative might be to give incentives to lower income buyers of second-hand plug-in vehicles. The elites who purchase the new plug-in vehicles will then have some (a little) financial incentive to support this program and the poor would benefit. Of course, we all benefit when the poor have access to affordable transportation to get them to work. One condition of this second hand purchase incentive program should be that a government or independent agency inspect the battery for all vehicles resold under this program, to ensure that the second-hand buyer gets a battery in reasonably good shape.

    Speaking of which, a battery inspection program should become a routine part of any plug-in vehicle resale. This would be no different than inspecting the engine on a gasoline car before resale. In fact, inspecting a battery should be easier than inspecting a more complicated gasoline engine. All you would need is a single battery cycle test and a certified test result, much like a smog check, which is routine in California.

    In the absence of any measures to incentivize the most effective distribution of limited battery resources, what should an individual buyer do? I’ve been driving fuel efficient vehicles since 1998, hybrids since 2000, and a plug-in since this year. I recognized that the plug-in was a less effective use of battery resources than a hybrid. If there was a system in place to encourage efficient distribution of battery resources, I would gladly participate in and support in. In the absence of such a system, I can only act in my own personal best interest, which was to buy the plug-in.

    Your article questions the lifetime cost-efficiency of a plug-in, but given that the driving infrastructure is unlikely to last the life of a new car, the lifetime cost-efficiency becomes irrelevant. What is relevant (again in the absence of a larger action) is how best I can make use of the remaining driving infrastructure. Given the insecurity of petroleum based transportation, the plug-in vehicle gives me transportation security that a conventional hybrid does not.

    I don’t expect to be able to make use of any car for more than about 5-10 years, but during that time, having a plug-in maximizes the chances of my being able to make use of the car.

    Again, thanks for committing your thorough and systematic analysis into a well-written article, and thanks to the readers who post insightful comments. I hope I’ve added value to the discussion.

    • You have raised an interesting point which is part of my thinking, I don’t assume that the driving infrastructure will remain at its current quality (high), that it will decline dramatically. This influences what kind of NEV/LEV plugins that I am interested in, we own a Prius which I’ve contemplated giving to my step daughter, and buying something “better”, either the new Prius hybrid or Leaf/Volt. But none of them in my mind as low 2 wheel drive vehicles be able to survive what I believe the road will look like in 10 years. However my Polaris LEV will, in fact I still use more offroad then onroad. Even though I think the GEM NEV’s are ugly, what stops me ultimately from buying its flatbed truck version is its reliance on high quality toads.

  8. In Spain there has been a yearly growth in electric cars sold of 1,031% !!
    Yes, they sold 181. One hundred and eighty one sold between January and July in a country with more than 20 million personal cars.
    Last year in the same period they’d sold 16 EVs.
    In the same period this year they sold 6,467 hybrids and more than 500.000 fuel vehicles and that in spite of a severe economic crisis and 20% unemployment

    In spite of aid from the government of up to 6,000 euros per car, in a fund of 76 million euros. Only 2% of businesses consider buying EVs after studying their problems, and specially the resale value, next to nothing.
    The reasons are the ones you have discussed.
    People here are very happy with Hybrids, the taxi drivers specially like the Prius.

    • The Oil Drum has more or less said they will not publish the post. One reason given (by one of the staff members) was that resale value shouldn’t be brought up, because it isn’t an engineering issue. (Give me a break!) He also was arguing that things might get much better, cost-wise. What would cost improvements do to resale values of the first-generation cars?

      I can see, though, that my wording is probably too strong for a very “green” audience, that is hoping for plug-ins to save them.

  9. From what I can perceive (if we ignore for a moment that maintaining private transport as the primary means of travel is in big trouble, no matter how we try to do it) full-electric plug-in vehicles have so many disadvantages that they won’t make it in the market place. Especially in view of the fact that a turbo charged diesel vehicle ends up arguably emitting less pollution whilst maintaining all the advantages of the traditional petrol engined car.

    Like it or not, private cars will be part of the transport mix for the next umpteen years, but it seems that, unless there are incredible advances in electric technology, super efficient fossil fueled engines, coupled with downsizing of vehicle weight, will easily win the day.

    • ICE is here to stay, agreed. But I think the focus on recreating the ICE experience is the problem, and this is due to the Detroit mentality and its inability to bring out a different class of vehicles (at least since the mini-van). Plug-in works for a different class, call it 2 seater, 35 miles, 35mph using lead acid batteries. The regulatory framework almost exists here in the Federal NEV and LEV regulations, what is missing in the regulations is 35mph, it is currently capped at 25mph.

      The GEM, Polaris, and others who have been working in or towards those regulations may make that class more of a reality, but it is going to take more entrants with different designs (i think the GEM is incredibly ugly for instance), and different price points.

      At another angle, with the availability of a number of electric motorcycles, I wonder when someone will simply use the trike angle and build an enclosed electric one.

      • Regarding the enclosed motorcycle, I think part of it may have to do with when a vehicle becomes too close to something that is regulated by crash-worthy tests.

        With all of the vehicles, there is a problem of integrating them into the mix that is currently available. I know that in China, there have been problems with electric bicycles going too fast relative to regular bicycles, and there being accidents. If there is a bike like with lots of regular bikes, and not too many electrics, I can see this would be a problem.

        There are many versions of the problem. It is hard to add a new class of vehicles, for this reason.

        • that is a good point. undoubtedly it is hard. For GEM that is probably why they focused their initial marketing on campus’s, military bases, places like that. i would imagine that the downtown environments of California like MountainView would work just fine as well since the speed limit of 25mph and the “rule of law” both operate there. My entire town of 45,000 people is either 25 or 35mph and the rule of law operates there as well. I’d like
          to believe that I could drive them now in my town without problems; however, i will wait
          another five or so years of descent when half the traffic is gone….

    • It would be better to make more High Occupancy Vehicle (HOV) lanes than push EV too hard imho. Although I would say a modest battery with 5 mile range would be useful for zeroing out gasoline consumption for most small trips. That type of battery would make for a better hybrid that can get some range from the electric grid, especially if coupled to night time recharging using a simple charge timer when electrical power is generally dumped into resistors.

      • While it is going to be a few more miles than that (15), I think the Prius plug in could be a game changer over the next five years. I think your model of thinking, “zeroing out” trips could become a cultural phenomena for drivers of this (and like designed) vehicles. Like many people, I try to organize trips to make a number of stops, and if I run out of milk, 2×4’s, or whatever, i simply don’t go back out for that until I have another trip of multi-stops. I think with this new Prius plug in will help me give up on certain retail experiences and settle on closer solutions for Pizza, milk, 2×4’s, whatever. If I can charge it on my solar panels then in my mind it is a free trip.

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