Several weeks ago, I wrote here about how I believe natural gas makes sense as a bridging strategy to get us from oil over to electric as a source of energy to move us around.
Of course, the most vocal proponent of this has been T. Boone Pickens, with his “Pickens Plan.” Many have argued Pickens is only pushing the plan as a means for personal gain. I don’t believe it, for several reasons:
- First, Pickens isn’t hurting financially. Quite the opposite: He has made a fortune in the crude oil business, and his personal net worth is estimated at around $3 billion. He’s donated over $400 million to Oklahoma State University where he is an alumnus.
- Second, I think he’s one of those rare American business owners who truly wants what’s best for America.
- And now, Pickens is likely dancing in the streets: This week President Obama turned the EPA on its ear and told its new head, Lisa Jackson, to review and (likely approve) California’s request for stricter tailpipe emissions than what’s currently mandated under Federal law. This essentially reverses the roadblock/stalling techniques employed by the Bush administration, and opens the door for more strict emissions rules moving forward.
Obama made his position refreshingly clear after issuing the order: “Year after year, decade after decade, we’ve chosen delay over decisive action… rigid ideology has overruled sound science… and special interests have overshadowed common sense… My administration will not deny facts. We will be guided by them.”
Obama also plans to raise miles per gallon targets to 35 MPG by 2020. Not particularly aggressive, but the carmakers will have trouble meeting it without major design changes to many of their models. True to form, U.S. auto companies are screaming like stuck pigs… faced with the grave reality of their situation.
Once the air clears (pun intended) and the whining ends, what you’re likely to hear is how the big three automakers are rapidly ramping up their Plug-in Hybrid Electric Vehicle research and development.
The Rise of Plug-in Hybrid Electric Vehicles (PHEV)
Make no mistake: The biggest roadblock for Plug-in Hybrid Electric Vehicles or PHEVs is battery technology that can provide enough energy for 100 to 200 miles of driving before recharging is necessary. Everything else to make the car currently exists: efficient, high-torque motors; variable ratio transmissions; and strong, lightweight composite materials for the body and frame.
Benefits of PHEVs are blatantly obvious:
- Reduce - and in fact nearly eliminate - our dependence on foreign oil.
- Greatly reduce greenhouse gas emissions.
- Revitalize the American automobile industry (and companies that support it) when we need it most.
- Provide thousands of jobs constructing the charging station infrastructure that will be required to support a national PHEV fleet of cars and trucks.
- The creation of even more jobs to upgrade and expand our nation’s power grid to get all the additional power that will be required to where it’s needed.
- Employ still more workers to construct solar and wind farms to generate the additional power required.
Clearly, the American automobile manufacturers have their work cut out for them with regards to PHEVs. Had they taken the long view three or four years ago on PHEVs instead of the short-sighted profit view of selling SUVs, we might already be there.
Now they find themselves in the difficult position of trying to survive the current credit freeze and consumer-spending shutdown that could easily last another 12 months. It’s not clear at this point which - if any of them - will last long enough to be able to bring a viable PHEV design to market, although all three have announced they’ll be introducing electric production vehicles in the next two years.
General Motors (GM), with its Chevy Volt, appears to be the closest with an actual production model. But it is probably in the worst financial condition of the three. So we’ll have to toss GM, Ford (F) and Chrysler on the “don’t” pile for now.
The Real Winners In The PHEV Game - Battery Companies
The real winners in the PHEV game will be the battery companies. They’ll be tasked with supplying the high-power batteries necessary to get a decent size fleet of PHEVs rolling down the nation’s highways.
Right now, the most promising technology that seems like it can provide the power densities required for the 100 to 200 mile target commuting range is Lithium-Ion. Car companies are already running test vehicles using lithium batteries, but cost is still an issue, and they’re coming up a little short on the range.
But they’ll get there: I believe that the power density issue will be solved within the next 12 to 18 months and manufacturing costs will be driven down by advanced yet-to-be-developed mass-production techniques.
So who’s in the battery business?
EnerSys (Nasdaq: ENS) is one of the largest manufacturers, marketers and distributors of industrial batteries. From submarines to spaceships - and everything in between - EnerSys has a battery technology to fit the application. It also makes the charging and power equipment as well.
Last Fall, the company launched its EcoSafe line of batteries designed for renewable energy storage applications. Targeted towards the wind and solar energy generation markets, this product line should see significant growth under President Obama’s energy initiatives.
It’s also working with a number of niche players to develop a Lithium-Ion line of batteries specifically targeted to the PHEV transportation market.
Based on comments he made this past Monday, Obama seems completely tuned in to our energy issues: “At a time of such great challenge for America, no single issue is as fundamental to our future as energy. It falls on us to choose whether to risk the peril that comes with our current course or to seize the promise of energy independence. And for the sake of our security, our economy and our planet, we must have the courage and commitment to change. I cannot promise a quick fix.”
I agree. But if we don’t get started, we’ll never get there. We’ll be watching.