New Industry Emerging Around Electric Vehicles

By Richard T. Stuebi

Much has been written about the planned release by General Motors of the Chevy Volt, a plug-in hybrid electric vehicle. When GM launches the vehicle, now slated for late 2010, it expects to sell tens of thousands of them.

As profiled in an article in the August 24 issue of Forbes, the bigger mover in the electric drive vehicles game looks to be Nissan (NSANY), which is investing several billion dollars to ramp up and produce 300,000-400,000 electric vehicles within a few years. Its entry model is the Leaf, a five-passenger hatchback that it aims to sell in the U.S. by late 2010, at a price point of about $30,000.

A key aspect of Nissan’s surge into electric vehicles is its joint venture with NEC related to its lithium-ion (Li-ion) batteries. The NEC battery design employs a laminated structure that improves cooling performance, which has been a major stumbling point for the use of Li-ion batteries. Indeed, Nissan plans to sell these batteries to other automakers.

Nissan’s CEO, Carlos Ghosn, is by his own words “extremely bullish on zero-emission vehicles.” He is bold enough to predict that 10% of world auto sales will be all-electric within 10 years.

An excellent overview of the electric vehicle realm, entitled "The Electric-Fuel-Trade Acid Test", was published in the September 5 issue of The Economist. In this article, not only were several of the new electric vehicle makers (e.g., Tesla Motors, Venturi, BYD Auto, SAIC Motors) and battery developers (A123 Systems (AONE), Boston Power) put into context, but some all-new technologies and business models enabled by vehicle electrification were highlighted.

For instance, consider the case of Better Place. This California-based firm is launching a business to serve local auto markets with a network of stations that will swap out depleted batteries with fully-charged ones within seconds, and charge the spent batteries for reuse in other vehicles, thereby offering customers a quick recharge akin to a refill at a gas station. Pricing will be akin to “rental” on the battery, until it is returned to a station to be replaced by a fresh one, which will also be “rented.” Each stop at a station thus implies a customer outlay on the same order of magnitude as a tank of gasoline or diesel.

Then there is the case of Michelin (MCGFF.PK), which is developing something called the Active Wheel. Beyond just the tire, Michelin is aiming to embed motors, brakes, suspension and associated systems into wheels, thereby distributing physical control to each wheel and allowing heavy items such as springs and transmissions to be entirely eliminated from the vehicle. Not only will this (theoretically, at least) improve auto performance, but it will reduce weight to increase energy efficiency and possibly lower capital and operating costs of vehicles.

The possibilities for an entirely new industry to emerge in providing and supporting electric vehicle markets are becoming clearer. Earlier this year, a study commissioned by the Electric Power Research Institute – funded by The Cleveland Foundation, the Greater Cleveland Partnership and First Energy (FE) – assessed the potential for Northeast Ohio to become a major player in the electric drive vehicle industry. The study indicates that many thousands of jobs are at stake for the Cleveland region – but only if (1) the U.S. takes actions to accelerate the penetration of electric vehicles in the transportation sector, and at least as importantly, (2) Northeast Ohio organizes itself to more earnestly pursue the business and technology opportunities associated with electric drive vehicles.

This economic potential is not just for Northeast Ohio. Clearly in response to the downturn of the American auto industry, the Obama Administration has made the state of Michigan a major recipient of its largesse, allocating half of a recent $2.4 billion in grants to stimulate electric vehicle and battery production. As reported in the Forbes article, Nissan’s U.S. battery manufacturing will occur in Tennessee, supported by a $1.6 billion loan from the U.S. Department of Energy. A123 and Boston Power are both based in Massachusetts, while Tesla and Fisker Automotive – both supported by the Silicon Valley mega venture capital firm Kleiner Perkins – are based in California.

Of course, not everyone is enamored with electric vehicles. In the same issue in which it profiles Nissan’s electric vehicle strategy, Forbes’ editor William Baldwin writes a skeptical opinion about the cost-effectiveness of electric vehicles in reducing greenhouse gas emissions.

When considered solely as an approach for reducing emissions, perhaps electric vehicles aren’t the absolute best solution. However, when one also considers the economic revitalization possibilities, as well as the imperative for reducing reliance on oil (from unstable and unfriendly sources around the globe), electric vehicles seem far more worthy of plugging.

Comments

[JAMES CARLINI:]

With the way the economy is, I really don't think many are going to be rushing out to buy a $40,000 Chevy or even a $30,000 Nissan.

What many articles fail to mention is that the battery costs between $12,000-$16,000 to replace. Try selling your 4 or 5 year old electric car that needs a new battery. No one is going to buy it if they also need to change out the battery.

Think of a conventional 4-5 year old car. You bought it at $40,000 and now it is worth maybe $18,000. If you have to add a new battery to sell it ($12,000-$16,000) what is going to be your asking price? $30,000-$35,000? Good luck trying to sell it.

I wrote several articles on Lithium-Ion battery technology.
carliniscomments.com/a...

Nov 03 06:10 AM

[Gerjo:]

I agree, this is the best way to get the attention on the subject of battery swapping. Over one year we have our first Quickdrop-stations in Hawaii, due to windmill-energy.

Gerjo Molenaar

Nov 03 06:21 AM

[GimliJan:]

Interesting article about the possibilities of new industries. However I would like to add to Mr. Carlini's post and take issue with that statement that "electric" cars will reduce our dependence on foreign oil. If you look at the amount of oil used in the production of electricity to run the factories that make the vehicles, batteries, etc, and also look at the fuel source for the recharges, you don't significantly reduce the dependence on foreign oil. Electric cars, trucks and mass transit vehicles (buses and trains), will only reduce the oil dependence when adopted and used by a large percentage of the driving population, municipalities, states and federal government agencies for all their fleet replacements. So we would need a national policy that mandates the replacement of the gas & diesel vehicles with electric and the replacement of Oil in Industry with alternatives where possible (Natural Gas, Nuclear, Wind, Solar). Just look at Europe and Japan which have high gas prices, excellent mass transit and government subsidies for alternative energy as well. Their oil usage is also high. So clearly the electrification of transportation is not the total solution.

Nov 03 11:12 AM

[esrb2525:]

Well don't forget that companies are also insuring these batteries up to 200,000+ miles. The electric cars should run forever as long as you do your regular maintenance. Just imagine driving a car for 10 years and still being under the mileage warranty. It sounds good to me.

Nov 04 01:06 PM

[User 458412:]

I am speaking from a position of having driven an all electric battery Toyota Rav4; it has almost 80k miles; still has a range of approx 100k miles and i charge it in the middle of the nite; the cost is negligible because my house has a 6.3kw solar array.

the battery pack is composed of nickel hydride which is a proven technology; ask the hundreds of people who have shared my experience.

the problem is that the technology is controlled by chevron and no one wants to talk about this issue.

Nov 04 03:13 PM

[jaimemotta:]

The Nobel Obama grants are intended to support union, and not to help industries! don't be cheated!

Nov 05 06:50 AM

[Davewmart:]

James Carlini:
Your link simply points to an article on your site which is not much about lithium batteries.
I appreciate that you doubtless have many interesting articles there which are more relevant, but surely if you wish to reference them for the discussion here is would be better to provide the direct links, rather than passing the responsibility of finding them to your readers.

Your figures for the cost of replacement batteries is fair, but is based on present day costings.
In a few years time when the replacements are needed, then if the idea of using lithium batteries is successful then costs are likely to be much reduced, for the 24kwh Leaf to perhaps the $6-$12k range rather than that you give.
Two more issues are relevant here, the first is that batteries may be leased rather than sold, and the second is that there is very little to go wrong in an electric vehicle, so a fair comparison would be looking at maintenance costs as well, and the savings on fuel.
In the real world ius used appropriately ( ie for city use ) the economics of EV's are far better than would be assumed by looking just at how much it costs at the moment to replace a battery.

GimLiJan said:
'If you look at the amount of oil used in the production of electricity to run the factories that make the vehicles, batteries, etc, and also look at the fuel source for the recharges, you don't significantly reduce the dependence on foreign oil.'

Oil is not a significant source for electricity. Coal, nuclear, hydro and wind are the main suppliers and therefore your premise is flawed.

To the author:
Ford has some cogent criticisms of Bettter Place's battery swapping idea.
Batteries are at an early stage fo development, so many different designs will fight it out, menaing that swap stations would need very large numbers of batteries to provide swap - that means high cost.
In addition many batteries are plumbed in with cooling circuits, and so swapping them out would be entirely impractical.

Nov 05 06:58 AM