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Until recently, two things have distinguished hybrids from plug-ins (i.e. PHEVs, REEVs and BEVs): The batteries and the way they are recharged. In fact, most hybrid electric vehicles (HEV) still use low-capacity nickel metal hydride batteries which are rechargeable through a regenerative braking mechanism only, while all plug-ins utilize high-capacity lithium-ion (Li-ion) batteries which are mostly recharged by the electric plug. These differences have been thought to be unsurmountable. However, there are signs now that they may soon disappear.

First, as I have shown in a recent article, at least three mainstream car makers have announced that in their next hybrid models they will use Li-ion batteries. Second, all plug-ins (i.e. concept, in testing and already on the roads) have contemplated a regenerative braking mechanism. So what is left as a source of difference between these two types of electric cars? Is it the plug? Yes, indeed, but is this distinction sustainable? Not necessarily, because as battery technology progresses (so long as oil prices stay high and acceptance of change increases) it will simply not make any sense not to plug. That is precisely why I thought almost two years ago that an EV strategy solely based on hybrids would be flawed. If this is correct, it brings us a new set of issues. One of them is standards. To be precise, we have reached a point where we need to start thinking seriously about EV standards.

Following a recent article published by Energy Policy, a leading journal in the field, along with the efforts by many governments to promote the development of EVs, "has come an increasing recognition of the role and importance of ensuring that standardization keeps up with these technological changes and that there is consistency across countries."

But what standards are we talking about? The above mentioned article focuses on three major areas: electrical systems and vehicle-to-grid technology, batteries and EV recharge infrastructure, and consumer and vocational. However, as plausible as they might be, these areas fall short to cover the kinds of things I referred to at the outset.

In what follows I will attempt to initiate a discussion about two types of standards that may be crucial to accelerate adoption of plug-ins in the next five years or so.

For one thing, car makers need to anticipate the forthcoming advances in batteries so that once important technological breakthroughs take place in the 10 next years or so, their current EVs will not be completely displaced from the market. Here I'm speaking of the possibility that in that time frame Li-ion batteries are, for instance, first substituted by Li-sulfur ones which in turn are later on replaced by Li-air batteries. Hence to avoid rapid obsolence, the EVs to be thrown soon into the market must be prepared in advance for those possible battery technological changes. This of course requires automakers to reveal their future battery strategies which may affect their current competitive stances. However, as more and more EVs are introduced into the market the standard will become self-evident.

For another, auto producers also require to foresee potential modifications in drive trains so that, for example, a HEV can be easily transformed into a PHEV or a REEV, which in turn can be converted into an all-electric EV sometime in the future. In this connection, at least one major car maker appears to have made some progress in that direction. As Mike O’Brien, Hyundai's (OTC:HYMLF) head of planning, has recently pointed out, "other manufacturers’ hybrid systems were developed in such a way to not allow them to easily develop plug-in hybrids. For the Sonata Hybrid to become a plug-in hybrid, really all we need are bigger batteries — the basic technology platform is already designed to support a plug-in variation."

As I have argued in a previous article, Hyundai is likely to leapfrog both Toyota (NYSE:TM) and Honda (NYSE:HMC) in the hybrid electric market with its up-coming Sonata hybrid. The question remains as to whether its efforts to set up a new important standard in the EV industry will help Hyundai beat them in the PHEV, REEV, and BEV markets as well. For the time being, though, as the following chart clearly shows, Hyundai seems to be doing just fine in the Korean stock market. This is, certainly, a plus in its attempt to become a leader in the EV market.


(Click to enlarge)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Electric Vehicle Standards: Do They Make Sense?