Electric cars charge ahead

At least nine major car companies promise plug-in vehicles by 2013.

Mark Blinch/REUTERS
A plug is seen coming from the Chevrolet Volt electric car during the North American International Auto Show in Detroit, Michigan January 13, 2009.

Armin Kusig is living a new American dream – one that lightens his fuel costs and puts a smile on his face. Driving a plug-in hybrid car that gets much of its locomotion energy from a battery, he gets up to 100 miles per gallon and recharges overnight from a socket in his garage.

Average fuel costs to commute 55 miles daily? About $1.62 – 15 cents for electricity and the rest for gasoline – if gas is priced at $2 per gallon.

Yet Mr. Kusig’s reality is still the future for the rest of the nation. Only a few dozen plug-in hybrids are on the road today. Most current plug-ins are conversions by do-it-yourselfers or by companies that charge $10,000 or more. Kusig, an engineer from Wayland, Mass., converted his hybrid Honda Insight into a plug-in by adding a built-in battery charger and a mechanism that lets him control the electric motor.

But the plug-in dearth seems set to change before long. A combination of unpredictable gasoline prices, prodding activists, unsold SUVs, and hefty government financial incentives for plug-ins have changed the game. After years of foot dragging, major car companies are at last accelerating into a market for electric-powered vehicles of all kinds, analysts say.

“They’re making pretty good progress,” says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., of GM and other companies’ development efforts. “They’re doing this for real.”

At least nine car companies worldwide say that by 2013 they will offer plug-in vehicles that use electric motors as their primary means of propulsion, according to Plug-in America, an activist group. (See the list here.) Some will be all-electric drive vehicles (EV). Most will be plug-in hybrid electric vehicles (PHEV) that use small gasoline engines as a backup.

GM and Chrysler both say they will sell a plug-in car in 2010. Ford will sell a battery-powered commercial van next year, a small battery-powered EV car the year after, and a PHEV competitor to GM’s Volt by 2012. Toyota says it will sell a plug-in-hybrid Prius to companies late this year, but hasn’t said when ordinary consumers will be able to buy one. So far, despite its financial woes, GM seems to hold the plug-in lead, Mr. Cole says.

“The key issue [for GM’s new Chevrolet Volt] has been the cost of the battery,” he says. “That cost will take years to come down. But the promise is still high. Teams are meeting their milestones on or ahead of schedule.”

Still, GM officials last week were forced to defend the Volt after a Carnegie Mellon University study found the car’s battery too big and costly to fly in the marketplace. The vehicle is expected to go 40 miles on a charge – and cost about $40,000.

Battery technology is critical. At the costs projected by Carnegie Mellon, the 16-kilowatt-hour storage capacity of the Volt battery would cost $16,000. But other analysts told the Monitor that battery capacity is already much less than the $1,000 per kWh cited in the Carnegie study.

Robert Kruse, GM’s executive director of vehicle engineering for hybrids, electric vehicles, and batteries, suggests that reports saying the Volt’s battery would cost even $10,000 were greatly exaggerated.

“There’s been a lot of speculation,” he said in a January interview with the Monitor. “We’ve been able to meet the business team targets for the batteries ... and it does allow, from a financial standpoint, the early Volts to be viable.”

While the battery debate rages, just knowing that plug-ins are coming has activists celebrating – as they did last month in Santa Monica with a parade of 70 or 80 plug-in vehicles, mostly all-electric vehicles.

“We accomplished our first goal: We got car makers’ attention and got them to commit to building them,” says Felix Kramer, founder of CalCars, the California Cars Initiative, which was the first to add batteries to a Prius and convert it to a plug-in. That put public pressure on automakers by showing it was doable. Now the group has turned to the next phase.

“We’re focused now on ensuring successful commercialization of these vehicles,” Mr. Kramer says.

Part of that involves creating a smooth landing zone for plug-ins, says Laura Schewel, manager of “Project Get Ready,” a program run by the Rocky Mountain Institute in Snowmass, Colo. Ms. Schewel is working with Indianapolis; Portland, Ore.; Raleigh, N.C.; and other cities to prepare new plug-in infrastructure – like putting charging stations in shopping malls.

Even though plug-in hybrids won’t technically need chargers, offering free-electricity to customers could be a strong incentive to stop and shop, Schewel and others say. Such infrastructure also would be key for several all-electric cars planned by Nissan and others.

“Workplace charging is really attractive,” Schewell says. “We are in economic hard times now. But lots of folks believe being part of a green economy is the way to get out of these hard times.”

Still, the cost of new plug-ins remains the big issue. Without financial incentives, Americans are unlikely to buy a $40,000 vehicle in numbers big enough to make much difference to US energy security or climate concerns.

In that light, federal tax breaks for plug-ins are a critical factor. Government economic stimulus provisions for plug-in vehicles turned out to be far larger than many expected – about $14.4 billion for plug-ins – most toward helping car companies retool and develop better batteries, says Jay Friedland, legislative director for Plug-in America, which held the parade.

Under the stimulus, each buyer would get up to $7,500 in tax credits depending on the size of the plug-in vehicle’s battery. California, Oregon, Texas, and other states are coming forward with their own incentives, Mr. Friedland says.

California will offer a $5,000 incentive, he says. Together with the federal offer, the price of a Volt could drop to about $28,000.

Federal incentives will also apply to the first 200,000 vehicles produced by any manufacturer – far broader than the incentive for conventional hybrids that helped hybrids grow to about 2.5 percent of the US vehicle fleet today.

The stimulus incentives could fund sales of 1.6 million vehicles – far more than the million-vehicle goal by 2015 set by President Obama, Friedland says.

Waiting until late 2010 will be hard, though. Some say the reason SUVs and other gas guzzlers are piling up on dealer lots is a “buyers strike.” Car dealers just don’t seem to have what buyers want.

At current gas prices, Kusig’s commuting costs driving a plug-in vehicle are only a little better than a standard hybrid. But if gas prices bounce to $3 a gallon again, a new factory model with bigger batteries that go 100 miles or more on a gallon of gas will be big winners – and Kusig will be lining up to buy.

“I converted my Honda Insight to a plug-in,” he says. “But it’s getting old with 140,000 miles on it. I want a new car – but it has to get better mileage than the 60-70 m.p.g. [average] I get now.”

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