New Energy is Driving Auto Production

Obama to give Electric Vehicles a shot

Ken Silverstein | Mar 11, 2012

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During one of President Obama’s factory visits -- some might call it a campaign stop -- he joked that he would buy an electric car in about five years, or after his second term. That was just before GM, which makes the Chevy Volt, said it would suspend production of the car for five weeks beginning later this month.

What gives? Sales of the Volt have not met expectations. But even before that GM announcement, the president had been touting a plan to get more hybrid and electrics one the road, as well as those that are run by such fuels as natural gas. How so? By giving tax credits to buyers of those vehicles and by providing money to build out the necessary recharging and fueling infrastructures.

“We can't just keep on relying on the old ways of doing business,” says President Obama, in a speech to truck workers at a Daimler plant in North Carolina. “We can't just rely on fossil fuels from the last century.  We've got to continually develop new sources of energy.”

Advocates say that the administration is thinking outside the usual paradigm -- to get past the dinosaur age of fossil fuels and into the modern realm. The financial incentives are necessary to grow the market and to create economies of scale that would improve technologies and decrease prices. Consumers would then be attracted and the subsidies could cease.

Skeptics of the proposed tax credits and federal spending are arguing that the market knows best -- not a bunch of politicians sitting in Washington, D.C. The internal combustion engine has survived all of these years not because of a lack of creative thinking but because it works better than anything else. Cars that run on gas can travel much longer distances than those that are powered by electricity.

Take the Chevy Volt: In 2011, GM sold 7,600 of those cars, short of its goal of 10,000. In 2012, the car maker had wanted to sell 45,000 of them. But if February is any indication, the company is a long way off. In fact, electric vehicles accounted for 2 percent of all cars driven off the lot in 2011, according to the Electric Drive Transportation Association.

Utility Revenues

That’s a ominous start to the president’s goal of putting 1 million electric cars on the road by 2015. Hence, the White House is trotting out its new proposal to jump start sales -- all hyped by $4 gas prices. The essence of his plan is to give $10,000 tax credits to buyers of alternative technologies as well as to pump in $1 billion to build out the infrastructure in key cities to run such vehicles.

"Accelerating the national deployment of electric drive cars and trucks -- battery electric, hybrid, plug-in hybrid -- and promoting diverse infrastructure options to support them will have real benefits,” says Electric Drive Transportation Association President Brian Wynne. “Vehicles that run on electricity offer consumers cost savings and help boost use of domestic energy, as opposed to imported petroleum.”

Electrification of the auto sector could potentially be a boon to utilities’ bottom lines. Hundreds of billions are spent each year on gasoline. Even if car sales fall short of what the president is preaching, power companies would still be selling electricity into new business lines and creating lucrative revenues in the process.

There’s still a ways to go before it would hit that point. In an analysis posted on its web site, vehicle expert Edmunds says that consumers can buy traditional cars and still pay the high price of gasoline and typically come out better than if they buy all-electric cars. In general, at $3 a gallon, the payback would be 15 years while at $5 a gallon, it would be nine years.

The Chevy Volt costs about $39,500 before the current tax credit of $7,500. The Nissan Leaf, its competitor, is about $32,000 before the same credit is applied. “The premium charged for hybrids and electric vehicles takes time for consumers to recover in fuel savings — often a long time, maybe even longer than they intend to own the car,” says Michelle Krebs, senior analyst at Edmunds.

She goes on to say that the sales of such cars could increase irrespective of gas prices. That’s because roughly 51 new hybrids will hit the market while eight new all-electric cars will do so. At the same time, though, smaller traditional cars that are getting 30-40 miles per gallon are becoming available.

Indeed, that’s the free market at work. Consumers will have a choice of electric or traditional cars, many of which will use less petroleum than the current options. And that’s something that the White House also supports, although it wants to pave the road for alternative vehicles to succeed.

EnergyBiz Insider is the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.

Follow Ken on  www.twitter.com/ken_silverstein

energybizinsider@energycentral.com



Industry thought leaders will be discussing this topic and more at the upcoming EnergyBiz Leadership Forum, Harnessing Disruption, taking place in Washington D.C., March 19-21, 2012. Review full conference details by visiting www.energybizforum.com

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Comments

Electric cars

Electric car is a new face of automobile industry; it brings a revolutionary change in automobile industry due to its high efficiency capacity and performance. Mostly electric cars are known as fuel efficient cars and environmental friendly also; it provides multiple advanced feature and specification to the user and changes the concept of hybrid vehicles.

Porsche repair Irvine

Electric cars are they conserving energy? Rev4

Electric cars are they conserving energy? Rev4

 

Ask yourselves what is the real cost of “Electric Car”?

 

Note: Electricity is a secondary form of energy derived by utilizing one form of energy to produce electric current.

 

Let us look at the facts:

 

In order to produce electricity, we need some form of energy to generate electricity, whereby you lose a substantial amount of your original source of energy in the generation process.

In the process we are losing the efficiency of the initial energy source, since it is not a direct use of the energy.

 

Let us take it a step further. To generate electricity we utilize; coal, oil, natural gas, nuclear, hydro electric - water, photovoltaic-solar, wind, geothermal, etc. Many electricity generating plants utilize fossil fuel, which creates pollution.

 

Do you realize how much of the initial source of energy you lose to get the electricity you need for your electric automobile; you also lose electricity in the transmission lines.

 

Why are we jumping to a new technology, without analyzing the economic cost, the effective return and efficiency of such technology; while computing and measuring its affect on the environment?

 

Natural gas vehicles are a direct source of energy, where you get the most for your energy source – in efficiency and monetary value. Cost of natural gas to a comparable gallon of gas ranges around $1, it has higher octane and extends the life of your engine, it is also safer than gas.

 

In these hard economic times – I would think, you would want to get the most for your dollar – and not waste resources.

 

Another economic impact would be the loss of road tax on fuel, these funds are used to build and maintain the highway infrastructure.

 

“It is Cheaper to Save Energy than Make Energy”

 

YJ Draiman, Director of Utilities & Sustainability

 

 

 

http://www.energysavers2.com

 

Will High Electricity Rates Drive Innovation?

Escalating costs of OIL will produce innovation!

 

 

YJ Draiman's vision is to make Los Angeles as the World Capital of Renewable energy and conservation.

http://www.yjdraimanformayor.com

Electric cars are they conserving energy? No!

Electric cars are they conserving energy? No!

 

I worked with UPS in Chicago in the early 90's, researching the conversion of UPS vehicles to Natural Gas as a primary fuel with overnight slow fill stations on UPS compound.

If we are to survive the Energy crisis and become energy independent, we must utilize every effort not to waste our energy resources. Innovation and technology will eventually save the day.

Electric cars are a fiction of energy conservation, (Look at all the costs associated with such technology); it is not a viable option.

We must look into other forms of fuel, and invest heavily into R&D.

 

YJ Draiman, Director of Utilities & Sustainability

http://www.yjdraiman.org

Free market?

You wrote: "Indeed, that’s the free market at work. Consumers will have a choice of electric or traditional cars, many of which will use less petroleum than the current options. And that’s something that the White House also supports, although it wants to pave the road for alternative vehicles to succeed."

No, a truly free market would be lead us right back to fossil fuels, where the real BTU's per quantity reside. It's a faulty assumption that just throwing money at some technology will automatically transfer into greater economies of scale. There are plenty of industries where economy of scale is never a real factor.

There might be a day when the so-called "renewables" can compete with fossil fuels dollar for dollar. The market, and not some junk-science crazed regime, will determine when that time should occur.

Natural Gas Cars - Low Cost - Transportation Alternative.

Dear EnergyBiz

Electric Cars are fine I guess but it seems to me that the US should be taking a much more active role to promote natural gas as the alternative fuel. Pushing Electric cars as some green alternative is not realizing the ineficiencies of the multiple conversions that have to occur to power the electric car. Coal or Nuclear or Gas or Hydro to Electricity -- to transmission line losses -- to Battery Charging -- to finally conversion to mechanical energy to propel the car. There are simply to many conversions to be efficient and frankly the electric car complexities are costly. I propose a more conventional and more efficient usage of the natural gas bonanza available in the US. Promote efficient and low cost alternative and get more natural gas powered cars on the road.

Garry Smith 

Agree with your analysis concerning multiple conversions

You are correct, there are a lot of losses that proponents of electric vehicles do not figure in when they are doing their singing-the-praises of environmental stewardship usage of electric vehicles.  Without even looking at the losses in transformers, transmission, distribution, and battery chargers, the gasoline equivalent mileage being claimed is bogus.  If one stops to look at the average efficiency of fossil power plants in their service region, it is easy enough to calculate that, on a highway mileage basis, the gasoline equivalent mileage of the Leaf, for instance, is only about 32MPG, not the 100 to 110 one often sees claimed--and I am not confusing that with their range claims.

Unless one can guarantee there is no fossil-fueled power plant online while they are charging, they must assume they have added the last bit of load that causes that fossil-fueled plant to be running.  Unless some careful planning is done around the charging process, I see the possibility that EVs may actually add to CO2 emissions because people are going to want to charge their vehicles when the want (or need) to.

EV tax credits are basically a boondoggle for the well-to-do with an environmental guilt complex and the car companies manufacturing a product too soon to be practical.  The poor and financially struggling cannot afford an overly expensive vehicle that cannot meet their demands for transport reliably and that cannot be refueled in a few minutes on the way to where they need to go.  Better to put any federal funds directed toward vehicle fuel efficiency into research improving the mileage of gasoline or diesel powered vehicles than on something a relatively few people can afford to buy.

Tiered Electricity Rates Unplug Electric Vehicles?

Hi Ken,

Thanks for the article.  I've been considering electric or plug-in hybrid vehicles and have held off after my electric company implemented tiered rates at the residential level.  I now pay much more if I use more than 500kWh in a month month.

There seems to be a disconnect in policies that encourage electric vehicles and the policies that encourage conservation via higher tiered rates.

Don

Watching with amusement

I've been watching with amusement as auto companies push the electric vehicles in markets where they make no sense for precisely this reason. PG&E rates go up  with usage, so lets sell in CA! Hilarious short sightedness. Yet in Chicago, real time pricing lets you charge for .05 $/kWh. Duh

Natural gas vehicles make more sense but today's premiums are making it cost ineffective. The Honda Civic NG is a $10k premiun over the gas model. At 15k miles/year and $4/gal gas the payback is 16 years.   There is a sound economic reason we use what we use.

I wonder if your utility's practice is legal

It would be interesting if a lawyer were to look at the tiered rates you are talking about to see if it is even legal.  It does not really cost the utility anymore to supply you with more power if you are careful about when you use it and especially if you adjust your lifestyle and activities to use the electricity during the odd hours--like running the washing machine, drier, and dishwasher in the "witching hours"; or charging an electric vehicle in those same hours.  One could even argue that your use of more electricity should result in a decreasing tier rather than increasing--after all, if you have a 100A X 220V service to your home, the cost of installation and maintenance of the distribution and service lines does not change so the cost/KWh should decrease.

You might want to challenge their practice to your public utility commission.