A CAR TO DETROIT’S RESCUE
Can electric cars save Detroit?
Steve Everly, May 4, 2009 (Kansas City Star)
SUMMARY
General Motors handed out print materials about its Chevrolet Volt at a Disney World Alternative Fuels & Vehicles Institute conference. The print materials featured the slogan “Charge a Battery, Change the World.”
The Volt may be the last hope for GM. It certainly represents the dream of President Obama, who campaigned on the promise to put a million plug-in hybrid electric vehicles (PHEVs) on U.S. highways by 2015.
Other carmakers also have plans for PHEVs as well as entirely battery-powered battery electric vehicles (BEVs). Some believe a shift to BEVs is key to saving the world from the worst ravages of global climate change. GM’s leadership believes its PHEV will save save Detroit. But some believe that with the U.S. operating 250 million vehicles, the transition to BEVs will be too small and too slow to do either.
From greenfuelsforecast via YouTube.
Toyota believes the President’s goal of a million PHEVs by 2015 is “unrealistic.” Conservative auto industry analysts believe Detroit will sell no more than 100,000 PHEVs in that time span and even that level of sales will be due not to market factors but to unsustainable levels of federal subsidies.
The question of how motivated to buy BEVs customers will be looms large. Most analysts admit there will be some deeply committed buyers for the Volt, as well as for other PHEVs and BEVs. They will be buying on ethical and/or environmental grounds. But many market-oriented analysts believe the bulk of buyers will only move when the cost of the car comes down and/or the cost of gas goes up.
The Volt is expected to initially cost nearly $40,000. That’s a high price for a small, 4-passenger car. One market survey reportedly found the Volt doesn’t have much of a chance to sell at a mass market volume unless gas is close to $5/gallon.
Does this look like a $40,000 car? (click to enlarge)
The Obama administration will provide Volt buyers with a $7,500 tax credit but market analysts say that will not make the vehicle cost-competitive.
The Disney World event drew other vehicles, including a hybrid electric car, a sampling of BEV and PHEV cars and trucks in the cue for the marketplace over the next 3-to-6 years, a natural gas-fueled car and a new generation of diesel gasoline vehicles. And next-generation ethanol, E-85 and biodiesel were popular topics.
With last year’s rise in the pump price of gas, cleaner burning diesel cars and light trucks re-emerged and could triple to 9% of yearly new car sales by 2016. An environmental group named a diesel Volkswagen Jetta the 2009 Green Car of the Year. But as the economy comes back and gas prices start rising again, diesel’s popularity may wane.
click for the full Kramer presentation
COMMENTARY
Hopes and dreams are what Disney World is all about. The car industry, not so much; the car industry is about steel and axle grease. And greenback dollars. The crucial question, in the words of the reporter who covered the Disney World event: How much is Tomorrowland and how much is Fantasyland?
The Volt is a breakthrough, first-generation product. Rarely do such products succeed purely on their own. Typically, an entrepreneur must carry the product until it can adjust to the feedback it gets from its experience in the marketplace. Many products have died for lack of financing all the way through the process. The only way the Volt will get that financing is through the federal government.
click for the full Kramer presentation
If the federal government can subsidize a financial and environmental disaster like ethanol – and it is committed to do so until at least 2022 – there is no reason for it not to subsidize a good bet like the GM PHEV. There are those who would, however, point at the ethanol fiasco as ideal proof the government should not pick winners.
BEVs will be especially challenged until the economy comes back and gas pump prices once again begin rising. Then the Volt’s extremely appealing fuel price advantage will drive interest.
The Volt will use electricity at about the same rate as a refrigerator and cost about 2 cents/mile. A gas vehicle presently costs about 8-to-10 cents/mile and will get more expensive. The Volt will, therefore, save its average owner about $1,000/year.
In addition, its ability to go 40 miles without drawing on its liquid fuel supply means that 75-to-80% of its owners will not have to use liquid fuel at all.
Until gas prices go back up, the Obama administration appears committed to backing BEVs. There are $25 billion in production incentives and another $1 billion for battery improvements provided by the stimulus bill.
click for the full Kramer presentation
T. Boone Pickens is probably the world’s biggest compressed natural gas vehicle advocate but admits the large transport fleet will be the first to make the shift. He proposes the U.S. develop a “California” plan. California made it illegal for its trash hauling companies to buy new diesels and provided a $50,000 subsidy for the purchase of new trash trucks powered by compressed natural gas, a much cleaner-burning fuel than diesel. The state now has half its garbage trucks running on compressed natural gas.
For the time being, compressed natural gas will serve truck fleets. (click to enlarge)
QUOTES
- Wesley Warre, Natural Resources Defense Council: “In just 100 days, President Obama has swung the door open on energy…”
- Scott Gottlieb, fellow, American Enterprise Institute: “There’s going to be taxpayer subsidies one way or the other to make that fly…”
- Obama Automotive Task Force report: “[The Volt] is projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable.”
- General Wesley Clark, former Supreme Allied Commander of NATO and representative, pro-ethanol Growth Energy: “In the near term, ethanol is the closest thing we can do to reduce our reliance on foreign oil…”
click for the full Kramer presentation
- T. Boone Pickens, energy entrepreneur and compressed natural gas vehicle advocate: “It’s going to take a little time to get this thing going…”
- Britta Gross, hydrogen/electrical infrastructure development manager, GM: “We need to be sure we get this right…”
- Michael Omotoso, auto expert, J.D. Power & Associates: “We don’t expect [the Volt or other plug-ins to impact the U.S. vehicle sales] until the price comes down…We expect volume to be small.”
0 Comments:
Post a Comment
<< Home