Plugging Electric Vehicles

by Richard T. Stuebi

Much has been written about the planned release by General Motors (NYSE: GM) of the Chevy Volt, a plug-in hybrid electric vehicle. When GM launches the vehicle, now slated for late 2010, it plans 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 (NASD: NSANY), which is investing several billion dollars to ramp up for producing 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, for their 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, 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, 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 (accessible here) commissioned by the Electric Power Research Institute (EPRI) – funded by The Cleveland Foundation, the Greater Cleveland Partnership and First Energy (NYSE: FE) – assessed the potential for Northeast Ohio to become a major player in the electric drive vehicle industry. The study makes 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. Along with Tesla, 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.

As the Fellow for Energy and Environmental Advancement at the Cleveland Foundation, Richard T. Stuebi is on loan to NorTech as a founding Principal in its advanced energy initiative. He is also a Managing Director at Early Stage Partners, and is the founder of NextWave Energy.

2 replies
  1. jerry dycus
    jerry dycus says:

    Nissan just said the Leaf will be price at very close to an ICE would. This is big news though I've always said EV's should cost no more than ICE's do. EV's have only 1 moving part plus bearings in the motor and need no transmission. Batteries will be paid for by the EV battery tax credit.

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