Evolution Shift
A Future Look at Today
May 26th, 2008

The Electric Car – An Update on the Mass Market

When I wrote my first column on the electric car early in 2007 it was triggered by the announcement that GM was going to bring the Chevrolet Volt to market in 2010. As stated then, this was a significant event in that this was going to be the first plug-in car produced in significant volume and at an affordable price. GM was underscoring this by putting the Chevrolet name plate on the car. Plug-in cars are important as they have the potential for transportation with no heat and emission generating combustion. Significant volume is important because anything less will not lessen use of fossil fuels and resultant greenhouse emissions.

The reason that the Volt cannot be produced prior to 2010 is that there is no current battery technology that will work for the consumer auto market. The drive train battery must be able to last for 5,000 charges, not generate excessive heat, be able to function from -10 to 110 degrees Fahrenheit, and have a charge last for a minimum of 40-50 miles. Since the battery technology of choice for GM is lithium ion, the type of battery used in laptops, the challenge is clear to anyone experiencing the heat and short length of use of a laptop on battery power. Think of bundling a hundred such batteries to power a car. I have written two columns in this space and in my new book “The Shift Age” about the quest for the perfect battery.

A year ago, when GM announced the Chevrolet Volt as a pure plug-in it basically had the announcement arena to itself. The good news is that now both Toyota and Nissan have announced plans to introduce electric cars to the mass market in 2010. This is good news for two reasons. First, competition usually accelerates development and production time lines, so that GM will now have its’ two largest competitors to think about. Second, there will be greater scale brought to the marketplace, and more quickly. Nissan went even further that GM in that it announced it would sell electric cars globally, not just in the United States. The proof now will be the quality, price, speed to market, and volume of production. The proud, green tinged announcement phase is now over and the real work begins to deliver what has been promised. May all three succeed!

There are a number of electric cars on the road. Internal combustion engine cars have been converted by enthusiasts to be plug-in electric cars. Currently, there are more than 200 such cars on the road in Illinois, and with a small but growing network of plug-in stations. These numbers will increase as oil trades at ever higher prices. As mentioned in the last column here, $4.00 a gallon gas seems to be the pain threshold for many Americans to change their transportation habits. When the average commuter or suburban resident is spending $3-4,000 a year on gasoline, paying the $5,000 cost to convert a car to electric or to pay that same amount as an added cost on a new electric car in 2010 will be an easy decision. It is my prediction that when the first mass market electric cars come on the market in 2010, the average price of gasoline in the U.S. will be somewhere around $6.00 a gallon. The commensurate cost for electric when computed in miles driven is around $1.25, so the market opportunity for electric cars is clear.

The key question is when will the major car companies reach significant production levels of electric cars? It is clear that the ever increasing price of oil is helping to create a mass market. There will initially be more demand than supply for safe, affordable plug-in electric cars. The companies that get there first and can ramp up production to the hundreds of thousands quickly will not only sell a lot of cars but can earn preemptive green honors similar to the environmental halo Toyota currently enjoys because of the Prius. There are some 9 million vehicles sold in the U.S. each year. The average car stays on the road for 8-10 years. It is therefore possible that 50% of all vehicles old in the U.S. by 2015 could be electric and/or hydrogen fuel cell and that by 2020, internal combustion only vehicles will either be phased out or will represent less than 10% of the market.

What is clear to me is that if GM, Toyota, Nissan, Ford and Chrysler and any other car company targeting the main, non-luxury market do not make electric, hydrogen fuel cell and plug-in hybrids the majority of their production by 2015, they will be out of business.

Humanity is now at a turning point in terms of transportation. In 50 years we will look back and view this time as the end of the internal combustion engine era for personal transportation. It will seem as anachronistic as the horse and buggy or the steam engines of the 1800s.

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