Is the moment for electric cars finally driving up?

McClatchy NewspapersApril 4, 2011 

US NEWS ELECTRICCARS 9 MCT

SemaConnect is one of a handful of U.S. start-up companies that are designing charging stations for electric cars.

SEMACONNECT — SemaConnect/MCT

WASHINGTON — When oil hit a record price of $147 a barrel in July 2008, it was a game-changing moment that sparked a serious push to create electric cars and hybrid electric engines that could help wean Americans off oil. Today, crude is back over $100 a barrel and the payoff is the first generation of mass-produced electric cars rolling off production lines.

Interest in electric vehicles has ebbed and flowed with the price of oil over the last three decades, but something new is clearly afoot. General Motors and Nissan already have electric cars on the streets of major U.S. cities, and intensified battery research is bringing down costs.

In 2005, there were no makers of lithium-ion batteries in the United States. Now, more than half a dozen battery plants are open or near completion, thanks in part to $2.4 billion in co-investment from the federal government.

Chevy's Volt battery costs about $8,000 now, down from $12,000 or more a few years ago.

"The question is: Can these guys make a battery that is five times cheaper? I think yes. I think we can do it," Eric Isaacs, the director of the Argonne National Laboratory, said in an interview. Argonne, outside Chicago, is the Department of Energy's lead lab for advanced battery research and development. Its 15 years of research into lithium ion batteries resulted in the one that's now being used in GM's Chevy Volt.

The Energy Department estimates that there'll be enough manufacturing capacity for 50,000 electric vehicle batteries by the end of 2011 and 500,000 by the end of 2014.

The lab's goal is to spur U.S. economic competitiveness. In a recent speech, Isaacs said that China had no cost advantage in battery manufacturing.

"So with government funding to defray some of the upfront costs of building factories here," he said, "we can realistically be competitive in a large and growing world market, once we have the technology to challenge the internal combustion engine."

Isaacs and other experts don't predict an abrupt end to conventional gasoline-powered cars, but neither do many predict a prolonged return of low oil and gasoline prices. As demand for oil climbs globally in coming years, the need for fuel economy in automobiles will grow only stronger.

"We think that increasing electric is inevitable. The speed is variable," said Genevieve Cullen, the vice president of the Electric Drive Transportation Association, an advocacy group for electric cars.

That's why a global race is on among the United States, Japan, China and other manufacturing powers not only to develop the next generation of battery and electric-motor technology, but to define what the auto of the future will be.

"The days of sub-$100 oil are really behind us," Mahi Reddy, the CEO of SemaConnect, said during a company tour in Annapolis, Md.

SemaConnect is one of a handful of U.S. start-up companies that are designing charging stations for electric cars, and Reddy is buoyed by the flurry of new electric cars coming out.

"That to me is a signal that a critical mass has been reached," he said, confident that the price advantage that conventional cars still hold will narrow rapidly.

SemaConnect recently installed a charging station outside a Safeway store in Westminster, Md. It's preparing to put in 50 more in places such as regional airports and rail stations.

Federal stimulus funds totaling almost $400 million have been used to help companies such as San Francisco-based ECOtality. It manufactures its Blink battery-charging stations in Detroit and is deploying stations in 18 large cities across six states. Installations began in the past several weeks in California, Washington state, Oregon and Arizona.

Rental-car giant Hertz offers electric cars at New York locations and will expand that to San Francisco and the nation's capital in coming weeks.

"Currently, we have a few dozen vehicles. By the end of the year we anticipate having hundreds of them available," spokeswoman Paula Rivera said. "We do view this as the future of transportation, and see adoption coming not only from having the cars available, but the ecosystem to charge them. ... As the ecosystem builds out, our fleet will increase."

That "ecosystem" is exactly what consumer-electronics behemoth Best Buy is eyeing. The retailer expects to capitalize on the need to install 220-volt electrical sockets in homes and businesses across America to allow for speedier car charging.

"We dedicated a significant amount of resources to help this technology come to market," said Chad Bell, the senior director of Best Buy's New Business Solutions Group. "We think these (home charging-stations) will be purchased and sold in the future similar to how electronics are sold today."

When a consumer buys an electric vehicle, the car equivalent of Best Buy's computer-repair service Geek Squad would do an assessment of the customer's needs, then send a contracting partner to install the charge station. Best Buy would remain the point of contact if problems arose.

President Barack Obama has challenged automakers to put 1 million electric cars on the road by 2015. That would be equal to one out of 12 cars sold last year.

Oil-price shocks and concern about climate change help push electric car production, but a third critical push has come from breakthroughs in battery technologies, aided by federal investment.

Battery price is the biggest cost component in an electric car. For every kilowatt hour of battery power, there's a driving range of four miles. Nissan's Leaf has a 24 kilowatt-hour battery, or a range of about 96 miles between charges. The battery costs $12,000, but as it's mass-produced and demand for electric cars grows, the cost should come down to $6,000 in three years, said Reddy of SemaConnect.

That will put the cost of an electric car on par with conventional cars. That's important because Toyota's pioneering hybrid Prius, which combines gasoline and electric propulsion, won over many motorists who wanted to be early adopters, but its higher price as a hybrid was greater than the fuel economy savings it provided.

Price differential will remain a short-term challenge, acknowledged Mary Beth Stanek, a government affairs director on energy for GM. In a recent speech, she predicted that, "We'll probably hit a commercial cost where it makes a lot of sense in the next six to 10 years."

GM introduced the Chevrolet Volt in 2010, and it's rolling out in force this year. The Volt can travel 40 miles on its lithium-ion battery pack, and after that it can travel 375 miles using its gasoline-powered combustion engine. The sticker price is about $41,000.

Nissan's Leaf, also introduced last year, is a 100-mile-range, all-electric vehicle that sells for roughly $33,000.

Toyota is preparing to release a plug-in version of its hybrid Prius next year; test models already are being driven in large U.S. cities. It won't go more than 13 miles on an electric charge alone, but it's rated at 134 miles per gallon for its hybrid qualities.

Ford Motor Co. is taking a different tack. It retooled its Wayne, Mich., plant to allow the production of conventional, hybrid and electric vehicles on the same assembly line. The partially solar-powered plant will build an electric version of Ford's strong-selling Focus late this year, followed next year by a hybrid crossover vehicle that blends a minivan with a car, as well as a plug-in hybrid.

In an interview, Ford's director of electric-vehicle programs said that mass acceptance of electric vehicles remained a way off.

"Hybrids, we think, are going to be the big volumes," Sherif Marakby said. Americans still worry about the range before electric cars run out of juice, and a hybrid "is a vehicle that you don't have to plan around in terms of your drive."

Ford will begin selling a plug-in hybrid next year with a range of at least 20 miles, but it will work as a gasoline hybrid vehicle with a combined range in the ballpark of 500 miles per charge and fill up. Ford expects that 10 to 20 percent of its fleet will be hybrids or plug-in electric vehicles by 2020.

Low-interest federal government loans made Ford's retooling in Wayne possible. Ford hopes that it will give the company a flexible platform on which to build, based on consumer demand, which could vary with technological breakthroughs, rising energy prices or both.

"Those loans were very critical to helping us convert ... in a difficult period of time when banks were not lending," Ellen Hughes-Cromwick, Ford's chief economist, said in a recent speech.

Buyers of electric cars qualify for a federal tax credit that ranges from $2,500 to $7,500, with the credit rising along with battery life. States are adding their own incentives, both on taxes and sweeteners such as preferred parking spaces and lower registration fees. Consumers who install charging stations can write off 30 percent of the cost from federal taxes up to $1,000; commercial sites can write off up to $30,000 in installation costs.

The Energy Department is funding research for next-generation batteries that could go 500 miles on a single charge, convinced by surveys that Americans will buy electric cars only if they have a range of at least 250 miles, roughly the equivalent of a full tank of gas.

At least one expert thinks range concerns are overblown.

"We shouldn't let the perfect become the enemy of the good," said Ed Kjaer, the director of electric transportation programs for Southern California Edison, a utility that's pioneered the use of electric car fleets. "I have never run out of juice, and I commute 100 miles a day, so let's be real. The battery-powered car is an urban commuting vehicle."

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