Lessons From Detroit PHEVs Conference

Advocates have been saying it for a while, but now all sides of the debate-including automakers, utilities, venture capitalists, and policymakers-are saying it too: electric-powered automobiles are the real deal, and we're on the cusp of the biggest transformation in automotive history since the invention of the internal combustion engine.

This may come as no shock to readers of Gas 2.0, but the complexity and number of major players involved in making this happen is not easily grasped. This is why the conference, called The Business of Plugging In, brought a diverse, all-star cast of speakers to Detroit. A few of them are featured in next month's Inc. Magazine, which does a fantastic job of describing what's being called the 'Electric Car Ecosystem.' It looks something like this: Electric cars must be built (by automakers and new venture-backed start-ups), supported by a supply chain of new components (like batteries and new types of electric motors) as well as new manufacturing capabilities, which are all being made possible by major grants (from state and Federal government).

The cars will be fueled by electricity (provided by utilities) in a fashion that must not overwhelm the power grid (and aggravate consumers and utility companies), and will ideally be sourced from new low-carbon power (like wind and solar) in a way that intelligently connects the car to the grid and the web.
Concern over charging infrastructure for electric cars should not be seen as an impediment to their immediate adoption. While there are major considerations for the long-term, things are 'good enough to get started'. Most of these cars will sit long enough to charge by a simple 110V plug-something that at least the 53 million garage owners in the US have access to. That's not a niche market, that's huge.

Studies have shown that the US can handle tens of millions of electric cars charging during off-peak nightime hours with our current infrastructure. We don't need fancy Smart Grid features to make this happen, since it's easy to do this (now) with timers that only allow charging during certain times.

However, adding a 220V plug (like the one powering your dryer) for an electric car is like adding a few new homes to the grid. Plugging in 5 or 6 cars at 220V during summertime peak load would (as of today) cause local blackouts.

Adding a 220V plug to your home may require additional cost. While most homes are wired for this (for the dryer), you still have to make a plug accessible to the car, and this has to be professionally and safely wired (this is called Level 2 charging). Worst case scenario is an added $1,000 cost impediment to the consumer (and the time for installation).

It's almost taken for granted that there will be many early adopters who rapidly snatch up initial plug-in hybrids offered by the major automakers. Richard Curtin of the Institute of Social Research at University of Michigan, noted that his research found a $10,000 premium barrier for car buyers. That is, the closer the price increase over comparable models gets to $10k, the less buyers can justify it, and over $10K the market evaporates. Curtin also found that average consumers are incredibly bad and incorporating future operating costs into their economic analysis, and instead consider only up-front costs. He also found that 'Attitude toward the environment' was the #1 factor in predicting willingness to buy a plug-in hybrid.

Mr. Fisker, who will be selling a 'lifestyle vehicle', stated that there are those who want to 'project their responsibility to society and the future,' and these consumers don't really care about the premium. This is probably true-just try asking the average Prius owner sometime whether the investment in fuel economy paid off for them.

Source : Reuters, by James Pethokoukis, October 26th, 2009, reprinted with permission from Gas 2.0